The Business of IT?

Two sets of recent discussions highlighted the business role of private clouds for me. The first set of conversations was at the Wall Street and Technology roundtable in NYC September 20th. Leading financial institutions gathered to discuss the role and challenges of big analytics. The second set of conversations was with our Platform ISF customers who are building private clouds.

My takeaway from Wall Street and Technology event was that IT silos dominate in areas of high growth or in periods of high growth. In a fast growing business, cost containment is a lower priority and business owners and units have more leeway to build their own systems. To paraphrase one comment: “When our stock is at $100, centralization and consolidation are not big issues, when our stock is at $10, sharing and metering become forefront”.

My takeaway from customer discussions is that virtualization is an operational issue while clouds are business model issue. For organizations that have concluded that the place to start with cloud is private cloud, the choice of a vendor/partner becomes strategic because the business model implications of cost and control are the strategic reason to consider cloud in the first place.

In our blog post “a strategy straight out of Redmond”, we discussed the agendas of each vendor camp. The point is that several of those camps would prefer to make the decision for private cloud to be an operational one more so than a strategic one. For many customers, private clouds may be more of an operational decision but many are seeing cloud for what it is; the chance for a new IT order with the customer in control. A year ago, a long time industry analyst told me “the difference between grid and cloud is that grid was driven by the academics and IT whereas cloud is being driven by the business”. This applies to virtualization as well.

So if we’re in a period of centralization and consolidation for many IT groups and the private cloud management layer is strategic for many firms, the choice of your vendor camp becomes as or more important that the particular vendor that you chose. In other words the business model is likely to drive the architectural model, rather than the other way around.