Global CIO: Cloud Computing's Deadly Vulnerability--And How To Avoid It

At several events in which I've been involved with more than 40 CIOs over the past few months, the most-talked about subject was cloud computing and the second-place topic was miles behind. Vendors of every stripe—from IBM and HP to Microsoft and Oracle to Riverbed and Informatica to Wipro and Capgemini and many many more—have developed full-blown strategies for building out cloud infrastructures, services, platforms, strategies, integration, and products.

CIOs are eager—extremely eager—to see if the potential of the cloud can be transformed into tangible business value that will help them deal with three extremely pressing issues:

*Moving Faster: Every organization these days is looking to accelerate its pace of business to be able to respond to shifting market demands and opportunities as they occur, not 6-9 months later. And with IT now essential to every facet of those organizations' operations, it's no longer acceptable to be told that major company initiatives will be bogged down for months because that's how long IT needs to spec out, purchase, test, set up, and provision new systems. Cloud deployments breed speed.

*Lower The Cost Of Infrastructure: With CIOs' companies are demanding more and better IT services and performance, the available budgets for those CIOs are barely above the viciously scaled-back levels of 2009. So CIOs are hoping a thoughtful cloud strategy will let them bridge the yawning gap between expectations/demands and limited funding.

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*Flipping the 80/20 ratio: Many CIOs say they are still spending upwards of 70% or 80% of their IT budgets on maintenance versus innovation, or on run versus build. As a result, very little money is left in the IT budget to fund new and vital customer-facing projects because it all gets sucked up in keeping the lights on. In turn, this funding trap is causing many CEOs to want to shoot themselves, shoot their CIOs, or outsource all IT operations. Regardless of which of those choices is made, the status quo is unsustainable and CIOs are looking to the cloud as the, uh, magic bullet that they can aim at reversing the 80/20 ratio rather than at themselves or their CIO.

Also, I haven't (yet) gotten so trite as to say that 2010 will be The Year of the Cloud, but if someone were to ask me what 2010 will be the year of, I would say 2010 will be The Year of the Cloud. (And don't be troubled by the fact that IBM CEO Sam Palmisano, HP CEO Mark Hurd, and Oracle CEO Larry Ellison have all told us they don't like the name "cloud computing"—after all, you wonderful folks in the Global CIO audience have come up with more than 500 new names to replace cloud computing—you can check out that list and other related content in the "Recommended Reading" list at the bottom of this column.)

No, the irony is that all the wonderful stuff I've described above—all the heartwarming, money-saving, speed-feeding, business-model-flipping miracles—also serves as the most mortal threat to cloud computing: we have met the enemy, and it is hype. The larger question that needs to be answered is this: behind the hype, is the potential real or is it just some empty promise conceived out of desperation?

To answer that, I turned to my colleague and friend Art Wittmann, who's the creator of and mastermind behind InformationWeek Analytics, our research and premium-content business. Art has forgotten more about IT strategy than I will ever know and while he's not quite as ancient as I am, he's lived through plenty of hype-cycles and is concerned that we are feeding another one by overpromising what the cloud is and what it can deliver.

This came through loud and clear in an e-mail exchange Art and I had earlier this week, and I wanted to share with you some of his thoughtful concerns: "It could be that cloud computing is the biggest thing since the internet, but remember that the internet took 20 years to become a big thing," Art wrote. "What makes a successful market for a vendor—the ones beating the cloud drum so hard right now—is no more than a few percentage-points shift in IT spending. If IT changes its spending patterns at 3% a year, the vendors will consider it wildly successful and in 20 years, you'll have phenomenon like Internet.

"I've repeatedly asked Charlie [our superb cloud-covering colleague Charlie Babcock] if he knows of any major companies who are using cloud services other than SaaS in a strategic way (meaning anything other than toe-dipping) and he can't really point me to anyone. So far, non-SaaS cloud services (IaaS, PaaS) are largely for other developers—period," Art wrote.

I see Art's point and agree that cloud computing is in its infancy, but where I disagree is with his 20-year horizon and with his steady-state theory—his assumption that right now in 2010 is just like 2007 is just like 2002 is just like 1996 and so forth. No, what we are facing here in 2010 with a global recession is a set of business challenges unlike anything I've seen in the past 30 years: uncertain credit, uneasy financial systems, jittery investors trying to divine if the stock market has any connection any more to the real world, and unprecedented government involvement in the private sector in every area from regulation to oversight to direct ownership.

As a result, I think the time-horizon most CIOs are looking at is 20 months rather than 20 years—there exists right now an incredible urgency to address and overcome the internal IT shortcomings that until recently have been shrugged off as just, well, insurmountable laws of physics. And cloud computing—or at least the promise and potential of cloud computing—just might change all that.

But let's go back to Art and his perspectives on whether that promise and potential have any chance of bearing fruit:

"Sure we need to cover this stuff, but I do worry that we're overdoing it. As it stands right now, you have crazy things going on like boards of directors asking 'what are you doing about cloud computing' to hapless CIOs and CEOs who SHOULD be doing nothing but watching and learning. But because it's being hyped by us, Barrons [in a recent cover story] and everyone else in the press who's buying into the vendor hype machine, readers are being forced to scramble for a proactive strategy much sooner than they should. I hate to use a Gartnerism, but we are so high on the hype curve it's nothing short of ridiculous. The trough of disillusionment is right around the corner . . . so let's temper the exuberance just a tad."

Again, Art offers a compelling and sobering assessment, as he always does. But also again, what is different here is the extraordinary urgency those "hapless CIOs and CEOs" face in getting their overall operations on track to perform at unprecedented levels of speed, global scale, flexibility, precision, customer engagement, and financial clarity. The status quo that Art would have those executives cling to for at least a while longer is simply not up to the task—and in these demanding days, the alternative isn't just devoting a couple more years and another pile of cash to finding new solution; rather, in this highly demanding and unforgiving global marketplace, t's oblivion.

That's why the urgency on the part of CIOs to see if cloud computing is real. That's why the urgency to test and tinker and experiment, rather than "doing nothing but watching and learning." And that's why, while it may be true that cloud computing's biggest vulnerability is hype, CIOs' biggest vulnerability is doing nothing—that is simply not an option.

So let close with some final and extremely valuable closing remarks from Art, along with the promise that across all of InformationWeek—from our Analytics research business to here at Global CIO to our well-grounded Plug Into The Cloud site to our core news coverage—you can be sure that you'll be getting cloud-computing coverage that reveals the failures as well as the successes, discusses the problems as well as the opportunities, and separates the hype from the reality.

In short, we promise that as we help you wrap your brains around the cloud, we won't get our heads lost in the clouds.