Over the last few years, IT and business executives have witnessed a profound shift in enterprise computing. While organizations continue to rely on internal data centers to manage an array of tasks, clouds have drifted into the mainstream of IT and business.
“Clouds are becoming the foundation for a new IT platform,” says Mike Pearl, U.S. cloud computing leader for PwC consulting. “Organizations are combining IT assets in order to create far greater value. In many cases, they’re able to react to market dynamics faster and more effectively.”
Of course, combining existing IT infrastructure—usually legacy systems—with cloud offerings, including infrastructure as a service (IaaS) and software as a-Service (SaaS), is no simple task. As organizations plug in a growing assortment of cloud services, a number of practical and technical challenges emerge. Among them: how best to break down silos and integrate processes? How to manage data across systems and software? How to address shadow IT? And how to establish adequate governance and security measures?
There are no simple answers. However, organizations that successfully integrate clouds and existing IT infrastructure frequently achieve a level of agility, flexibility and transformation that would have been unimaginable only a few years ago, notes Massimo Pezzini, vice president and research fellow for Gartner. “Clouds should be used to deliver services and manage processes that would be impossible or unaffordable through traditional approaches. They should be used to transform the business … not just to make it more efficient.”
As organizations adopt clouds and integrate them into the fabric of the business, profound changes are taking place. “In the past, IT delivered services based on the needs of the business and the strategy it was attempting to execute,” says Daniel Benton, managing director of the IT Strategy Practice at Accenture. “Today, business leaders aren’t necessarily looking to the CIO and IT department to define and install information technology. They’re making their own decisions and turning to cloud providers to deliver the capabilities they desire.”
It’s no small shift. In many cases, it’s possible for an executive in marketing, human resources, finance or legal to switch on a service in a matter of minutes—typically with no more than a credit card. Within this new order of business, “Agility is often defined by the ability of IT to stay out of the way so that a business unit or department can react to extremely volatile business conditions in a more immediate way,” Benton says.
However, the incremental gains that result from discreet cloud services don’t necessarily measure up to what a well-integrated environment can deliver. “Innovation isn’t about having the most bleeding-edge piece technology,” he adds. “It’s about IT creating a level of integration that generates maximum value.”
Developing a cohesive strategy is paramount. “Organizations must recognize that a hybrid portfolio of cloud-based and on-premises applications will be the norm,” Gartner’s Pezzini explains. “They should set up agile governance processes, methods and integration platforms to address the challenge.” Gartner refers to this as “cloud-services integration,” or CSI.
Effective integration, PwC’s Pearl says, means building links and connections between systems. A well-designed infrastructure also helps an enterprise avoid cloud sprawl, while eliminating redundancies and workflow inefficiencies.
Powering Up Clouds
At EnergyPlus, a Philadelphia, Pa.-based Fortune 250 firm that sells electricity and natural gas to more than 350,000 customers scattered across the Northeast United States, cloud-based infrastructure plays an increasingly prominent role in business operations.
Tying cloud services into the existing IT platform is vital, notes CIO Hugh Scott. Because the company relies on the Web to serve existing customers and sign up new ones (nearly 90 percent of new customers sign up online), “It’s essential that the Website and our contact center application are available 24 hours a day, 7 days a week,” he says. “If the site is down, it directly impacts our growth.”
In the past, the six-year-old company relied on its own Web servers and internal hardware to manage key infrastructure and applications. However, it soon found itself shackled by a lack of scalability. In some instances, site demand can spike by a factor of 5x to 10x.
“It became apparent that without virtualization and a cloud infrastructure, it was impossible to scale appropriately,” Scott says. “We could not provide the level of performance and availability necessary.”
As a result, the IT department began exploring ways to move its entire production environment into the cloud. Other tasks followed. Today, EnergyPlus, which uses a virtual private cloud that’s managed by SunGard Availability Services, can dial up and down capacity on demand.
The company also placed software development tools in the cloud and adopted cloud-based email. Along the way, a 40-person IT staff has worked closely with business executives to develop a strategy; seamlessly tie together systems, data and workflow; and build a road map for future migrations.
At this point, Scott says, “We’re not looking to justify what we put in the cloud. We’re attempting to justify what we’re not putting in the cloud. … We are a more strategic IT department and a better company as a result of cloud computing.”
A Clear View of IT
Integrating clouds into an IT infrastructure requires more than physically connecting systems, PwC’s Pearl says. “It’s important to develop a governance model that allows for a great deal of flexibility in the business, while maintaining a level of control and security for IT.” Ultimately, he adds, an organization must create an environment “that drives speed to market, introduces the right capabilities and avoids fragmentation of business processes.”
Along the way, there’s a need to address and manage shadow IT: the purchase of cloud services on an ad hoc basis from outside the domain of the IT organization. Otherwise, as Gartner’s Pezzini points out, organizations can wind up with shadow integration and resulting gaps in processes and workflows.
Stitching together clouds and existing IT infrastructure is at the center of a strategy for Critical Mention. The New York City-based company aggregates and distributes real-time video across the globe. It operates about 200 points of presence across four continents and digitizes about 40 hours of live television every 60 seconds.
The company has about 1,500 clients, ranging from large companies, such as McDonald’s and Mercedes Benz, to government agencies, public relations firms and nonprofits. Clients create filters and they are alerted in real-time when a video segment matches their criteria.
“We are a technology-centric company that places huge demands on systems,” says founder and CEO Sean Morgan. The company currently holds approximately 1 petabyte of data.
Critical Mention has plugged in a number of cloud services and capabilities into a private cloud. These include disaster recovery, quality assurance, development and demonstration environments, business intelligence software and post-processing tasks.
During Hurricane Sandy, the firm’s disaster recovery strategy, which revolved around data redundancy on multiple servers, was knocked offline for four days, and the business took a significant financial hit, Morgan says. Today, a cloud infrastructure hosted by Rackspace protects the data and also offers clients access to video segments seconds after they appear on news outlets such as Bloomberg, CNN and ABC.
Morgan says that the key to achieving success was mapping the flow of data and integrating servers and legacy systems with the cloud-based services. Engineers and IT staff then worked closely with cloud infrastructure provider Rackspace to integrate various hardware and software systems.
“At the end of the day, it’s about providing the best service possible to our customers, including greater stability and four-nines uptime,” Morgan says. “The cloud plays a crucial role in delivering a platform that’s necessary in the digital age.”
The way Gartner’s Pezzini sees it, IT departments must transition into serving as a cloud service broker and working with outside providers as well as internal constituents to deliver services in the most efficient way possible. This requires new technical skills along with an ability to communicate and collaborate in a way that wasn’t necessary only a few years ago. It also requires new approaches.
For instance, Gartner predicts that by 2016, at least 35 percent of large and midsize organizations will use integration platform as a service (iPaaS). “In the new world of cloud, mobile, social and big data information, the CIO’s role will increasingly revolve around being the ‘Chief Integration Officer’ for the organization,” Pezzini explains.
Accenture’s Benton points out that an enormous convergence is currently taking place, and the cloud now intersects with mobility strategies, social media, big data and more. While digital strategies vary across companies, the primary focus must be on how to deliver digital technology in the most efficient manner possible.
“It’s a bit like 1999,” he states. “Everyone knew they had to deliver an e-strategy, but not everyone understood how to integrate everything and build a viable business model. Today, organizations must deliver a digital agenda with an agile infrastructure.”
PwC’s Pearl adds that the ongoing march to cloud services is an opportunity to transform an organization and IT. “Whether clouds play a role at the application layer, the infrastructure layer or in managing data, the focus must be on how to bring together assets in more efficient ways and create greater value,” he concludes.
“Clouds force IT organizations to fundamentally change their approach from serving as a back-office custodian of technology assets to a strategic services integrator and business leader.”