10.12.2010 16:12Martin Kuppinger

Cloud Computing � Service Integration Smarts for CIOs
How to manage and produce Cloud Services
Cloud Computing is the hot topic in IT and it will remain so, though possibly not under the same name. And while the hype expression may change, Cloud Computing itself is going to fundamentally redefine business IT. And while not every CIO may welcome this development, he or she should prepare themselves for what is clearly going to be the next big step in this industry.

Cloud Computing stands for services made available and consumed via „clouds”, be they private or public. The term cloud itself simply indicates an IT environment in which such services are hosted.

Having said that, there are lots of things that differentiate Cloud Computing for conventional IT, for instance:

  • Greater granularity of the services themselves compared for example with traditional IT outsourcing;
  • greater use if standards in the services and their description (although we still have quite a ways to go yet);
  • consumption-based payment models;
  • the disappearance of the perimeter; services can be consumed either locally or through external service providers, thus increasing openness and transparency.

But in fact, Cloud Computing only makes sense if it is used to improve the quality of service IT provides to a company’s core business. So it is safe to say that Cloud Computing is part of the optimization process known as the “IT supply chain”.

Seen that way, it seems logical for CIOs to focus on service management, which is what Cloud Computing is mostly all about anyway, namely how to identify and employ the most suitably service provider, and to do so using a structured and well thought-out process.

IT management has three key tasks. The first is to separate the production of IT services from the service management, the second is to optimize the service management itself, and the third is to improve those parts of IT production that will continue to be produced in-house.

All three of these tasks belong to the CIO’s core competency. Other topics like securing external cloud services, weighing different payment models, or deciding whether to make or buy, are all simply aspects of this basic alignment process.  

IT needs to be divided into two parts – service management and service production. The goal of production is to create services that are as efficient as possible. Here, things like standardization and automation play a crucial role, as does building a solid technological fundament through virtualization. That’s the “how” part – but CIOs should be more concerned with making sure that IT is evolving in this direction.

Service management is about mapping the needs and demands of business to the services provided by IT, about service procurement (internal and external), about orchestrating said services, managing them and making sure they are billed correctly. Done properly, this will mean that IT in the future will be much more accountable than it is today.

The Holy Grail of all this is simple: it’s “ERP for IT”. This also means that IT’s role within the enterprise will be redefined by moving it much closer to the business side than before. This will have fundamental consequences. For instance, it will much easier to answer basic questions about IT’s contribution to the business as a whole. Risk management will be greatly simplified and made more professional since services will be better described, and they will be covered by SLAs. These, of course, need to be extended beyond straightforward functional aspects to include such things as governance and security, as well as data and privacy protection.

CIOs shouldn’t burden themselves unduly with the details of getting external cloud services up and running. For them, the real challenge lies in redesigning their IT organizations so that service management and in-house service production can be optimized. That way, they will really be shifting the paradigms in order to profit from the true promise of Cloud Computing.

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