It's not magic, just evolution

When it comes to business, cloud computing is a technological evolution, rather than a purported revolution says Adapt IT Director, Gavin Halse. He says the underlying principles relating to the need for infrastructure, systems and processes to deliver business benefit have not fundamentally changed.

“IT managers and CIOs need to remember that there is no 'magic' in the cloud as such, the cloud in reality is the evolution of infrastructure, platforms and software, which can now be reliably delivered in a flexible, scalable way using a combination of hardware virtualisation technologies, software as a service and the Internet as the underlying enabler,” says Halse.

At the 'other end' of the cloud are real companies and people, with infrastructure and intellectual property investments, who are seeking to offer differentiated services to their customers in new, innovative ways. “The challenge for the CIO is to identify those service providers that will add business value, either through substantial cost reductions in IT infrastructure, or in value-added services relevant to the company's industry and business model.”

Halse says the first opportunity is cost reduction, which will be readily achieved by companies like the large telecommunications providers, who can leverage off existing infrastructure investments and combine this with commoditised computing resources, dramatically reducing the underlying cost of computing. These commodity services will compete, as always, on price and service level. This is familiar ground for the CIO.

The second opportunity, value-added services, is more difficult. While there are many “apps” already in the cloud, most of these are hardly enterprise ready, and on inspection, have only superficial capabilities. Many of the established specialised software vendors are still one step back from migrating deep application capabilities into the cloud. In time, this will happen, but until then there will be a level of risk when selecting vendors based on their 'cloud credentials'. Halse says that for many, this risk is still too high.

There are many opportunities for IT service providers to reposition their value propositions to take into consideration these developments. Value-adding services that can be provided by local providers to assist companies realise cloud value include consulting, system integration, service aggregation, service level management, end-user training, business improvement projects and so on.

Halse's advice to CIOs is to see cloud as an evolution of the outsourcing model. “The key is to proactively build strategic relationships with those established specialised service providers who are well positioned to ensure that these disruptive technologies ultimately enhance your business.”