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Is cloud computing disenfranchising the CIO?

Cloud computing is continuing its meteoric rise and as a partial result IT control and decision-making is moving to the line of business managers. In the middle of it: the CIO. Clare Coulson considers what these changes mean for the modern CIO…

When Neil Armstrong and Buzz Aldrin set foot on the moon 45 years ago it represented a technological leap forward for mankind. More astounding, perhaps, to those of us who wear our phones like a sort of security blanket, the computer on the Apollo 11 space shuttle ran on technology less powerful than the average modern smartphone. We have come a long way, often in leaps and bounds.

One of the most influential and transformative of these leaps, at least in the world of IT, was the arrival of virtualisation and shared tenancy on computers – the enabling seeds of modern cloud computing. With a bit of smart software, data centres the world over could immediately utilise the huge surplus of excess server capacity. Cloud computing was initially pooh-poohed by box-hugging IT department heads who preferred to play in their own DIY sandpit. It still is in many quarters, but it is becoming increasingly clear that they are swimming against the tide. Frost & Sullivan’s State of Cloud Computing 2013 reports for Australia and New Zealand indicate that local organisations are now steadily embracing cloud computing for most if not all of their IT infrastructure and software.

Frost & Sullivan reports that over 60 percent of Australian organisations currently using cloudbased solutions are planning to increase their cloud budget over the next 12 months. The converted are liking what they see and wanting to buy more. What is more, 24 percent of organisations that currently do not access storage via the cloud are likely to do so in the next 12 months. Similar data was reported for New Zealand.

In 2010, 74 percent of enterprise IT budgets was spent by CIOs. Last year that had plunged to 58 percent. – Forrester Research – Asia Pacific 2013

The report indicates that many organisations had initially used public cloud offerings for test and development activities, but are now migrating a wider range of production workloads and core business systems to the cloud, including ERP, CRM and online services.

A key driver has been a maturing in wider business understanding of cloud computing. Phil Harpur, senior research manager for A/NZ at Frost & Sullivan mentions that the increasing awareness of cloud has seen an increasing number of companies ask the question, ‘What can I do with cloud services?’, rather than ‘What do cloud services prevent me from doing?’. This is opening up a broad range of opportunities for companies to develop their business models to cope with the rapidly changing IT environment. Cloud is progressively seen as more than just a way of reducing IT costs and IT decision makers are gradually becoming more aware of the other benefits that the cloud offers such as agility and flexibility.

Cloud computing expert Craig Deveson, CEO of Cloud Inc and the first in the world to develop an exclusive partnership with Google with his company Devnet, explains that cloud by itself doesn’t save you money. “In fact if you are trying to do things exactly the same it may cost more, but if you re-architect around the cloud it could cost you significantly less or give you significantly greater return on investment for the company. Increasingly you’ll see companies re-architecting their solutions and moving to the cloud for strategic reasons. That’s where the real payback is.”

Frost & Sullivan showed that overall IT cost reduction was just one of the reasons that organisations are now considering the cloud. Reduced risk of IT disruption from external factors such as natural disasters, greater overall business agility and flexibility, enhanced IT infrastructure efficiency and faster deployment time are all driving adoption of cloud computing. SaaS adoption is also being driven by the Ultra-Fast Broadband (UFB) rollout in New Zealand (and presumably the NBN rollout in Australia although this wasn’t highlighted in the Australian report, perhaps deliberately given it’s somewhat languid progress), falling broadband prices, rising data cap limits on broadband plans and increasing demands for enterprise mobility.

A significant factor that has emerged over 2013 that is reportedly hastening decisions on cloud hosting has been the establishment of local facilities by big global players Amazon Web Services and Rackspace. Both have ramped up local cloud operations as has long time provider of cloud services, Fujitsu. IBM is reportedly establishing a cloud services infrastructure (as opposed to its large traditional hosting service) and Microsoft (Azure) has stated it will have local facilities…errr…soon.

This article was originally published in iStart Technology in Business magazine