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Shrouded costs could be death knell of traditional IT

As SaaS and IaaS offer services for pricing transparency in monthly bills, shrouded costs may be the death of traditional IT.

This article can also be found in the Premium Editorial Download: Modern Infrastructure: Hyperconvergence emerges as a data center building block:

You've probably heard that, in the near future, everything will be in the cloud. But did you also hear that IT is dead?

Sarcasm aside, there is some truth to that statement. IT is changing, in a large part because of cloud-based services. This is a predicament that IT created for itself, however.

For one, it's refused to be transparent about costs. Very few organizations actually know what their IT costs are. Expenses have been hidden in project-level budgets for years; there are subsidies for discrete initiatives that somehow fund massive, common data center infrastructure, and so on. But what does it cost to deliver a particular service in-house? Nobody knows.

We often see costs attacked at a low level, though, cutting trees instead of examining the forest as a whole. Take Google Compute Engine. It recently lowered its pricing quite a bit, and it offers a substantial discount for continuous usage. Even with these new low prices you would still pay about $28,000 per year to run all the n1-standard-1 sized virtual machines that could be hosted on a $10,000 physical server with a five year lifespan. That's $137,000 of cloud costs over those five years. But is the $127,000 difference enough to pay for power and cooling, networking, racks and staff to run it all? IT doesn't know, in most cases.

In addition to the budgetary issue is the "not invented here" problem, where IT justifies not using new technologies or products because of… well, because of fear. Fear that their jobs will change or disappear. Fear that their lack of knowledge will be exposed, as a result of continually doing deals with demons that require consultants and professional services to deliver their horrific enterprise software. Fear that if the CEO really knew how fragile this stuff was, they'd all be fired anyhow. And, as with many situations involving fear, IT staff members pretend to be strong and all-knowing, blustering that they, the high priests of IT, are not to be questioned. Mere business mortals could never understand the arcane ways of the respective technologies.

Executives are tired of bringing us tribute, though. And they're far from dumb. They know enterprise software is horrific. To them, it's a black box that eats money on one end and delivers a terrible service on the other. This is why Software as a Service (SaaS) is so appealing. SaaS is also a black box but it has clear costs and, in most cases, delivers a product that has less overhead, requires minimal training and support, and is more aligned with the business itself. Infrastructure as a Service (IaaS) is also appealing, in part because few organizations actually know their costs, and as a result it's very hard to make accurate business decisions. Outsource it all to Amazon Web Services, though, and you get a nice, neat bill that is free of the politics and much more transparent than the IT budget. You also get IT services where you can focus on the service itself, not the arcane details of which load balancer is better or what version of a database is required.

So is IT dead? No. There will always be a need for humans to operate IT systems, though the manner in which that is done is changing drastically. Deeply technical skills, such as mastering mysterious incantations to command network switches or bartering souls for the proper disk performance, aren't as necessary anymore. Instead, one must be able to script and automate, understand how cloud authentication works and grasp broader business concepts. IT conversations now are increasingly less about the technology and more about the business needs. IT staff need to stop thinking of themselves as unique, start being honest with themselves and their respective organizations, and start asking for what they need to change. Otherwise they will find themselves as obsolete as their beloved technology, in about the same amount of time.

This was last published in May 2014

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Cloud is part of IT , so I thinks its too dramatic to say Cloud killed IT. The purpose of IT to start with was to optimize situations, find best solutions, lower cost, lower time to market and Cloud is only another step towards it. Yes with the amount of transparency that's beginning to creep in with services being delivered as products over cloud and the way people are in general getting IT savvy , lot of overpriced services and people may get a much deserved reality check, however, thats again part of maturing IT. Cloud is leaning up the unwanted bulk but not killing IT.
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