“Cloud Is not A sIlVer Bullet”
Evolution or revolution? Or maybe both? In an interview with SAP Spectrum, Mark White, CTO Deloitte Consulting, and his deputy William Briggs discuss why cloud computing is the next giant
step in IT – and how it will revolutionize business models.
Interview: Johannes Gillar
Experts say that the cloud represents a new chapter in how enterprises can better use IT. Why do they believe that?
— Mark White —
There are three broad answers to the question what companies want to achieve by using the cloud. Number one: they want economic advantage. In fact, you might say they have a prefer-ence for operating expense over capi-tal expense or they have a preference against a large upfront payment. So cloud, particularly public cloud, offers the opportunity for preferring operat-ing over capital expense and for havoperat-ing a monthly subscription over a large up-front capital cost.
The second answer is speed to solu-tion or scale of solusolu-tion. The head of HR
— Mark White —
chief Technology Officer for Deloitte consulting and a lead iT Principal on the Department of Homeland Security account team.
His professional focus is architecting, developing, and delivering critical business information solutions for clients. Prior to taking the CTO
role, White was the national leader for Deloitte’s Architecture & Infrastructure services in the U.S. He earned a B.S. in Computer Science
with a concen tration in systems architecture, graduating magna cum laude from the University of Georgia. He also earned a Masters of Applied
Mathematical Sciences with a concentration in operations research from the University of Georgia.
“
cloud is what you make of
it. cloud enables you to
sub-scribe for one department of
your business instead of all.
if it goes well, then roll it out
and scale it up.
”
SPecial
SAP SPECTRUM 1 /2011 31
might say I need the resumé screening site up next week, not three months from now. Doing that with the inter-nal IT team can take weeks or months. But in the cloud, it only takes hours or maybe days to go from identifying the need to identifying a service provider. As for scale of solution, there are
actu-ally two parts. In one I can pilot, test, or try out my new HR resumé sourcing sys-tem in a limited fashion with the exter-nal cloud provider. If it goes well, I can scale it up to the full scale and scope of my business demand. The second part is the global perspective. For example, it could be that I have quite a sophisti-cated IT capability in Germany but need a working group to do business in the Czech Republic, where my company’s IT capability just doesn’t manifest well. So what you are finding in some com-panies is that they’re going to a cloud to provide services for the remote, less developed, or emerging markets of their organization.
The third answer is efficiency of re-source. Let’s use an SME example. SMEs are the most aggressive and complete adopters of public cloud services today because in the cloud they have access to solutions at a level of sophistication or capability that they can’t afford to implement internally.
— William Briggs —
Those are examples of faster and cheap-er. The third part of this impossible tri-angle is better. Better, cheaper, faster. What cloud allows is a democratization
of services – and so the small provider now can reach a much larger market-place. Taking this one step further: three small providers could collaborate and go to the market as a single large provider. So our motto here is that cloud is technology evolution. People use the cloud to do things faster, cheaper, and better – and then ultimately to do differ-ent things together, filling white spaces in the market. The cloud is potentially a business model revolution.
— William Briggs —
Deputy chief Technology Officer for Deloitte consulting and a director in the U.S. technology practice.
He specializes in helping organizations identify, architect, and implement innovative technologies to improve business performance. In addition, he is the lead for Deloitte’s Technology Trends efforts. He earned a B.S. in
Computer Engineering, graduating magna cum laude from the University of Notre Dame. He also earned a Masters of Business Administration from
the Kellogg School of Management.
“
People use the cloud to do
things faster, cheaper, and
better – and then ultimately
to do different things
to-gether, filling white spaces
in the market. The cloud is
potentially a business
mod-el revolution.
”
— William Briggs
(infrastructure, platform, software, etc.), cloud services (public, private, etc.), and cloud business models. Which cloud adoption model would you recommend for a midterm IT strategy?
— Mark White —
Let me start answering that by using the quintessence of consultants’ answers, which is “it depends.” It depends on the size of the company, the industry, the marketplaces, and the purpose of IT within the company. It depends on whether we’re talking to the CIO about being a cloud service provider or a cloud service subscriber. But in terms of road-map, there are a few things I would say that are uniform across all of those things. The first is that if you look at
midterm IT strategy and ask yourself what the impact of cloud is or what op-portunity it represents, we at Deloitte would say, think of yourself as an IT services shop. So if a CIO is interested in cloud services, the first thing he or she might do is look at their current IT services catalog. And then they should evaluate the various workloads within this service catalog and which of those workloads can benefit from the cloud. Then they should build a business case because cloud is not a silver bullet. Cloud is what you make of it. The next step would be to pilot, to take a small step first. Cloud, particularly the public cloud, enables you to subscribe for one department of your business instead of all. If it goes well, then roll it out and scale it up. When CIOs look at midterm strategies, most of them think of the cloud as a source of capacity, or what we call the capacity cloud. But what we’re seeing clearly is a continuing matura-tion of looking at cloud services for ca-pability reasons, too. Examples of that might be subscribing to Collaboration
Security Operations as a Service. These are capabilities that are more finished business services. So that’s the capabil-ity cloud, and we’re seeing it becoming the dominant mode now.
So CIOs are moving from the capacity cloud to the capability cloud?
— Mark White —
Let me tell you where we think it’s go-ing, and this is slightly speculative. We started with the capacity cloud; we’re now in the capability cloud. We believe the third generation of this is what we’re calling a composite cloud, where capa-bilities are composed for more complete end-to-end business services, functions, or lines of business support. In the
composite cloud, everything is a service and can be composed and orchestrat-ed. So as CIOs work on their midterm IT strategy, we would suggest that they think about the composite cloud.
SAP’s cloud strategy is to offer SMEs on-demand solutions such as SAP Business ByDesign that are in the cloud while staying on premise with SAP Business Suite when it comes to large enterprises. How do you assess this strategy?
— William Briggs —
With SAP Business ByDesign and on demand, SAP has a very compelling of-fering for small and midsize businesses and for the subsidiaries of global com-panies doing business in emerging markets. There it never made sense to do a full SAP ERP deployment. Smaller businesses have a more rapid adoption pattern period and are looking for all kinds of business processes and hirable services. With large enterprises, you see experimentation on the edge and things
management. It’s no surprise, but the leading software-as-a-service vendors are emerging into true cloud players. And that’s going to continue.
So could there be new offerings that would come in and fill that void?
— William Briggs —
Maybe SAP could be a provider of that, and I think they’d have more credibility with the true enterprise customers. But it’s going to take time. The enterprise customers will be watching with inter-est because they’ll be invinter-esting on the edge. SAP is doing some really interest-ing thinterest-ings here.
— Mark White —
Well, at a higher level, I would say two things, and we have said this in fact to SAP before. First, I think there is an op-portunity to get a crystal-clear message to the marketplace about SAP’s core assets and the implications for on premise and private cloud versus public cloud and so on. Second, there are places where SAP ERP and the fully launched Suite are re-quired and desirable – and then there are other places where it would be good to have an entry-level solution, such as SAP Business ByDesign.
You say that the importance of cloud computing rests upon its clear value proposition. What exactly does this mean?
— Mark White —
If I think of cloud as technology enable-ment, then I’m looking for efficiency and effectiveness. We have examples where clients had computing and stor-age capacity inside their shops that they only needed once in a while on a sub-cyclical basis – it was essentially non-productive capacity in the intermediate times. That’s an example where being able to take the idle capacity out of your shop and subscribe on demand from the cloud can have a significant posi-tive ROI. In one case, the client’s cost-per-machine image went down more than 50%, and better than that, they eliminated about 20% carrying cost for ‘just in case’ capacity.
“
The challenges for information
se-curity and privacy in the cloud are the
same as those within my four walls.
Only the scale is different.
”
— Mark WhiteSPecial
SAP SPECTRUM 1 /2011 33
Does it ever cost a company more to subscribe to the cloud than to rely on its internal IT infrastructure?
— Mark White —
Yes, we’ve had examples of that. And you may wonder why a company would even go with the cloud solution. Basical-ly, it’s because they want to get started. So while costs are slightly higher, it’s a great bridge activity. The business value is inherent in the opportunity cost.
Most cloud computing activities are non-mission-critical applications such as sales force automation or CRM. What issues must be resolved to accelerate the use of cloud computing
for critical business applications? Deloitte ResearchLink list: www.sap-spectrum.com
— Mark White —
There are a couple of objections that we hear about consistently – for example, the issues of data security, privacy, or data locality. So they have to be worked out. The enterprise needs to feel that they’re safe, compliant to regulatory constraints, accessible, and protected. The answer to that, I believe, is that the most complex pieces are locality and regulatory, not security and privacy. In fact, the CTO of NASA was recently quoted in an article, saying that he finds the security implementation of many large, sophisticated cloud providers better than those of certain enterprises. Why? Because they do it on such a large scale for such a large audience that their sophistication is high and their
re-sources quite substantial. Nevertheless, the challenges for information security and privacy in the cloud are the same as those within my four walls. Only the scale is different. So I need to make sure that the challenges I want to solve in the cloud are solved within my four walls. And they can be and will be solved in the cloud. Now, data locality regula-tory issues are slightly more subtle and a little more risky. They are still being addressed on a one-by-one basis. The good news is that we’re working with our clients to help solve these issues.
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