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Is The Cloud Real?

Many of us read reports from industry pundits as well as the latest industry rags and hear the “experts” describe the latest trends. A lot of these for the most part, don’t come to fruition. The most unfortunate part is that our bosses and internal customers read these reports as gospel and we spend our time debunking a lot of the myths.

An area that is much hyped is the Cloud. The question is whether or not this is fact or fiction. Today, I will focus on SaaS in particular, as even the word Cloud conjures up conflicting images. In my world, SaaS is real. The most compelling metric is that in 2010, the number of Cloud apps exceeded our on-premise apps, and the impact on our business and IT has been profound. Let me repeat, SaaS exceeds on-premise apps!

Most organizations are only contributing 20% of their budget (people and dollars) to innovation, our IT Apps team contributed 60% to innovation in 2009 and 2010 respectively. We attribute our results to two things: 1) We have an integration infrastructure that has allowed us to scale, i.e. we don’t have the hairball connectivity you find in most organizations, 2) SaaS has allowed us to focus on business value-add and not the infrastructure.

With our success, do I consider SaaS a panacea? Absolutely not! There are things we all must be aware of before engaging.

Integration – In many cases, the business becomes enamored with the pretty interface, and doesn’t consider the back-end requirements of administration and integration. This is how they are sold and presented by some SaaS sales teams. SaaS apps can technically exist in the absence of integration, but they lose their effectiveness. For example, will user administration be managed manually or integrated with your directory. If it’s not integrated, who’s responsible for adding and terminating users from the system? If you use a SaaS CRM solution, customer data needs to be integrated with other systems or its overall value also diminishes.

Lesson #1 – you must have a strategy to integrate your SaaS apps.

Governance – SaaS bloat is a reality and it’s something we must guard against. Although it’s interesting that our SaaS apps have exceeded our on-premise systems, the concern is that business teams can easily engage these vendors while not truly understanding the impact of their decisions. In the on-premise world, IT was a natural gatekeeper. Consequently, you can end-up with more SaaS solutions than you ever intended, and these solutions can become a security risk as critical data may exist in a system that the company is unaware of.

Lesson #2 – you must have a governance and architecture model to ensure appropriate decisions are made.

Resource Requirements – A common misconception is that SaaS will reduce the number of IT headcount needed to support a function. Based on our experience, this is not true. There is still the need to manage the requirements process and configure the system. The difference is in the area of administration where fewer resources may be needed. However, it’s hard to eliminate 20% of a DBA, 20% of an SA and 20% of an app administrator, as these are all different people supporting a system.  In the case of our CRM solution, we’ve actually had the opposite effect – we added headcount. Please don’t misinterpret this as bad. In fact, we are extremely happy with our CRM adoption and the fact that multiple other groups now want to leverage the solution.

Lesson#3 – leave your existing staffing model in place and plan to retool your staff.

I’ve intentionally omitted IaaS, PaaS and STaaS (storage as a service.) They will be part of a later discussion. What’s important to understand is that SaaS absolutely has a compelling value proposition, if managed properly. We could not achieve our internal metrics without leveraging SaaS apps. While many organizations are concerned about the potential security impact of SaaS, I agree, it too must be managed. The focus should then turn to how to add more business value – that’s the business of IT.

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5 Responses to Is The Cloud Real?

  1. Pingback: Yes, The Cloud is Real! « In(tegrate) the Clouds

  2. datango AG says:

    Tony,

    Interesting stuff indeed. When you say that you’re now able to focus 60% on innovation versus 20%, can you cite where you are prioritizing those activities? We just did some interesting research on IT adoption/end user adoption and it demonstrated that most IT organizations are only able to resource things like new hire user enablement or focus on driving down help desk volumes through ad hoc intervention. More innovative IT organizations are increasingly focused on optimizing the ‘herd’ and ensuring greater app. utilization/process adoption across the board while analyzing for improvements. Curious as to whether this made your list?

    Best wishes,
    Steve – datango

  3. Pingback: Do IT departments need evolution or a revolution? « the datango blog

  4. Asish Kumar says:

    Tony,

    Saas based application hosted in Cloud will reduce application and Infrastructure support work force. We will require more specialist Also off-shore/Onsite model based expense will reduce. People should be able to provide service remotely.

    Asish Kumar
    CTO/CEO

  5. Pingback: 5 Ways IT Can Establish Cloud Control | Sandhill

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