The Great Cloud Blockage: 80/20

Tuesday, August 16, 2011

Ben Kepes

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A few weeks ago I took part in a really interesting roundtable discussion on Focus.

The roundtable was entitled “Enterprise Cloud Adoption – Defining (and Easing) the Barriers” and it bought together some of my favorite folks from around the Cloud space.

On the roundtable we had:

Sam Johnstone - resident “say it how it is” expert and well respected Cloud commentator

Christian Reilly- former manager of global systems at Bechtel

Adiran Cockroft - Cloud architect at Netflix

John Taschek - VP Strategy from salesforce.com

Yours truly

The roundtable was wide ranging but one part that really struck home for me was a point raised by Reilly around IT department budgets. Reilly reflected on something that really impacts on the economic decision making process around Cloud Computing.

Back in our Cloudonomics paper we referred to a Gartner report that estimated that 80% of IT expenditure went into simply “keeping he lights on”. The approach we took in the paper was one of questioning this 80% expenditure and showing how significant the savings that could be made by abstracting this spend away from the organization.

In our roundtable Reilly rightly pointed out that the remaining 20% of IT budget has to cover the totality of greenfield opportunities that an organization might have, this is a significant barrier as it greatly limits the number and scope of new projects that can be undertaken by an organization.

If only a small proportion of this greenfields budget can be used for innovation, and the organization has a large number of legacy line-of business applications delivered on-premise – there is little desire to spend the already limited resource on extensive re-architecting operations.

It really is a significant Catch 22 situation – IT cannot free up sufficient dollars to move legacy applications to the Cloud. And because they therefore have to focus a significant proportion of their budget on “keeping the lights on”, the opportunities for investment in these activities are eroded.

That’s the reason that distinctly line-of-business applications like salesforce.com, and specific standalone use cases like development and testing have more readily been moved to the cloud.

But I contend that until we free up more funds to divert to innovation spend – we’ll impede the progress of cloud adoption, but more importantly reduce organizations ability to compete and prosper.

As always, I’m keen to hear your thoughts, oh and we’d love you to join in some of our webinars or read the whitepapers – the CloudU homepage is here – and you can register to have updates sent to your inbox (in a non-spammy way of course!) there.

Cross-posted from Diversity

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