Public cloud causing enterprise IT to change

The public cloud may make enterprise IT look outmoded, but it is not dying. Signs indicate better results are ahead—if organizations make some key changes.

A few weeks ago, I sat on a panel hosted by CenturyLink on sustainability and efficiency in IT. At CenturyLink’s sunny Irvine, California, data center my co-panelists gathered ahead of going on stage and on camera. One of the panelists remarked that enterprise IT was dying—dying—slowly dying. But I believe this characterization is too broadly phrased and an inaccurate choice of words.

The enterprise’s data center paradigm has changed irrevocably. And it will progress on its change cycle as enterprises embark on fewer new builds, and trends show that market share favors the commercial data center service providers. The paradigm of public cloud puts the sometimes outmoded ways of the enterprise data centers and legacy enterprise IT into an unfavorable light. But rest assured, there are some positive signs for enterprise IT—and good results ahead—but some changes do need to occur.

Enterprise IT stronger than ever

Because of these commercial options, the contemporary enterprise IT may be stronger than ever, without relying on the legacy IT infrastructure groups to the same extent it did before. Research from Uptime Institute, for which I work, shows that enterprise data center budgets and footprints have flattened over the past four years and are now shrinking.

+ Also on Network World: Why Bank of America is not using the public cloud +

The public cloud companies provision IT developers with infrastructure with a seductive immediacy and clarity. Cloud providers furnish invoices with costs delineated by resources consumed by each app. They shape invoices to directly plug into a resource-based chargeback model. There are many ways to consume the cloud, as well as opportunities for savings and waste, and now you can see costs by application. This transparency is rivalled by only a small percentage of enterprises today.

Struggles with cost transparency

Cost transparency, a precursor to chargeback, is something the typical enterprise has struggled with. For example, 91 percent of Efficient IT adopters are aggressively transitioning to cloud. But 65 percent of them do not have a chargeback model and cost reporting in place. Assuming the cloud buyer uses the billing features of public cloud, that statistic should be clarified as 65 percent of enterprises don’t have a chargeback model for existing/non-public cloud IT infrastructure.   

A big part of the reason that extant IT infrastructure does not currently compete with public cloud is the lack of cost insights and management controls that follow cost insights. It is not uncommon for enterprise IT leadership to characterize their strategy as "tripling cloud in the next 10 months." The imperative for enterprise IT is now two-fold as cloud transitions accelerate. 

Changing the course for enterprise IT

The following is what enterprise IT leadership must do to make the paradigm shift:

  • Despite the abstraction of infrastructure and hardware in a public cloud, enterprise IT leadership retains management controls through implementation of a strong cost modeling and reporting system. Clinging to a flat chargeback or rate card model could be a justification for IT to leave, thereby ceding business advantage to the public cloud. Public cloud may or may not be a better choice, but the transition pace and breadth of adoption needs to be economically sound, not just the easiest, fastest and cheapest.
  • Transform enterprise IT to better emulate the risk function rather than a service delivery mode. Enterprise IT evolves into a group that ensures transparency and oversight. Corporate risk gleans insights from a variety of corporate assets and capabilities without having to hand deliver it.

The transformation from a legacy cost model (such as a rate card) to resource-based is a strategic undertaking. Like freighters, enterprise IT organizations change course slowly, even imperceptibly. This transformation needs to involve the IT service delivery stakeholders in real estate, IT, procurement, risk and finance. It must include enterprise IT leadership. The lesson we’ve learned from enterprises that have established credible chargeback is that it has to be "top down," and attempts at "bottom up" can result in siloed initiatives going nowhere.

With the adoption of IT chargeback, an organization can expect to see significant shifts in awareness, culture and accountability. Organizations that have implemented a modern chargeback have plenty of stories about the unhappy end users the first time charges were allocated. But what followed were actionable discussions on how to decrease resource consumption. Defunct assets were identified and removed. Hardware utilization was known and evaluated on an ongoing basis. Decision making was faster. Major savings came into reach.

Change is often painful, but often it is so much better on the other side.

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