CIOs Must Fit the Cloud Into IT Strategy

CIO — Cloud computing is still in the testing and experimental space for many organizations, but its benefits are becoming clear to many. Cloud is rapidly shifting from a world of hype and possibilities to one of practical application, and CIOs that haven’t already considered what cloud means for their business need to step up the pace.

That was the consensus of six panelists brought together by information exchange solutions specialist IntraLinks in a roundtable discussion Thursday morning at the Gabarron Foundation in New York City.

“You think about technology waves, and every once in a while you get one that you know is meaningful, that actually changes the way companies spend their money and invest in solutions; it actually changes the way the tech industry itself is shaped, and cloud computing is one of those things clearly,” said Ted Schadler, vice president and principal analyst with Forrester Research, who moderated the panel.

“I got interested initially in cloud because of the pricing model: the fact that I could potentially buy capacity as I needed it and pay for it as OpEx instead of CapEx,” he said. “That essentially lowers the bar for innovation because I can build something quickly and deploy it quickly. This is a hugely important phenomenon in cloud.”

“It was also a major driver of open source, where if I could get a server for free in Linux and deploy it, I could as a developer actually try something out,” he said. “The cloud just took that and blew it out on steroids. There’s probably not a single startup that comes through my office, and probably not through yours, that isn’t deploying on cloud infrastructure. They might keep the customer database in their own data center, but all their storage and all their compute sits on Amazon or it sits on Rackspace or it sits out there somewhere in the cloud. That is a huge opportunity for innovation, for things that change the way companies work together. You see this now reflected in the investments of the major infrastructure providers. You also see it reflected in the growth of companies like Salesforce and Google. Google Apps for Business, Google Apps for Government, that’s a billion dollar business today.”

Schadler noted that Forrester’s discussions with CIOs indicates that cloud computing is a top of mind consideration for most. And he said that most organizations are not looking to the cloud as a method of cost management, but for “extension”-the capability to take their business in new directions faster.

Sultan Khan, Global IT Strategy & Governance Practice Head at Tata Consultancy Services (TCS), agreed.

“What we’re seeing is that every CIO is thinking, talking and doing something about cloud, clearly with a very reasonable degree of maturity,” he said. “We recently conducted a survey with our clients and found that 10 percent or less of the cloud-based solutions are actually out in the public space. Today, close to 90 percent of the solutions sets are being developed within the internal cloud space. What is interesting is when you ask them about where they are going by 2015, a lot of them see that ratio being 30 percent or so in the public service space. There is a definite shift towards not only cloud, but also taking it from the inside to the outside.”

Philip Jacob, senior director of risk management at Axioma, a provider of optimization software and financial risk modeling software for the financial services industry, said his organization has turned to the cloud-and specifically Microsoft Azure-to provide the raw computational power for its services rather than build out new servers each time it takes on a new project.
“It’s allowing us to be able to plan much more effectively,” he said. “We don’t have tell our clients in advance, “here’s the level of service we can offer you.” We can tell them, “here’s the potential,” and then we can just buy on demand the services necessary to do whatever and however complex calculations they require.”

Jacob noted that such a model allows Axioma to be much more efficient as well, because most of the demand for its risk management reporting only occurs for about eight hours a day. If the organization bought hardware to serve its needs, it would sit largely unused for 16 hours a day.

“It’s a way to only get the capacity when we need it, but also not to have to plan what could be very large potential acquisitions in advance,” he said.

David Goodman, chief technology officer of the International Rescue Committee (IRC), an organization founded at the recommendation of Albert Einstein to rescue intellectuals and artists from the Nazis, said the cloud allows his organization to better allocate staff resources. Today, IRC provides humanitarian services to refugees around the globe. Goodman leads a staff of 26 based in New York and Nairobi, overseeing teams focused on infrastructure, application development and project management. He is also responsible for RescueNet, the organization’s global intranet.