Cloud computing is first and foremost an economic model. Many IT innovations, such as virtualization, have originated from the need to improve the economics of IT; cost increases of more hardware, complexity and administrative requirements eclipsed cost improvements gained from server hardware commoditization. Virtualization had the promise to bring this under control, but the improvements have been modest. The reduced friction to deploy has resulted in an explosion of server instances along with the costs that accompany them.
And while virtualization offered to solve the economic challenges of enterprise IT, cloud computing affects the economies of building Web-scale applications. There is little doubt that companies like Google and Amazon wouldn't have been able to achieve their current reach and margin models if they had continued to leverage traditional large-scale compute techniques. Infrastructure costs alone would have ruined their prospects.
Even though cloud finds its technological roots in virtualization, its economic model more closely resembles the PC market, in which individuals adopted and then took to the enterprise. This was a new way for technology to enter IT's realm -- resistance was high but relatively futile.
Some parts of the cloud have been easier for enterprises to embrace. Many Software as a Service (SaaS) offerings like Salesforce.com and Microsoft Office 365 offer subscription-based economic models that neatly displace existing licensing and hosting models. Where the requirements fit within the mainstream use cases, companies were able to liberate themselves from the cost and complexity of managing on-premises implementations.
Rethinking the vendor/IT relationship with cloud
In the enterprise market, there are two types of technology vendors: those that provide business software and those that provide infrastructure. From a sales and marketing perspective, it's obvious that business software conversations should be had with business executives and infrastructure conversations should be had with technology executives concentrated in IT.
But there is one problem with this scenario: Vendors that produce business software tend to market and sell it as a technology rather than as a business solution. Non-technical executives do not want to have technology conversations and delegate these conversations to IT teams. In an ideal world, IT would be able to send that back over the wall, but we do not live in an ideal world.
Then there are the cloud service providers -- most of whom have their best relationships with IT teams. The problem is that IT is not in the business of reinventing economic models. It is in the business of keeping infrastructure running at peak efficiency.
This leaves the cloud vendors who naturally gravitate to IT to figure out how to communicate the value of the cloud in terms that make sense to their true audience. And the language they speak is infrastructure, which neither represents the business value of cloud computing nor directly affects the business of the company.
The Infrastructure as a Service (IaaS) cloud model offers the most similarities in IT skills, with the additional promise of cost reduction over current hosting models. Neither of these points taps the potential value of cloud computing; however, the market remains more interested in an IaaS model that's essentially self-service hosting of virtual machines.
Why does IaaS remain in the spotlight?
So, why are IT conversations focused on infrastructure in the first place? It's not because the word is contained in the name of the service layer. The service layer is getting the attention because of a focus on infrastructure -- not the other way around.
Google's definition of infrastructure is "the basic physical and organizational structures and facilities (e.g., buildings, roads and power supplies) needed for the operation of a society or enterprise." It's interesting that the word "enterprise" is now explicitly included.
So infrastructure is required for the enterprise to operate, but it only provides indirect economic value. While software has a direct economic impact -- it offers value by helping to make the business better at what it does -- the presence of infrastructure alone provides no value. Its presence represents cost and its absence yields an inability for the organization to produce value. Software requires infrastructure to operate and infrastructure requires IT teams.
The cloud computing economic model is entirely focused on how software is consumed rather than how infrastructure is consumed. The model applies where it can either make an enterprise better at what it does or do something that previously it could not. Simply consuming infrastructure services from the cloud the way workloads used to be consumed provides no significant improvement in operating costs or business agility.
Enterprises need to look to Web-scale companies to understand how those methods can be applied to enterprise-scale solutions. The existing focus on infrastructure only encourages the application of legacy methods, which results in squandering the benefits cloud computing offers a business.
About the author:
Mark Eisenberg has been doing mobile app development since 2005. He joined the nascent Windows Azure sales team at Microsoft despite being an early cloud skeptic. Now, after embracing the cloud and its technological potential, he combines cloud and mobile expertise with his technological background to help clients realize real value from their technology investments. Mark is also a seasoned business development professional with more than 20 years of experience. He started his career in software development and has since maintained his technology edge, most recently adding cross-platform mobile development skills. His sales career began when he joined Intel's channel and has included positions at other communications-focused firms prior to Microsoft.
This was first published in November 2013