Published on the 07/10/2011 | Written by Owen McCall

For large enterprises, the cloud is a revolution for those processes that are necessary, but not necessarily that important. Therefore, think very carefully before you move any process or application into the cloud, especially if it’s a source of competitive advantage, says Owen McCall…

I have been to a number of events over the past few months where the theme, or a major theme, of the event has been cloud computing.

The flow of these events goes something like this. An industry analyst stands up and talks about the trends leaving the audience with a very clear message that cloud is here, it is real and if you, the CIOs, do not move to the cloud then your firm will be left at a significant strategic disadvantage. Then there are case studies from vendors (they are cloud ready and their clients are way ahead of you) and some CIOs outlining what they have done. Often this is a new or “fringe” application or a move to cloud infrastructure often in the form of dedicated, virtualised hosted hardware. Then comes the interesting piece, the panel and the Q&A.

On a number of occasions the panel have been asked what cannot or should not be moved to the cloud. The answer is the cloud is not suitable for large workloads or an organisations most critical and sensitive data and applications.
My conclusion from this is that the cloud is “a revolution” for those things that are necessary but not that important to a large enterprise and (at least currently) not relevant for core business activity.

While this seems paradoxical if you think about it this should not surprise us as cloud has many of the hallmarks of what Clayton Christensen calls disruptive innovation, and what we are seeing is the maturing of a disruptive technology from it’s initial marketplace (i.e. the consumer) to users with more mature and complex needs (i.e. the enterprise).

What is the impact of this for enterprise CIOs? Here is my take on it:

1. Hurry up and get non critical parts of your organisation onto cloud based infrastructure, particularly as your current hardware gets to the end of it’s lifecycle.

2. If you require a new application consider software as a service (SaaS) solutions in your evaluation. Learn as much as you can from this but do not move anything critical now as the technology and service providers are not yet ready and robust.

3. For critical large loads do nothing now, but review your position regularly as cloud technology and application providers mature to gauge when is the right time for you to move more services into the cloud.

4. Take particular interest in issues surrounding security, sovereignty, data integration (remember ERP, one of its big selling points was the ability to integrate data and have one source of the truth) and the ability to migrate data if and when you choose to leave that provider.

Finally, as you watch, consider what is the business need that would cause you to move your services to the cloud. Much of this will be dictated by your organisation’s business model. For example, what is your organisational focus? Is it cost reduction?

Improved customer service? or driving product innovation? Are you looking to dominate your competition or simply be competent? (for more on this check out Treacy and Wiersema’s The Discipline of Market Leaders). Think very carefully before you move any process or application into the cloud if you believe it is a source of competitive advantage. Competitive advantage is built upon capabilities that are hard to replicate, cloud however, removes barriers and allows quick adoption by all. This commoditising effect of the cloud is a large part of Nicholas Carr’s argument that in the near future IT will not matter. While this may happen do not hasten it by giving up true competitive positions too early.

Here comes the cloud. Hurry up and wait. Hurry up, and learn as much as you can by using the technology now, but wait for the technology and provider community to mature before you bet your enterprise on it.

ABOUT OWEN McCALL//

Passionate about using technology to make a real difference to businesses, communities, families and individuals, Owen McCall has focused his career on understanding and answering this question: “How do you harness the power of IT to deliver value?”
An independent IT consultant, he is a former CIO of The Warehouse.