In a recently Harvard Business Review blog, a two-year research study with the Harvard Business Review, The Economist, Corporate Executive Board, Intel and others suggested that CIOs are not in sync with what the CEO and the other line-of-business executives need from IT. One out of two CEOs said that IT should be commodity service purchased as needed and only a quarter of executives felt that the CIO is performing above their peers. The research clearly pointed to the failure of IT to deliver value to the business in terms of accelerating growth, reducing customer acquisition costs and improving customer retention.
I also recently spoke with MIT Sloan Management Review about the emergence of the chief digital officer in the enterprise. I noted that digital technologies -- cloud, mobile, social, applications, big data -- in the enterprise is shifting some of the technology procurement, development and implementation responsibilities away from the CIO, and to new positions within the enterprise including: the chief digital officer, chief data officer, or into marketing with oversight from the chief marketing officer. Gartner is predicting that by 2015, 25% of the enterprise will appoint a chief digital officer.
One technology that promises to help improve IT efficiency and enable the CIO and her staff to be more strategically focused is cloud computing. Cloud promises to help with changing the way IT is acquired and allowing IT to focus on more value added projects. But not all companies are ready for the cloud. I spoke to Richard Casselberry, director of IT operations for Enterasys, who manages 30+ enterprise cloud applications across the globe, servicing 1,000 employees in 30 offices. Casselberry has developed a cloud readiness checklist based on his experience of building a hybrid network infrastructure.
Here are ten things every CIO should think about and discuss with their CEO and executive team before making the leap into cloud.
Culture - Cloud changes quickly, and therefore a company culture of adaptability and nimbleness is key to success. Are you ready to deal with that rapid pace of change? If your company is currently running on Microsoft Windows 3.11 and everyone is okay, then there will be a big change in the pace of new features. Not all companies, or employees, are ready to deal with learning new things, at a rapid pace. So you will need to decide how to best managing large scale, rapid changes which will require you to either commit to extensive training/re-tooling or employee skill set upgrade and turnover.
Security - There are security challenges but different ones than you think. Data security being compromised is probably not a real issue, but if you don't tightly manage accounts and access you can be in trouble. The good news is there are tools that will automatically integrate your HR system with all of your cloud and on-premise systems. For example, we use Okta that handles cloud identity and gives us a landing page to market new tools so users adopt them quicker. We recently shared our view of cloud security with the Wall Street Journal.
Compliance - Compliance can be an issue but no worse than in house systems. Make sure that the vendor has the right controls and documentation to show that they have been tested (SSAE 16 or ISAE3402) by a reputable auditing firm. In fact a recent study from RightScale says that only 18% of advanced cloud users see security or compliance as a challenge.
Cost - The cost model for cloud computing deployments are different. The cloud expense model has a more consistent cadence and without the large up-front costs. Some organizations prefer capital costs versus operating costs, so make sure you are prepared for the change. Many companies plan to refresh technology every 3-5 years but that depends on the company's financial performance, meaning the refresh can take longer than average cycles. With licensing cloud payment schedules, you lose that option. The benefit comes from the pay as you go model. For example, you can add a single user to Google and the expense would be significantly lower than building your own exchange environment in house.
Control - When you are on a true multi-tenant SaaS model, you lose some control over changes, maintenance windows and upgrade cycles. Be sure that the organization understands that they don't really get to decide when the next upgrade happens. You still have the option to disable new features and test before roll-out.
Visibility - Many firewalls will show you who connects to what, but not really at a deep enough level to be able to prioritize applications. Salesforce chatter and a salesforce user updating a quote probably should be treated differently. Today most networks do not have the necessary levels of visibility and control but in the future this capability will be available.
Network architecture - Cloud companies need good internet access - really good internet access. Evaluate your cloud providers network architecture to study the traffic patterns and aggregation points. For example, with a global footprint, you probably need to rethink centralized internet access, knowing users in Hong Kong are not going to be happy with their network performance, if the traffic has to come all the way back to New York City, to hit the Internet.
Clients - If your company is using desktop PC's and doesn't allow mobile devices like smart phones or tablets, you will miss out on the flexible nature of most real cloud companies. One of the great advantages of web only tools is they only need, well a web browser. You can obviously still get some good benefits using cloud companies, but can gain even more once you embrace the mobile, flexible revolution that "BYOD" or client independence can bring.
Organization - If you are familiar with hosting your own servers and have the appropriate staffing and able to handle on-premise solutions, then you will likely find that roles are going to need to change. The further "up the stack" you go, the more drastic the changes will be. But also the more valuable IT will become. If, for example you are doing Infrastructure as a service, your IT staff will still need to worry about scalability, patches and backups. Move up to Platform as a service and you can worry less about backups and focus more on user interfaces or workflow. Step up to true software as a service and you can focus even more on training, leveraging new features and celebrating all the great new features "you" rolled out. In a recent CIO Journal article called "How cloud is changing IT organizations" we noted the changes that we saw along with peers at Deloitte, Airocent Group and the University of California at San Francisco.
Reliability - Based on our experience, cloud deployments are no less reliable than on-premise solutions. That said, when something does go wrong, and it will, you will feel completely out of control. Typically, when there is a network outage, employees see the IT teams in the server room, busy trying to restore the network to a functioning state. When you go to a cloud model, most of that involves phone calls, escalations and waiting. It's hard for people to see IT just waiting and not "doing anything" when the CRM system is down. Communicate updates to team members and lines of business and manage the perception of the organization until stability is stored.
Progressive CIOs are adopting cloud computing. CIOs recognize that with proper planning, cloudy days can quickly turn from a downpour, to a break in the sky with sunshine. With the proper due diligence, hybrid deployments (combination of cloud and on-premise solutions) will help CIOs become more strategic and relevant to the business.
This post was co-authored by Richard Casselberry, director of IT operations, Enterasys.
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