Cloud and Consumerization... the Power of Choice In Sourcing

Cloud and Consumerization... the Power of Choice In Sourcing

One of the reasons I enjoy my role at Avanade is because I get to have discussions with major customers about how disruptive technology shifts (such as cloud) will be to their business and IT strategies. The impact becomes even larger when coupled with other major trends such as Consumerization of IT, (which is what this post is about).

First, there is often a lot of confusion about the full scope and impact of Consumerization of IT, and often heated debate about semantic differences. Nevertheless, anyone advising enterprise IT will miss some crucial implications if it is reduced to “gameification and shiny devices” as one person said to me. This is absolutely a trend which must sit at the top table in IT decision-making.

I have mentioned before that there is increasingly large amounts of IT spend which is no longer under the direct control of the CIO function and that this is a result of the Consumerization of IT.

Regardless of the full and precise definition and impact of Consumerization of IT, I think it holds two major aspects.

Consumerization of IT is:

  • The injection of end-user expectations on instant gratification and agility together with Device-and-mobility-led blurring of work-life activitie... AND
  • the introduction of market-forces-led behaviours into individual and business unit decision-making around consumption of IT services. A.K.A. “The Power of Choice.

This has never become clearer than today when faced with the evidence of this in action as I will explain below.

In an efficient supply chain in business, procurement money for raw materials and services normally flows to the supplier of lowest cost for identical quality. In IT, this would normally be from outside specialist providers (e.g. if you’re a bank then your competitive advantage is being the best at banking, not at email hosting). However, when this does not happen it is usually due to transaction costs, such as search costs, bargaining costs, and policing costs, in effect reflecting an imperfect market with barriers to entry. This will then drive towards internal supply.

Fast forward to 2012/2013 and we have globally accessible commodity cloud services delivering high quality SLA’s at a fantastic price due to the following:

  • Search costs are reduced because it becomes much more like shopping among a known list of major players, information is fully available about the specifics of the service
  • Bargaining costs are reduced as it is a purchase of a prescriptive service
  • Policing costs are reduced due to industry standards such as SAS-70, ISO, etc. coupled with tightly defined SLAs, as well as a new standard set in terms of transparency of service outages and steps to resolution

In effect, the market becomes more efficient, barriers to competition and consumerization are eliminated, and we see the increasing consumption of IT services direct by the business from cloud suppliers such as SAAS/PAAS/IAAS, etc.

What does this mean for the role of traditional IT? There are two paths to follow.
Resist the Consumerization of IT and attempt to place barriers to protect the traditional role (FUD). While this may be short-term effective, in the end this will cause a deprecation of the perceived alignment of IT to business imperatives.
Embrace and welcome the consumption of the commoditised core capabilities from the cloud such as technical platform, and use the freed up focus to move much closer towards the business rather than an “internal vendor”. IT will spend more time on overall integration, end-to-end service delivery, and business innovation. Enterprise IT will move much closer to a strategic advisor/enabler to the business.

To conclude: The maturity of the cloud has brought huge benefits and low cost of entry to business needs for IT Services. Enterprise IT should not resist this consumerization trend, but rather welcome it and use the freed-up scarce resources towards the objectives that will deliver the most benefits in terms of strategic business outcomes.

Gavin Williams - Vice President EALA for Cloud Computing Gavin has 20 years of experience in Enterprise Customers delivering innovative IT solutions for business benefit. Gavin works with different customers throughout EALA to understand their business needs and helps them set technology strategy and direction. Particular focus on senior level engagement with customers who wish to re-gear their IT Organization and Services within the context of service provision from Cloud platforms.