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October 07, 2010
Thoughts

Cloud Computing Killed the IT Department?

“Video killed the radio star” – The Buggles (1979)

There was once a time when a company’s IT department was the gatekeeper of all things technology related.  They would perform the research and due diligence, purchase a large software package, install the software on the servers or distributed hardware (both of which were purchased and managed by IT), and manage the access and licenses to the software.  Heavy IT involvement was required from software selection to installation to operations and maintenance.

Fast forward to today.  Much has been made of cloud computing recently.  It is being hailed by some as a transforming force.  Companies are able to avoid significant capital expenses on infrastructure to support new capabilities, thereby lowering the barriers to entry.  One of the most successful pioneers in this space has been Salesforce.com.  Salesforce.com is utilized by thousands of companies as a CRM solution.  And, unlike other common CRM solutions, you’re not going to find any Salesforce.com software installed in a company’s data center, or on workstations scattered throughout the company.  More and more solutions are being provided everyday in the cloud, with Google as one of the biggest players leading the way.  Even Microsoft, who has made billions of dollars selling the traditional software license, has recognized the power of cloud computing with their rollout of Office Web Apps.  The Seattle Times reported on Microsoft CEO Steve Ballmer stating in a March 2010 conference that 75 percent of Microsoft resources are now focused on cloud based work.

So, will cloud computing kill the IT department?  Well, in most well managed IT departments with strong IT governance, a well developed IT strategy, and focus on providing the divisions they support with premier service, death is unlikely.  In fact, many of those IT departments will probably be pushing the cloud as a way to lower IT costs.  Smart, nimble CIO/CTO’s recognize that data centers are not cheap.  They understand that much of the capacity that exists in their data centers is typically underutilized except during peak periods.  For the past ten years, CIO/CTO’s have been rapidly pulling the outsourcing lever to lower IT costs.  Cloud computing is the new lever being pulled to further drive down IT costs.  But even with this new lever, a well functioning IT department will continue to play an important role in directing and executing the IT strategy of the company.

However, many documented business case reviews and published articles demonstrate that there are many IT departments out there that are extremely reluctant to give up control.  They shutter at the thought of not having IT assets within their domain.  These IT departments don’t view themselves as a service provider, but rather as dictators mandating what can and cannot be done.  They don’t partner with the divisions they support (Sales, Marketing, Finance, etc) to deliver value.  Instead, they behave like a monopolistic entity, recognizing that their customer has little choice but to work with them.  In these types of IT departments, IT governance is weak or non-existent.  The IT strategy has been poorly defined, or has little sponsorship outside of the IT department.  This is the IT department who may be killed off by cloud computing.  This is the IT department that will become less relevant.  This is when a division soured by their relationship with IT and enabled by a lack of IT governance, will purchase the capabilities they need directly from the cloud.  As the dysfunction continues, the relevancy of the IT department will continue to diminish as the divisions begin to treat their IT capabilities delivered through the cloud no differently than a metered utility, such as your water or electric service.  You only pay for what you use, and you don’t need to work with an electrical engineer to figure out how to plug the cord into the outlet.

Video killed the radio star.  Will cloud computing kill your IT department?

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