MT: We hear a great deal about cloud computing at the moment, about how more and more of the technology we use in business will be hosted by third parties and delivered on a 'pay-as-you-go' basis. What are the factors behind the popularity of cloud computing?
Andrew Greenway: Why has cloud suddenly taken on such momentum, given that the technologies that underpin it - the internet, virtualisation - have been around for quite a long time now? I think there are three factors. The first is the huge investments being poured in by new players to the corporate IT industry. Amazon, Google and Microsoft, in particular, are investing billions of dollars in hardware and software at a rate that we've not seen before. These firms have realised that they can resell some of that capacity back to the corporate markets and make an additional return on their investment.
The second thing is that there are now products and services being offered on cloud platforms that really do deliver good functionality, good enough not only for small and medium-sized companies but also larger organisations as well.
And the third thing is that we've now got a cadre of business people who have recently left university and who have grown up with the internet. They expect to have all the information they want at their fingertips, when they want it and on a range of devices. When they enter the corporate world they find the IT infrastructure looks very dated compared with what they have in their own lives. That's going to put a lot of pressure on IT directors to move into the cloud.
MT: What about the business benefits, what are those likely to be?
AG: Clearly cost is one - trying to get more for less is the name of the game in most industries nowadays, and the cloud can offer considerable cost savings. A typical in-house corporate IT operation might run its servers at only around 10% utilisation. If they've done a really good job of virtualisation and automation then they might push that up to 30%-35%. But you might be able to get that up to 80%-90% by, for example, taking the peaks of demand away from your own servers and running them in the cloud.
Then you really can start to make some considerable savings, although for most organisations this is not going to happen overnight. They have legacy investments and they will need to figure out how and what they can move into the cloud.
One good analogy is the power industry. In the old days, if you had a factory, you used the river or a steam engine to make your own power. Then came the national grid and firms didn't need to do that any longer. But some facilities - hospitals, for example - still have their own generators in case things go wrong. There will be a case for maintaining some in-house IT capacity.
MT: Well, saving money is certainly a good starting point these days. Are there other advantages to businesses being in the cloud?
AG: Companies are using the cloud in multiple ways to achieve high performance. For example, the cloud changes how organisations are able to communicate with their stakeholders. I mentioned the generation which has grown up with the internet: well, these people are consumers as well as employees, firms are going to need to develop relationships with them based not just around the telephone or face-to-face meetings, but around lots of different types of media. You're going to need a very agile IT set-up so that you can present yourself to customers on whatever device and in whatever situation, in real time, and keep it all up to date. It's very difficult to achieve via traditional IT architecture, but the cloud provides a really solid platform for doing just that.
There is a whole raft of new applications which are going to come onto the market soon. We recently ran a competition with our subsidiary Avanade for new cloud application ideas. The winner was a small software company, which provides scheduling software for the elderly care market. It wants to use an iPhone type-app so that carers can log online not only their arrival and departure at each client's home, but also much more detailed information - this person has run out of his meds, for example. They will also be able to record video messages, so friends and relatives can log on to see how things are going. That should help the business build much stronger relationships with stakeholders.
MT: What sort of questions should CXOs be asking their IT people about the cloud?
AG: You need to work out a strategy, to say: 'There's this trend coming, in fact, it's already here. What does it mean for us and where should we prioritise our efforts?' The biggest challenge for some organisations will be making sure the strategy isn't born just from an IT viewpoint, that it's the views of IT and the business combined. You need people who appreciate what the technology can do but who also understand the needs of the business, and that relationship between the business and IT isn't always there.
MT: What about security? There's a lot of management anxiety over the cloud, that vital corporate IP is going to end up in the hands of a third party, hosted no one knows exactly where.
AG: There are some very valid security concerns and I would urge any company going into the cloud to have its eyes wide open. Of course you want to make sure that you are sticking to the regulations, but you also need to think about how comfortable you feel about any prospective partners. If you moved to another provider, would you be sure that all your data would be destroyed, for example?
MT: So will the cloud mean 'adapt or die' for IT departments?
AG: There will be a change in the skillset businesses require from IT. They will need more business-savvy IT people, people who can see what's coming in the technology and say: 'Actually we could steal a march on our competitors by doing such-and-such, and we need to do it now.' There won't be many two-year, multibillion-dollar IT projects in the cloud. It should spark more creativity in business, it's an exciting time for IT. We're only just scratching the surface.
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