Blogging for Computerworld: Introducing "Cloudsourcing the Enterprise"

Ryan Nichols

We're flattered that Computerworld, one of the leading IT trade publications out there, offered us the opportunity to write a blog for their readers on the topic of cloud computing. While Computerworld's readers have all sorts of questions about the cloud, we'll be focused specifically on the issues surrounding how companies are adopting the cloud, because this is changing as quickly as the cloud itself.

We'll post excerpts from each Computerworld blog post here in Appirio's "CIO's Guide to the Cloud," along with our regular industry commentary. I've attached entry #1 below: "The path to cloudsourcing." Happy reading!

The path to cloudsourcing

Have you ever wondered what exactly cloud computing is, and why everyone seems so excited by it? Gartner defines cloud computing as "a style of computing where scalable and elastic IT-related capabilities are provided 'as a service' to external customers using Internet technologies.” How’s that for a mouthful?

My name is Ryan Nichols, and I’ve spent my career bridging the gap between business and technology at companies like McKinsey, SAP, and Intuit. Now I’m at Appirio, helping bridge that gap for companies moving to the cloud. I’m introducing this blog to explore how this thing called “cloud computing” can apply to your business -- because the potential impact of cloud computing is a whole lot more exciting than its technical definition.

Read more here...

Second Hack at a Cloud Curveball

By Mark Koenig

Last week I took a road trip to meet with some of our customers, and talk about the business benefits they are looking to realize from their cloud investments. At one client, we were discussing the well-documented ability of cloud providers to deliver a new release every four to six months, and how best to incorporate newly released functionality - using the example of salesforce.com Chatter - into the organization. It was at this point that our client - the CIO - threw a curve ball: “those rapid release cycles can be a problem.”

I got ready to hit that ball out of the park by talking about the importance of participating in release previews, and gathering advice from customers participating in the beta release, as well as the importance of organizational change management. That’s when he went on to explain that on an earlier cloud project their e-commerce system went down because one of their on-premise software partners was not able to keep up with the rapid changes in the cloud solution.

Nasty nasty curve ball. Our experience has been that cloud integration is generally easier than on premise integrations because of the service-oriented architecture foundation on which most cloud solutions are built. So all I could think about was how frustrating it must have been for that CIO: feeling held hostage by a vendor who provided a key element of his e-commerce infrastructure when all he was trying to do was improve his customer experience and introduce new products. The amount of incremental revenue he was missing out on while he waited for his traditional on premise vendor to catch up with his cloud vendor crossed my mind too. While thinking about what it must have been like to integrate that application into their environment the first time around, I took a weak swing and said something about how integration is perennially the hardest part of any substantial implementation effort.

I’ve been replaying that conversation in my head ever since, and now I’m ready to step into the batter’s box again. Yes. Not being able to adapt your business processes and introduce new products and services because your application architecture is too brittle to handle it is a big problem. No question. But being able to move so fast that your on-premise apps can't keep up is a pretty high class problem to have.

This increase in agility is one of the primary reasons that organizations are choosing to move their business onto the cloud-based applications and platforms. In the cloud, applications can be configured and re-configured to adapt to changes in business processes or to the introduction of new products and services, with minimal impact to the future upgrade path. And there are cloud integration platforms with pre-built and configurable integration templates to help knit applications together. Sure there may be the occasional on-premise app that makes for a challenging integration, but in the long run, moving to the cloud means that IT can focus on innovation instead of infrastructure.

So what is a CIO to do when some vendors who comprise the application architecture can’t reach cloud speed soon enough? Waiting until every solution provider in your portfolio is cloud-based is not the answer: the competition will have feasted on you by then. A more proactive approach is to conduct a portfolio review with three aims in mind:

• Which applications in my portfolio can be migrated to the cloud platform (or platforms) of my choice? (Hint: it’s not just your least strategic apps.)
• Of those that remain, which have vendors with a roadmap that will support my move to the cloud? Which have substitutes in the cloud ecosystem that I should consider?
• What is the best path to the cloud for my organization?

The best path to the cloud will be different for each organization. What each organization should do the same, however, is to create a roadmap and a business case based on the analysis above, chart the course, and check progress frequently along the way.

Cloud Computing as the Economic Tide Shifts

Thoughts from Bay Area Council Outlook 2010
by Ryan Nichols

I was honored to be the guest of Accenture at this year’s Bay Area Council Outlook 2010. The conference marked the release of McKinsey’s annual report on the regional economy (which, in a sign that everything comes full circle, I was privileged to work on with my mentor Lenny Mendonca when I was at McKinsey ten years ago).

Overall, there was a tone of cautious optimism in the presentation of this report to a room of regional business leaders, suggesting that the tide of the regional economy has reached its low-water mark. In fact, the biggest risk may be that we let this crisis “go to waste” as a once-in-a-generation opportunity to fix some of the underlying problems in our economy.

Gary Pinkus, Managing Director of McKinsey’s west coast practice, extended the analogy between our regional economy and the tide: there’s a benefit to a low tide - it reveals the rocks that have been lurking beneath the waterline all along, and exposes those who aren’t wearing their bathing suits.

More than half of the people in the US expect a return to “business as usual” at the end of this crisis. As the economic tide rises, the message we heard from McKinsey was to not forget that the rocks are still there. For the Bay Area, this means changing how we govern ourselves, how we educate our children, how we invest in infrastructure, and how we maintain our reputation in the global economy.

Now, what does all of this mean for the IT industry?

Certainly the receding tide of the economy has exposed a lot of hidden rocks in how we use IT to support our businesses. Reduced budgets have sharpened corporate focus on the real value proposition of entire categories of IT spending. What exactly will you get out of your next ERP upgrade? What exactly are you getting for the maintenance payments you make to your on-premise software vendors? Why do you spend up to 10 times as much implementing software as you do on the software itself? Do you really need to be in the business of operating your own data center?

Over the past 2 years, these questions, combined with the need to do more with less, has had dramatic impact on the enterprise adoption of cloud computing technology. Companies facing IT budget cuts postponed or canceled expenditures on their traditional on-premise infrastructure, and spent money on cloud computing projects instead. Salesforce, Successfactors, Taleo, Concur, and other cloud-computing pure plays had record years in 2009. SAP, Oracle, Microsoft, HP, not so much. The receding tide of the economy exposed some ugly rocks indeed, and allowed CIOs to chart a better course toward achieving their goals.

The receding economic tide also exposed many IT industry stakeholders who weren’t wearing their bathing suits. ISVs were resisting the switch to SaaS because of the impact to their revenue streams. Data center providers were relabeling old technology with new names, selling “private clouds” to companies that had no business operating data centers. Services firms were going along, because they have more to gain than they have to lose in the transition to the cloud. Many IT professionals themselves were resistant to change because of fears to their job security.

Now, as the tidewaters slowly return, the IT industry is faced with the same question as the broader economy—will we use this opportunity to fix our underlying problems? or will we go back to “business as usual”?

Our view is that there is no going back. CIOs who initially were attracted to SaaS solutions for their lower TCO are now discovering that they have a powerful platform in their enterprise, one that’s suitable for running more and more of their business. They’re moving from opportunistic adoption of point SaaS applications to what’s being called “cloudsourcing”—sourcing complete business solutions from one or more cloud platforms.

A low tide isn’t always pretty. But if the focus forced by tough economic conditions helps you chart a path towards clearer waters, then a crisis truly is a terrible thing to waste.

And in this business, we’re very happy to see clouds on the horizon.

Turkeys don't vote for Thanksgiving

“Turkeys don’t vote for Thanksgiving”: Why it’s so important for enterprise IT to emerge a winner in the transition to cloud computing

By Ryan Nichols

Gartner’s Ben Pring gave a room full of vendors and IT managers a splash of cold water this morning at a great local analyst briefing, explaining that many of the enterprise IT buyers he talks to see the move to cloud computing as a threat to their jobs. He estimates the real purpose behind 7 of 10 briefings that he does with enterprise IT is to help “build a script” to derail cloud initiatives.

Why? Here’s Ben’s explanation:

"Turkeys don’t vote for Thanksgiving. Many in IT see the public cloud as next generation outsourcing, and ask 'What the hell am I going to do?' If you’re someone with one eye on your 401K, you know that your route to that checkout depends on your headcount, and your budget. There’s a lot of IT managers who want the quiet life. They are scared of Chatter, of Twitter, of Facebook. They have no time to look at the new, when they’re hanging on for dear life trying to manage the old."

Keep in mind, Gartner is very bullish on cloud computing, and they spend a lot of time educating buyers and managers on how to make the shift to the cloud. With cloud computing at the peak of the Gartner hype cycle, it’s no surprise there are lots of questions. Cloud and SaaS-related terms are the top things IT execs search for on Gartner.com, and Gartner analysts take hundreds of briefings every year on these topics.

Is all of this activity from cloud skeptics?

Most of the IT professionals we work with (and we’re sure many that Ben and Gartner counsel) have a different view on cloud computing: They view the shift to the cloud as an opportunity to get out of the business of tedious, commoditized tasks. They don’t want to spend 80% of their time and energy just “keeping the lights on.” They view the shift to the cloud as chance to finally enable business innovation, instead of inhibit it... to start saying “yes” to their business partners instead of “no.”

But accelerating enterprise adoption of the cloud will require convincing the rest of enterprise IT that cloud computing is more of an opportunity than a threat.

This shouldn’t be a tough case to make. Consider Ben’s description of how cloud computing is changing the world of supporting custom business processes-- traditionally the bane of IT's existence.

Customization of a packaged, client/server application is extremely complex, and accompanied by an expensive top-down business process re-engineering effort. Typically, you spend 10x more on the customization than you spent on the underlying software, and at the end, end up with a brittle solution that’s impossible to upgrade. It’s so bad that today’s best practice is to run completely vanilla packaged apps.

Contrast that with customization of a cloud-based application: Apps built on cloud platforms can be “customized” through simple configuration, oftentimes by a business analyst in partnership with IT-- no busload of Big 5 consultants required. Customizations can be applied iteratively, without a “big bang” release. And customizations don’t break your ability to upgrade.

Of course, there’s a role for enterprise IT in both types of customizations. But customizing business processes in the cloud provides a couple of very real advantages for IT professionals: you’ll sleep better, for one thing, and actually enjoy your job. You’ll also be able to add more value to the enterprise, which is the best type of job security there is.

Now that more and more of the IT industry is committed to moving to the cloud, it’s important that vendors do a better job of making the case to skeptical IT professionals. That will require building a bridge between the world of on-premise software and the world of the cloud, and developing a business-case driven roadmap to take advantage of these new capabilities.

The message: You don’t have to be a turkey. The journey to the cloud makes all of us into pilgrims.