In recent years, explosive Internet growth has created extraordinary opportunities — as well as new challenges — for IT leaders. But an even greater transformation is upon us in the form of the “Internet of Everything” (IoE), which Cisco defines as the networked connection of people, process, data, and things.
Cisco estimates that there were “only” about 200 million things connected to the Internet in the year 2000. In the wake of unprecedented innovation on a host of fronts — including video, mobility, social media, and cloud — this number has risen to approximately 10 billion today, and a significant upsurge to 50 billion connected devices is expected by 2020. By connecting the unconnected, IoE will give rise to new sources of value for organizations in the coming years (http://www.internetofeverything.com). Cloud, as a democratizing force for IT-led value, will be one of its principal enablers.
While the growth trajectory of cloud has been extensively charted, there is comparatively little understanding of how cloud will impact IT organizations themselves, along with their remit, structure, and strategies. In a wide-ranging study, Cisco® Consulting Services, in partnership with Intel®, sought to pinpoint just how cloud is driving change in IT. The “Impact of Cloud on IT Consumption Models” study explored the dramatic changes affecting IT at all key consumption lifecycle stages — how businesses plan for, procure, deploy, operate, and govern IT. Once leaders have a clearer picture of where and how cloud will change IT consumption patterns, they will optimize the strategies to confront this change and deliver the services their businesses need to succeed.
One of the clearest expressions of this cloud-driven change is the emergence of lines of business (LOBs) — human resources, sales, R&D, and other areas that are end users of IT — both as direct consumers of cloud-based services, and as ever more prominent influencers of companies’ IT agendas.
Cloud is enabling astonishing One of the clearest expressions of this cloud- driven change is the emergence of lines of business (LOBs) — human resources, sales, R&D, and other areas that are end users of IT — both as direct consumers of cloud-based services, and as ever more prominent influencers of companies’ IT agendas. Cloud is enabling astonishing technology-led innovations, many of which are occurring beyond the purview of the “IT organization” as traditionally conceived.
The so-called “bring-your-own- device” (BYOD) phenomenon (http://www.cisco.com/web/about/ac79/re/horizons.html) is but one example of this shift toward a new IT organizational dynamic. As cloud reduces barriers to adoption and places downward pressure on IT capital costs — while unlocking sources of potential innovation for LOBs — the relationship between the business and IT changes dramatically.
In a “world of many clouds,” companies have many options regarding how they choose to consume cloud solutions across those IT life-cycle stages. Whether it is a full stack of private cloud capabilities or a single enterprise application delivered via a public cloud provider as a service, there is tremendous dynamism in the vendor landscape of cloud offerings and unprecedented choice for companies as consumers of IT. In this light, the overall goal of the study was to ascertain the bigger cloud picture — what is happening now, how leaders believe IT will be consumed (bought, managed, supported) in the future, and what this will mean for their organizations.
So, what do IT leaders need to know about the role of LOBs in the IT consumption lifecycle of the future? How do IT decision makers perceive this sea change in their organizations? What will IT organizations fundamentally look like in three years? And what must IT leaders do to ensure their continued relevance to the business? Answering these questions is critical if IT is to continue to discharge an expanded role in enabling innovation and business agility.
Here are some of the key findings:
- In the Eyes of IT Decision Makers, Cloud Is Good. Despite its challenges and disruptions, cloud is viewed, on balance, as a positive development for IT organizations. (Case in point: security may be an inhibitor to cloud, but it is also viewed as a solution to security fears.) Globally, more than four out of five respondents believe that cloud will positively impact their organizations.
- Cloud Is Here…and Growing. Cloud — whether public, private, or hybrid — is already here. Today, it occupies a significant share of IT spending, 23 percent, and our respondents see it rising to27 percent by 2016. Private cloud is the most prevalent cloud deployment method at 45 percent.
- Emerging Markets. Despite the overall positive attitude toward cloud, important distinctions arise between emerging and developed markets. IT leaders in emerging nations are more upbeat about cloud, focusing on its transformational and innovative potential; in developed markets it is seen as a tool for cost-cutting.
- High Marks for Cloud Providers. In a competitive marketplace, cloud providers will need to offer end-to-end solutions while orchestrating an ecosystem of partners. Accordingly, high ratings for cloud providers in our survey come with high demands: for security capabilities, custom solutions, and guarantees on service levels.
- IT Wants To Feel Safe in the Cloud. No matter which industry or global region was surveyed,
One Size Does Not Fit All. In a World of Many Clouds — public, private, and hybrid — companies will need to formulate an approach that enables them to meet the overarching goals for their organization. IT leaders should consider how best to partner with key stakeholders, such as LOBs and third-party providers, with an approach that is tailored for their unique needs.
IT Seen as Front and Center
Despite the rise of LOB influence, our IT respondents — especially those in emerging markets — believe that IT will maintain a centralized and well-funded role, managing cloud solutions with consistent policy and security solutions. (Respondents in Asia Pacific and Latin America are nearly twice as likely to project an increase in the size of their IT organization than their counterparts in Europe and North America.) But LOBs Are Gaining Influence. The influence of LOBs will extend across all IT lifecycle stages and create unprecedented complexity for IT organizations as they grapple with security and technical support. As IT transforms to an “as-a- service” model, the interlocks and relationships between IT and LOBs will need to change.
Yet as LOBs seek out cloud offerings and business apps to meet their unique needs, IT will become a critical intermediary and orchestrator within the business, overseeing service, procurement, and delivery, while also providing technical support and security.
The IT-LOB Partnership. Whether centralization and greater resourcing for IT is realistic remains to be seen. Regardless, IT will need to partner with LOBs in complex new ways. In the view of the IT leaders surveyed, IT will evolve to be a broker of services to LOBs, acting as an intermediary and orchestrator of internal and external cloud solutions within the business, while also providing technical support and security.
A Wake-up Call for IT
Given the rising influence of LOBs, IT must step up to new challenges: moving rapidly, fostering innovation, enabling new end-user experiences, and positively impacting business outcomes in a measurable way.
The Current State of Cloud
The Cisco/Intel study indicated clearly that cloud is here, and it is growing fast. Across the nine countries involved in our survey, an average of 23 percent of IT spending is already devoted to cloud. Our survey respondents see cloud spending rising to 27 percent in three years, implying a growth rate of more than 17 percent in the overall share of IT that will be driven by cloud over the next few years.
A key difference between emerging and developed markets becomes apparent when we explore some of the core drivers for cloud. In developed economies, such as the United States, the United Kingdom, Germany, and Canada, the number-one business driver for cloud is lowering costs. While cloud is seen as a mechanism for cost takeout, it also affords the ability to “pay as you grow” and achieve more predictable cost controls. In emerging nations — Brazil, India, China, for example — the number-one driver is increased business agility and productivity.
This is consistent with other recent Cisco studies, including “The Financial Impact of BYOD”
(http://www.cisco.com/web/about/ac79/docs/re/byod/BYOD-Economics_ Econ_Analysis.pdf) and the “IoE
Value Index” (http://internetofeverything.cisco. com/learn/2013-ioe-value-index-whitepaper), both of which have uncovered a high level of interest in the potential for innovative IT use among respondents from emerging markets. This may also reflect the tendency of emerging markets to “leapfrog” to new technologies, skipping, for example, the legacy landline architectures that still predominate in some developed nations.
As for key cloud inhibitors, security concerns loom large as the biggest impediment to adoption. With so many business processes migrating to external clouds — beyond the organization’s firewall — this is perhaps no surprise. And this inhibitor transcends geographical and industry divides.
Respondents cite a low-level of satisfaction with their existing cloud providers. In general, and spanning geography and industry, only slightly more than half were “very satisfied” and another 35 percent were only “somewhat satisfied” representing a total of less than 60% positive rating. A shockingly low percentage when you examine the Market Hype and Public Impression which the Cloud Industry is presenting to the public.
These statistics show that there is a LONG WAY for Cloud technology (at least 5 to 10 years by most industry expert estimates) before Cloud technology is ready for prime-time Enterprise adoption. The fact is that currently the Public Cloud Adoption is primarily made up of Small Business
Given such high marks, cloud providers are well positioned today, although they must be prepared to operate in an increasingly demanding marketplace.