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Are Cloud Solutions Shifting the Internal Dynamics of Your Organization?

insiderPROFILES, Volume 5, Issue 1

January 1, 2014

Few innovations have changed enterprise IT as dramatically as the cloud. Once dismissed as a buzzword, cloud computing has not only changed the standard delivery model for most applications, but it is also changing the role of the IT organization and its relationship with the business units.

To investigate these trends further, insiderPROFILES recently spoke with Gregor Petri, a Research Director with Gartner who has examined this topic and says the role of the internal IT organization is already changing. Following are excerpts from that interview.



Gartner’s Gregor Petri Describes How Streamlined Access to Cloud Services Is Changing the Role of IT

Q: How much is cloud technology changing the IT buying dynamics and decision-making overall in business organizations today?

We are seeing an increase in the trend of what is sometimes called "shadow," "rogue," or "parallel" IT, where the business organization doesn’t depend on the central IT organization to deliver the company’s technology solutions. And while there are pros and cons to that model, in the broad sense, I think the role of IT will change considerably from what it is today to something that we call "hybrid" IT.

Q: What do you mean by hybrid IT?

Hybrid IT means an IT organization plays both the role of a broker of external services and of an internal service provider. In the future, most companies will have a number of traditional in-house systems, including a private cloud running internally on which they have other applications running, and they will also be using an increasing number of public cloud services, from providers such as SuccessFactors, Amazon Web Services, and many others. Software-as-a-service (SaaS) solutions will continue to be an important part of overall IT usage for corporations.

So the hybrid IT organization will have to be involved in delivering all of those types of services. IT will act as a broker or an intermediary that adds value to both the internal IT services and the external cloud services.

Q: How will this hybrid IT organization add value for its company?

First of all, it will aggregate those services and applications and make them all available in one place. Often, that can be done through an internal app store, catalog, or marketplace. The users can see all of the different services they have access to. Preferably, the users will all use a single sign-on, and the cost of these solutions will be charged to the department in a consistent and uniform fashion.

The second responsibility for IT in this new role involves integration. Very quickly after users adopt cloud solutions without input from IT, they get fed up with entering the same data over and over again in several unconnected systems. They want some integration between these various cloud and on-premise systems. In some cases today, IT builds those integrations, and many times, IT will use other cloud services to realize those integrations or go to a third-party partner that already offers the integrated combination.

Another important role internal IT organizations play in becoming cloud service brokers is governing the solutions. And to manage governance, they first have to know that the solution is actually being used. In the role of internal cloud service broker, they aggregate the services and take care of the billing and the access, which gives them a better idea of what’s being used, so they can accommodate proper governance.

Q: So even with cloud solutions available to the business, the IT organization isn’t going away — but its role is changing. Can you provide more examples?

The cloud is creating new possibilities every day, reaching out to hundreds of millions of people using big data and giving users mobile access anywhere in the world, any moment of the day. These are things that we couldn’t do before or were excruciatingly hard. That is now all becoming possible thanks to the cloud.

— Gregor Petri

Yes. In some ways, you could compare the IT department to the role human resources (HR) departments have today. The HR department in most organizations doesn’t actually manage the humans in the department. It’s the line manager or the business operations people who manage the employees day-to-day. HR helps with the onboarding of people, the background checks, and the selection process. They also make sure the cost doesn’t get out of hand and that the organization has an exit or off-boarding plan if something goes wrong.

The central HR organization plays an advisory role for the line-of-business managers for HR issues — helping decide on best practices and when to consult with HR, and perhaps most importantly, providing compliance and skills training on how to work with the available (human) resources.

To some extent, it will be similar for IT departments and cloud resources. When business departments increasingly use cloud solutions directly, they will involve the IT department as advisors in parts of the process: selection, onboarding, troubleshooting, planning exit strategies, etc. In most organizations, IT needs to get a mandate to say it now has this role of a broker and should be consulted when the business units start to use these external cloud services.

Q: Do you think the typical IT organization is structured well for this kind of change, or do IT leaders need to facilitate modifications for this new role?

Well there are three core functional groups that make up a hybrid IT organization. The first delivers the services on the existing applications using traditional infrastructure. Then there’s the group that runs the private cloud — these people are a little bit more technical and are making cloud services available to users who want to use infrastructure capacity. They are also looking at what applications their organization can possibly run on that private cloud. The third group works with the external cloud services, and the capabilities required in that group are skills like vendor, contract, and sourcing management.

On top of that is the internal brokerage group, which liaises with the end users to gather requirements and determine what services would make sense. So the people in this group act as an intermediary that adds value to the various consumed services.

Q: Do many companies have that structure in place now, or is that more of a model they’re aspiring to?

It is definitely more something they are aspiring to. A lot of IT organizations want to become a broker for cloud services because they realize that as the whole business becomes increasingly digital — using ever more social, mobile, and big data applications — they cannot run all these IT services internally. These new applications are often much more complex than traditional services. Not too long ago, if CIOs knew COBOL and SQL, they could fix 80% of the systems themselves. But that time has gone. We now see systems do complex activities like pattern and image recognition or data-driven predictions. Solutions have become a lot more complicated, and that means it becomes harder for the existing IT organization to support all these solutions; they have to make choices and operate at a higher level.

But there will be some digital application areas where IT organizations will see opportunities to differentiate themselves, and that is where they will want to go deeper. However, it is important for these IT organizations to pick a couple of areas to focus on and not spread themselves thinly over thousands of applications, many of which are very similar to those other organizations are using and can be sourced as SaaS or even as business-process-as-a-service (BPaaS) solutions.

Q: What is the future of the relationship between the IT organization and the line-of-business people as a result of all these changes?

I think digital startups and other companies that deliver their value digitally — such as Netflix, Facebook, or Google — are good examples of what to expect. There you see that business departments are making daily decisions on how to leverage technology to better service their customers. For the primary process systems in those organizations, there’s not a separate IT department that comes in to do a one-time project or is only called when there is a problem. IT people are embedded in the various business departments working toward the same agenda as others in the department. They often have the same boss, and they work very closely together. And that, I think, we will see more of in the future — IT people moving into the line-of-business departments and actually working within the departments. As IT people are the ones with the digital skills, they should be part of the team doing digital business.

And these embedded IT people work closely with the centralized broker function described earlier, because they also will source enabling components such as infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS) applications or at even higher levels where possible.

Q: It’s clear that "cloud" is no longer just a buzzword or trend. But how far will it go? Will all applications be accessible via the cloud at some point down the road, or will there always be a need for on-premise solutions?

It will continue to be an evolution — the cloud is cre­ating new possibilities every day, reaching out to hundreds of millions of people using big data and giving users mobile access anywhere in the world, any moment of the day. These are things that we couldn’t do before or were excru­ciatingly hard. That is now all becoming possible thanks to the cloud.

One common mistake a lot of IT organizations are making is looking at what they do today in IT and saying, "Let’s move that to the cloud." Basically, if you do that, you get the same functionality with the hope to shave some costs off. But it’s not necessarily cheaper to run an application that wasn’t designed for it in the cloud.

It makes a lot more sense to leverage the cloud for new capabilities. It’s pretty safe to say that the large majority of new applications and services will be designed specifically for the cloud. And a large part of the value of these new services will come from included and embedded content, not from more efficient computing or better algorithms. The great benefit of some of the cloud solutions already available today (such as LinkedIn or Google Maps) is they offer volumes of content far beyond what individual companies could ever imagine to collect — let alone keep up to date — themselves. Shared content will be an important driver for further cloud service adoption, maybe even more so than shared infrastructure or shared software code.

So I don’t think everything we have today will go to the cloud. But I think the large majority of what we will do in the future will be done in the cloud. And that will be a lot more than what we do today. It will be more mobile, analytical, and collaborative. Making way for what we in Gartner call a nexus of forces, consisting of mobile, information, social, and cloud.

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