יום שלישי, 27 בינואר 2009

The 'Israeli CIO' view on Cloud computing

I recently met with 2 CIOs (one of a large retail company and the other from a large financial services company) and discussed with them the cloud concepts. I wanted to hear their view on this very "hot" subject.
Now, usually these "innovative" (which is sometimes a nicer term than "immature") concepts wouldn't stand a chance with large Israeli enterprises. But CIOs today don't have much choice; they HAVE to consider alternative consumption models for applications in order to do more with much tighter budgets.

After weeks of reading about Cloud computing, SaaS, PaaS, Daas, IaaS and getting excited about the possibilities that these models bring, the reaction of these 2 CIOs showed me that hype can only get you so far. CIOs don't really care about it, if anything, they are deterred by it. The questions they raise are very practical, and if these questions aren't fully answered there is no way they would consider cloud-based models:

Question # 1: Where's the value?
This is a relatively easy question to answer in these difficult times. Moving IT investments from Non-discretionary ("I just HAVE to keep paying annual maintenance fees to my software vendors") to discretionary ("let's start a new project that will help increase internal efficiencies") is a main purpose for CIOs today. SaaS and cloud software can help in moving some of the non-discretionary spending to discretionary. There is no reason to go into long term commitments to support 10 servers, databases, DRP and maintenance just to get a sales configuration service up and running.
Another compelling reason is that SaaS apps are providing the long-tail of enterprise applications. Need a mini-app just to manage employee travels? Employee incentives? Recruitement? Mini content sharing applications for a specific project? These are all available in SaaS. The "nicher" the process, the more likely you will find it in a SaaS model.
The other benefits are: Scalability, faster time to market, moving spending to Opex budget, and lowering the "head-aches" associated with supporting the applications in-house.
Question # 2: Who will support it? And will provide me with an SLA?
Enterprises' CIOs will not buy ANYTHING unless there is a local company that not only supports it, but can also provide an SLA for its' support. There has to be someone "responsible" on the other end, and it has to be someone local, within my country, that I can talk to. This is a crucial condition. Without it, there is not much chance anything will happen with cloud in local (non-international) organizations.
Question # 3: Is it ok "regulation-wise"?
Organizations that are very regulated (for example, banks and insurance companies) are already saying an automatic "no" in Israel to any model that means their data is kept outside of the organization. Unless it is made clear by the regulators when and how these "virtual" services can be used, CIOs will not take the risk. Another concern is more basic and has to do with using the internet to consume applications – many financial orgs. have to run 2 separate networks: an internal one, and an external – public one. This poses a huge question mark on the likelihood that these organizations will consider SaaS or any other cloud model.

Of course, there are a lot of other questions, most are somewhat psychological and will likely fade away at some time. But these are the 3 main questions and until these questions are answered don't expect Israeli CIOs to buy into these models because of the hype factor.

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