Is Cloud Computing a way out to strangle-hold on IT Budgets?

If you were to ask any CIO today to list out his / her priorities, the list could look something like this -

• been customer-centric and enhance customer experience
• a few experiments with mobility
• business process automation
• ensuring business continuity
• business intelligence applications
• IT Security

If one looks at the list above, it is very clear that CIOs are primarily looking at their so-called "traditional", "core" functions of  - automation, business continuity from the IT perspective and IT security as their priority. 

Today, majority of the IT functions continue to be performed in-house. The other reason for the list seems to be skewed towards the "traditional", "core" functions of the the IT department is because IT budgets are likely to remain consistent and no major budget increase is anticipated. This thought is further supported by the fact that overall there is a strangle-hold on any new investments made by the businesses due to the current uncertainties about policy and the regulatory environment and rising costs. So, it is all about "keeping the lights on". There is no money for the CIOs to "play" with newer technologies.

So what is the way out?

The "traditional", "core" functions are already optimized by the CIOs, but still are on the list up here. So, what is that a CIO could be thinking in here? Well... perhaps - look at new and emerging technologies which help reduce the total cost of ownership (TCO) and improving the turnaround time (TAT). Well... there is cloud computing that the CIO can tap into.

But how... 

Well... as a CIO with stagnated budgets, one could look at moving the data centre infrastructure on the cloud and availing of infrastructure as a service (IaaS) from one of the cloud service providers. What the possible IaaS will do is - help replace the data centre infrastructure, it can help create that much needed disaster recovery (DR) site strategy to ensure business continuity using at a much cheaper cost than otherwise. The IaaS will allow, the CIO, an ability to be quickly provision servers and all necessary infrastructure for different projects and applications. IaaS could be a good model for hosting web services based applications and applications that require a quick increase in infrastructure availability. The IaaS facilitates further cost savings in terms of amount of power consumed and in terms of time and efforts for server provisioning. 

courtesy: cioresearchcenter.com

Also, a CIO could consider the platform as a service (PaaS) as a great model wherein the management of the infrastructure becomes the job of the cloud service provider and could free the in-house IT team to focus of building solutions that can help transform the business, focus on customer-centric business solutions and enhance the overall customer experience. This will help the CIO bring in a business focus to the IT function and an opportunity to work along with the CEO / COO and other senior management team on the "real" and "burning" business concerns and issues.

Another alternative and most commonly used model for cloud computing initiatives is - software as a service (SaaS). The CIO could deploy his / her business critical applications on the cloud or use off-shelf business applications. Whilst doing so, it is important to take a cautious approach and the CIO would have to consider aspects such as performance experiences and do a detailed cost analysis with comparative sheets for the future plans. This is a model wherein the CIO can save not only on infrastructure but also software application licenses and move to a "pay-per-use" model. So, in this manner, a  CIO could provide the business with much needed solutions on a OPEX model and save the business big money in CAPEX and lower the turnaround time (TAT) considerable.

However... there is no "one size fits all" in here. So what model do I use for my business? How do I figure it out?

As a CIO, it is important that I understand my infrastructure and business application footprint and then adapt and use the various models and options available. This will allows the CIO to effectively shift and reduce the up-front CAPEX expenses in the IT Budget and spread the costs over a longer period using a OPEX model and still be able to satisfy and meet the business needs of solutions from IT. Some business benefits of cloud computing initiatives that CIOs can use to convince  the CEO / COO and the other senior management team could be -

• Shifts fixed to variable cost model (CFOs would love this)
• "pay-per-use", "scale-up when needed", 'try before use" models possible (CFOs would love this too)
• Provides flexible cost-effective computing to support growth (COOs and CFOs love this)
• Enables faster "go-to market" strategy (the CMO and Sales folks will love it)
• Support experimentation
• Drives new potential businesses
• Can enable user-defined experiences

Of course... the CIO will need to detail out the "real" business cost savings and monetize the benefits before putting it to the CEO / COO and the other senior management team.

Great... but what about IT Security on the Cloud? Is it not something the CIO should be worried about? What happens to my data on a "public" cloud because a cloud service provider has so many customers and may also have customers who are in similar line of business as mine. One needs to understand that the cloud computing infrastructure is not fundamentally insecure, it needs to be managed and accessed in a secure way. There are ways - data encryption techniques, designing and defining mitigating controls, cloud authentication and authorization solutions that one can use to ensure that the data on the cloud infrastructure is secure and safe. Most critical is to - protect the API keys.

So.... is there merit for a CIO to look at cloud computing in these times of strangled-held IT budgets? With all its worth, I strongly believe that it is an option that the CIO should look at and if planned and executed well it has considerable business benefits and also impacts the way the business is done - it facilitates the customer involvement in what kind of a product the customer will like to see and use. Also, yes... it is very much doable with the support to the CEO / COO and the other senior management team. It is important that the CEO / COO and the senior management team understand that it can be done and invite the CIO to the "strategy table" and share the business issues and concerns with the CIO. They need to give the CIO opportunity to find a solution to the business issues and concerns, give the CIO an opportunity to innovate and experiment (of course within the defined IT budget) and to optimize and cost savings for the business.