Cost is king when it comes to cloud for both customers and cloud service providers (CSP). This is why public cloud services work on a self-service credit card model that allows a customer to look at a web page, select what they want, pay for it and have it implemented in seconds or, at worst, a couple of minutes.

This is a well-proven model that has come from the web hosting market and it has been successful in driving surplus cost out of the business model for everyone. Some liken this to the supermarket model but it is better compared to a vending machine. In supermarkets today you can have meat and fish cut and prepared to order. This is not a one size fits all. Go to a vending machine, however, and there is no option to cut the chocolate bar in half or only buy two-thirds of a bottle of drink.

With G-Cloud now successfully established for Central Government it might be reasonable to assume that here, at least, people understood the benefits from a commodity solution. Not so.

Identifying the right cookie cutter

Denise McDonagh, former CTO of G-Cloud and now back at the Home Office says “I see people say I want to buy from G-Cloud but I want to change the terms and conditions. This is not the ethos of commodity buying.”

McDonagh is right and this is where IT departments and business units need to re-examine what it is they want from IT and what they want from the cloud. Look at many companies and there are a lot of common solutions across the enterprise. Email, backups, collaboration, accounting, human resources, file and print services are common to all companies.

Some of the internal processes may change from company to company but the basic of these applications and services are pretty generic. These applications are ideally suited to a low cost, commodity delivery such as cloud.

There are some services and applications that are beginning to move to cloud as they also go through a phase of standardisation. A very good example here is data analytics. There is often very little difference between the major data analytics vendors at a software level. The ability to ingest data, process it according to some rules and then export the results is pretty standard.

The vast majority of the functions and formula that are used are also standardised elements although comparing these between vendors is not simple. This is purely down to the reluctance of software vendors to allow their functions to be independently examined by professional third parties to prove that they are accurate.

It is not just the software vendors that have failed here but also professional bodies but that is something for a different piece. Suffice to say, whether you choose IBM, Teradata, Oracle, SAP, HP, Microsoft, Qlikview or any other analytics vendor, the majority of the money and time spent is in setting up the system to work with corporate data.

IT vs Business Unit and cloud

The biggest reason given by business units for going outside of the company and buying in cloud services from third parties is time. IT is seen as being slow to adapt, slow to deliver and ultimately more expensive than the solutions offered by cloud companies.

This is where IT needs to reinvent itself and not be afraid of using cloud services outside of the enterprise. The first and most significant challenge is dealing with application and data sovereignty silos inside business units.

Liam Maxwell, Chief Technology Officer, UK Government, has admitted that when they began to investigate IT across government departments they discovered that each department would buy its own solution, even when an equivalent solution already existed elsewhere in another department. Rationalising this into a single set of solutions by looking across departments was the only way that they could solve this problem.

Many IT departments would say that they are well ahead of government, that there is no such thing as departmental IT and data sovereignty. They are probably right or, maybe, it should be that they WERE probably right.

However, the willingness of business units to buy in cloud solutions because they are cheap, easy to setup, can be put on a corporate credit card and delivered immediately has broken that chain of control. Data is leaking out of corporate IT departments faster than water through a sieve. More importantly, each department is now buying its own solution. This means that enterprises need to act now to prevent themselves facing the problem that the UK Government faced when it looked into the state of IT across government departments.

Internal IT departments can solve much of this problem. They have to adopt internal self-service mechanisms that are simple and easy to use. This is nothing new but widespread take-up and delivery is lagging decades behind the technology.

Another change that IT must make is to embrace external cloud services. If departments are buying into cloud services then IT should be willing to take over the management of those contracts. If IT decides not to engage early in this process then it will find itself being forced to take over contracts when business units point out that the are now essential services that must be maintained.

This is not about making it hard for business units to adopt cloud, quite the opposite. Where there are cost savings to be made IT needs to encourage the business to adopt cloud. What this does is reduce the duplication of contracts with the same cloud provider and deliver greater savings for the enterprise.

Solving the challenge of customisation

Commoditisation may enable companies to gain access to some services quickly and cheaply but competitive advantage often means customising some of those services. This is where private enterprise departs from the commoditisation model that McDonagh wants to see across government.

The problem historically is that IT has never had the resources or the flexible processes to make customisation quick or simple. Projects become gold plated or are rushed through and fail due to poor planning and process. That is changing as Agile and other approaches become mainstream.

IT departments already use some cloud services for development and testing so making the jump to deploying on cloud is not a huge risk. What it does do is refocus spending away from internal systems and put the money back into the development of the solutions that the business units need.

For those business units who still believe they can save money by purchasing access to Salesforce, for example, and then having it customised, there are medium and long-term risks that have to be considered. Chief among those risks are the location of sensitive corporate data, the funding of maintenance and changes to the solution and the risk that the supplier may go out of business.

This is an opportunity for enterprise IT departments to again reinvent themselves. They can work with the business units to help them deal with risk. At the same time, they can insist on any Intellectual Property (IP) coming either back to the enterprise or being placed in escrow. This is exactly what UK software company BJSS does on all of its government contracts so it is perfectly reasonable that to extend that to private sector customers

Reaffirm the business and IT relationship to get the most out of Cloud

Companies need to think carefully about where cloud will take them. Everyone wants to save money but when systems and data get duplicated, costs and complexity will inevitably increase as well. Enterprise IT departments have been slow to make themselves part of the cloud plans being made by business units but they still have a vital role to play in helping drive down costs further.

When solutions need to be bespoke, the experience of the internal IT teams means that both they and the business units can get a good deal either through better management of third party developers or by deploying new systems into the cloud where appropriate.