We recently had the pleasure of having an extended conversation with Dana Gardner, president and principal analyst at Interarbor Solutions. Our discussion covered enterprise cloud adoption, C-suite IT strategies, the changing cloud market, and much more. This is the first of two parts; Check out Part 2.
Gathering Clouds: With the range of topics that you’re covering, what do you look for in terms of relevant areas to share your perspectives on?
Dana Gardner: We try to help decision-makers in the enterprise understand trends and how they will be impacting their businesses to become better prepared for change, transformation, and taking advantage of some of the newer models around cloud, big data, and mobile. So I tend to focus on areas where change is prominent, while recognizing that established enterprises can’t just adopt things entirely without serious consideration for their installed base, for their existing systems and platforms, and considerations of the behaviors that go along with adoption of new technologies. I write about change but with a real sense of reality about how existing systems and investments need to be cared for as well.
GC: You mentioned that you’re talking to the enterprise, but why have you chosen that as your focus?
DG: Because that’s where I focused for the last 20 years. I come from that as a background, but, when you discuss and focus on enterprise topics, it does impact more than just the enterprise. It impacts the suppliers, vendors, and service providers to the enterprise. It impacts the supply chain, so those who do business with suppliers, the B2B side as well as the B2C side. And it impacts, of course, the entire ecosystem, if you will, around technology. The enterprise is sort of the end goal. But there many more types of companies and organizations that are impacted beyond the enterprise. Therefore, the content that we produce is consumed by them as well.
GC: Is there a particular reason that you feel the enterprise requires illumination on the topics you’re writing about? Are they typically behind the curve, are they advancing certain trends, or is it really that they’re as interested in scouting new ways and methods to do things as a smaller, more agile business might be?
DG: It’s all over the map. There are early adopters and regressive adopters that are some of the largest companies. There are companies that do tend to be more conservative in adoption overall as well. We also, of course, have a lot of readers, and our audience also extends beyond that and what they focus on really depends on the culture and vertical of the business that they’re in. It also depends on how well they do IT because if they’re up to high productivity and requirements for performance and availability, then they might not feel that pressing need to adopt rapidly because they’re doing well with what they have.
Some organizations budget more aggressively for IT adoption than others. Some are more stringent with their spending and try to get every dollar out of their investment. It really varies very dramatically from company to company. Everybody needs to recognize that we’re in a very dynamic time, as technology has been rapidly changing over the past 30 years, but because there are so many more domains that are impacted – cloud, mobile, big data, social, and many more. When businesses change, when customers and consumers change, when behaviors change, when global markets are rapidly embracing new technologies, all these things put an onus on the IT department to become change-oriented as well while still satisfying and supporting the organizations as they go through these business transformations.
GC: Regarding the shift that’s occurring in terms of how IT organizations are moving to the cloud, does that change the very nature of what that organization is to their larger parent company against what they have historically been?
DG: Yeah, I think it does. When you go to a services orientation, in terms of how you use technology and consume it on a platform basis, but also on how you source it, the role of IT does change. Technology is maturing, just as we’ve seen with other aspects of business over the past hundred years or more. The advent of steam, the advent of electricity, the advent of widespread transportation, and the ability to deliver goods widely – all these things have happened over the past hundred years, and technology is certainly not immune to similar evolutions. We’re starting to see the shift from technology being customized to more of a commoditized consumerization of technology services with a smaller degree of customizations. I look at that as really a shift in what IT does for enterprises, not only because of these more tactical shifts but just because of the general direction that business takes, Over time, things that were one off, custom, and on premises for each and every company become something that can be commoditized and delivered as a service.
GC: You are pointing to this sort of split between the DIY vs. as-a-service paradigms within the IT industry. But does this movement towards the cloud necessarily mean that one is going to be superior to the other? Or does standardization and commoditization mean that innovation really happens at the strategic level rather than the implementation level?
DG: I see it as changing the emphasis in organizations from simply acquiring certain applications as services to specializing in them. You have to look at the difference between what we call a “core” or a “contextual” application. Is it something that’s just there that everybody uses, like email or messaging or data storage or backup and recovery?
Whether that might include intellectual property, patents, or even just being first to move in an industry or vertical marketplace, in those areas, you will want to retain deep control and protection over these applications and services and data sets. But in many other back office types of functions, you really don’t differentiate yourself, and you might just look for the lowest cost approach, and therefore the cost-benefit analysis can be applied as to whether that’s something you would outsource or retain partially.
And you might even find situations where you can combine these in a hybrid fashion so that you’ll have your specific applications that you highly customize, develop, and protect running on someone else’s data center or some other infrastructure, so that you get the best commoditized, economic IT benefits, while also retaining control and being innovative on the specifics to your industry and being a differentiator in some regard in your market.
GC: Do you feel that the benefits of hybrid cloud make it the logical end goal for a business in terms of how it views its IT or cloud strategy developing?
DG: Yeah, I do, and I don’t even think that the definition of hybrid cloud has been fully baked yet. Clearly, it’s going to be something that you’ll want to have variability with. And that will change over time depending on your business, your maturity as a company, what resources are available, and what level of trust and security are available from the provider. Hybrid really does offer the best of all worlds because you can exercise choice between certain applications and certain sourcing models, bring things around, and change them, which is important for lowering your risk and exposure to risk. It’s also an important aspect of playing the market so that, if there’s a lower cost provider that you want to use you can. And a lot of companies are seeking to exploit future hybrid models by trying to assure the SLAs and contracts around the use and movement of their technology so that there’s ‘fungibility,’ you can move something from one provider to another, it’ll still operate.
And this whole notion of the software-defined data center helps the move toward hybrid because it’s not just applications and data that need to be fungible in a cloud model – it really requires the entire network stack, the server stack, the platform, and even the application frameworks if you’re doing platform-as-a-service (PaaS). And it’s still a vision now, but I do think that, for some organizations, the end goal is to be able to literally pick up the entire cloud apparatus that supports major applications and move them from data center to data center, whether it’s data centers that they own, lease, or outsource. This ability is also sought for being able to make similar moves for disaster recovery, for performance, and for load balancing, There are economic market considerations in choosing the best cloud provider at any given time, some of which get us to a very mature position where technology is a commoditized service, meaning that the best service provider will get the most business.
But ultimately, the choice of business as to how they procure IT remains with them, and it really can reduce the overall cost of IT while increasing productivity. And there are many other benefits to cloud model around access to mobile in securing, backing up, and protecting data regardless of what’s going on in any particular geography. So hybrid really is a very attractive model, and I expect that people will be moving more and more in that direction.
GC: So we’re talking around this notion of having a lot of choice. But with the increasing commoditization of the technology itself, what becomes their salable asset, what becomes the way that one company would choose a managed service provider (MSP) over an Amazon, over a Rackspace, over whomever?
DG: Well, it’s a very good question, and I think the right set of variables is still being written. But, like with other mature business services like transportation or energy or facilities or supply chain, a business looks for the right combination of value, dependability, assurance of long-term resource availability, and cultural fit. In the end, it’s about the relationship, and companies look for trust and affinity between partners. The shift we’re seeing is how the thinking about technology, not as this special secret sauce, black box, magical art, has shifted to it as really just another business service that would be procured in a similar way with the same types of considerations, something, you would write it into a contract.
GC: How do you see this shift toward adoption occurring at the enterprise level? What is convincing those organizations? And what’s still keeping a lot of them away?
DG: Well, having done a lot of case studies with companies, there are many that are making the move to cloud of their own volition. They see the advantages, but I think they’re in the minority. For many enterprises, the IT organizations are actually being dragged into this, whether it’s through a new set of requirements around cost, productivity, or whether it’s the workforce habits and behaviors that are shifting and changing. Whether it’s through shadow IT activities where units or groups within the company are procuring IT in a different way or bringing it in themselves without IT’s knowledge. These factors are forcing IT to adapt.
The PC was sort of dragged into the enterprise in a similar way back in the mid ‘80s. It’s not unprecedented for IT to have to react rather than be proactive. We see both. But I do think that the majority of Global 1000 companies are being pulled in this direction through the use of mobile, through the need for data availability, and particularly the requirements of large and fast data types.
And they’re also recognizing that the cost of IT has been going up steadily over the past 20 or 30 years. The leadership, the boards, the business-minded folks in these companies are not interested in a situation where 50% of new spending is on IT for R&D or for capital expenditure. They like the idea of moving more toward a pay-as-you-go, on demand type of a model without a lot of capital outlays every three, five, four years — whatever the cycle is. So, for a lot of reasons, IT is being compelled to do this.
When certain companies do it well and gather the benefits of this model and reap the rewards of productivity and lower cost, they become more competitive and perhaps ultimately dominant in their markets. Others either react or get pushed aside, so again, it’s the recurrence of trends that we’ve seen patterns and cycles that we’ve seen in business now again happening but with technology being a very important part of that adoption pattern and productivity development.
GC: You’ve touched on a few of them — the issues of cost and productivity — but beyond that, what are the fundamental value propositions of moving to the cloud, and how are they evolving as this space evolves?
DG: That’s still a little bit up in the air. Some people think that cloud is all about cost, others think it’s more about choice and convenience and being able to move rapidly without having to build out or adopt skills on your own. Others see it as a security benefit or even availability in terms of delivering data and applications across a wide area network.
And yet, other businesses just see it as a natural evolution of a platform from client server to greater utility to high-performance computing to virtualization and clusters and nodes and fabrics. The value prop of cloud has a technological trajectory on its own as well, which often requires an update o f your data center and your systems to take achieve the highest utilization of hardware and software to get the most bang for your buck and have elasticity for being able to meet your peaks of demand but without it breaking the bank. So a certain combination of these variables ends up being the most favored description for cloud success or the most valid incentive to move to cloud. But it’s always hard to say, since it’s going to be somewhat changeable over time, as well as being dependent on the type of organization.
But it’s still a work in progress. I do a lot of case studies with companies, and many of them don’t want be in the IT business. They want get out of the business of supporting commoditized applications and services. And they don’t even care about the cost, they just don’t want to do it. These companies would just as soon outsource it. Other companies see it as a natural progression where they can enter new markets more rapidly, they can innovate more quickly because they’re outsourcing the underlying technology and therefore focusing on their new business initiatives. So, why people adopt cloud is still a work in progress, but we see a lot of interest for a lot of reasons, and I don’t think that cloud is a flash in the pan.
This is the first of two parts. Part 2.
By Jake Gardner