What questions should an agency head ask about cloud services?

By Steve Hodgkinson, Ovum
Wednesday, 08 August, 2012

Approaching the cloud with an executive's eyes

Cloud computing remains a hot topic and we are now starting to see the conversation about cloud float up to the 'C' level – with articles appearing in company director and executive magazines and publications such as the Harvard Business Review (HBR). This is an interesting development because it creates the opportunity to put the hard questions about cloud … or, rather, to put questions about cloud in their correct context.

One of the problems with much of the cloud discussion is that it exists devoid of organisational context. The cloud computing model is hyped by vendor marketing and by its evangelists as a "one size fits all" solution for all agencies. Discussion is also frustratingly bottom-up – a solution seeking a problem. From the perspective of a chairman or CEO, however, "the cloud" only has any meaning if it solves an existing problem or creates new opportunities for innovation.

Cloud in the abstract: Toad of Toad Hall or Chicken Little?

We need to change the way cloud services are discussed in the boardroom. Cloud is not something that should be discussed as a point solution in isolation from a dialogue about existing ICT capabilities and the evolution of demands for ICT-enabled innovation. In the abstract, it is too easy for cloud to be loaded up with simplistic and emotional Toad of Toad Hall or Chicken Little metaphors.

Toad of Toad Hall, if you recall your Wind in the Willows storybooks, was much enamoured of the "shiny new thing". Cloud can be easily over-hyped, creating unrealistic expectations and the risk of a type I error – a false-positive enthusiasm for the cloud.

A Chicken Little perspective ("the sky is falling!"), on the other hand, can result when cloud computing is regarded as a dangerous source of unmanageable counter-party, security and data sovereignty risks. Chicken Little thinking creates the risk of a type II error – a false-negative decision to ignore both the opportunities of cloud and the perils of the ICT status quo.

Boards and CEOs should therefore ground cloud discussions in a frank assessment of the ICT status quo. Looking at cloud in the abstract as a technology industry fad or a point solution is an easy way to miss the point of one of the biggest developments in ICT in recent decades.

Chicken Little thinking creates the risk of a type II error – a false negative decision to ignore both the opportunities of cloud and the perils of the ICT status quo.

For the purpose of discussion at board or executive level, a mature enterprise-grade cloud service is simply a high–quality shared ICT service – a new way to source a set of pre-built ICT capabilities that benefit from the provider's economies of scale and investment in service innovation. A cloud service is Internet-age ICT – providing a set of services that can be purchased off a service catalogue.

Whether or not a cloud service is relevant or useful, however, depends on the strengths and weaknesses of the existing ICT arrangements more than the abstract benefits of the cloud model. As an academic discussion, it is too easy for those with a vested interest in the outcome to portray cloud services in either Toad of Toad Hall or Chicken Little terms. The fundamental building block of a strategic discussion about cloud services is a frank "warts and all" assessment of the ICT status quo.

Cashed up agencies, with strong ICT capabilities that are in tune with existing and future business needs, may see more risk than value in cloud services. On the other hand, agencies that are struggling to sustain robust ICT capabilities or are constrained by funding, ageing technology assets and skills may see cloud services as a cost-effective alternative and a useful enabler of ICT-enabled innovation.

The unfortunate reality is that many agencies fall into the latter category … and recent budget cuts suggest that ICT capabilities will be put under in increasing pressure in the coming years. Cloud services should nonetheless be on the strategy and planning radar.

Dr Steve Hodgkinson is the Research Director IT for Ovum in the Asia Pacific region.

Empower the CIO to ‘think outside the boxes’

To make sure they don't miss the point of the cloud, a chairman or CEO should ask their CIO the following questions:

  • How adequate are our current ICT arrangements to support our agency?
  • Where are our key areas of ICT weakness/risks?
  • Where could cloud services strengthen our ICT capabilities and add value to our ability to drive policy and service delivery innovation?
  • Are there examples of other comparable organisations that are already using cloud services? If so, what are their experiences?
  • Should we use cloud services? And, if so, what do we need to do in order to source and manage them well?
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