Transforming Into a Service-Centric IT Organization By Using the Cloud

While IT executives typically approach cloud services from the perspective of how they are being delivered, this model neglects what cloud services are and how they are consumed. These two facets can have a large impact on the overall IT organizations, points out eWeek Knowledge Center contributor Keith Jahn. Jahn maintains that it is very important for IT executives to veer away from the current delivery-only focus by creating a world-class supply chain for managing the supply and demand of cloud services.

Using the popular fable The Sky Is Falling, known lovingly as Chicken Little, Jahn explains a possible future scenario that IT organizations may face due to cloud computing. As the fable goes, Chicken Little embarks on a life-threatening journey to warn the king that the sky is falling and on this journey she gathers friends who join her on her quest. Eventually, the group encounters a sly fox who tricks them into thinking that he has a better path to help them reach the king. The tale can end one of two ways: the fox eats the gullible animals (thus communicating the lesson “Don’t believe everything you hear”) or the king’s hunting dogs can save the day (thus teaching a lesson about courage and perseverance).

So what does this have to do with cloud computing? Cloud computing has the capacity to bring on a scenario that will force IT organizations to change, or possibly be eliminated altogether. The entire technology supply chain as a whole will be severely impacted if IT organizations are wiped out. Traditionally, cloud is viewed as a technology disruption, and is assessed from a deliver orientation, posing questions like how can this new technology deliver solutions cheaper and better and faster? An equally important yet often ignored aspect of this equation is how cloud services are consumed. Cloud services are ready to run, self-sourced, available wherever you are and are pay-as-you-go or subscription based.

New capabilities will emerge as cloud services grow and mature and organizations must be able to solve new problems as they arise. Organizations will also be able to solve old problems cheaper, better and faster. New business models will be ushered in by cloud services and these new business models will force IT to reinvent itself in order to remain relevant. Essentially, IT must move away from its focus on the delivery and management of assets and move toward the creation of a world-class supply chain for managing supply and demand of business services.

Cloud services become a forcing function in this scenario because they are forcing IT to transform. CIOs that choose to ignore this and neglect to make transformative measures will likely see their role shift from innovation leader to CMO (Chief Maintenance Officer), in charge of maintaining legacy systems and services sourced by the business.

Analyzing the Cloud to Pinpoint Patterns

The cloud really began in what IT folks now refer to as the “Internet era,” when people were talking about what was being hosted “in the cloud.” This was the first generation of the cloud, Cloud 1.0 if you will—an enabler that originated in the enterprise. Supply Chain Management (SCM) processes were revolutionized by commercial use of the Internet as a trusted platform and eventually the IT architectural landscape was forever altered.

This model evolved and produced thousands of consumer-class services, which used next-generation Internet technologies on the front end and massive scale architectures on the back end to deliver low-cost services to economic buyers. Enter Cloud 2.0, a more advanced generation of the cloud.

Beyond Cloud 2.0

Cloud 2.0 is driven by the consumer experiences that emerged out of Cloud 1.0. A new economic model and new technologies have surfaced since then, due to Internet-based shopping, search and other services. Services can be self-sourced from anywhere and from any device—and delivered immediately—while infrastructure and applications can be sourced as services in an on-demand manner.

Currently, most of the attention when it comes to cloud services remains focused on the new techniques and sourcing alternatives for IT capabilities, aka IT-as-a-Service. IT can drive higher degrees of automation and consolidation using standardized, highly virtualized infrastructure and applications. This results in a reduction in the cost of maintaining existing solutions and delivering new solutions.

Many companies are struggling with the transition from Cloud 1.0 to Cloud 2.0 due to the technology transitions required to make the move. As this occurs, the volume of services in the commercial cloud marketplace is increasing, propagation of data into the cloud is taking place and Web 3.0/semantic Web technology is maturing. The next generation of the cloud, Cloud 3.0 is beginning to materialize because of these factors.

Cloud 3.0 is significantly different because it will enable access to information through services set in the context of the consumer experience. This means that processes can be broken into smaller pieces and subsequently automated through a collection of services, which are woven together with massive amounts of data able to be accessed. With Cloud 3.0, the need for large-scale, complex applications built around monolithic processes is eliminated. Changes will be able to be made by refactoring service models and integration achieved by subscribing to new data feeds. New connections, new capabilities and new innovations—all of which surpass the current model—will be created.

The Necessary Reinvention of IT

IT is typically organized around the various technology domains taking in new work via project requests and moving it through a Plan-Build-Run Cycle. Here lies the problem. This delivery-oriented, technology-centric approach has inherent latency built-in. This inherent latency has created increasing tension with the business it serves, which is why IT must reinvent itself.

IT must be reinvented so that it becomes the central service-sourcing control point for the enterprise or realize that the business with source them on their own. By becoming the central service-sourcing control point for the enterprise, IT can maintain the required service levels and integrations. Changes to behavior, cultural norms and organizational models are required to achieve this.

IT Must Become Service-Centric in the Cloud

IT must evolve from a technology-centric organization into a service-centric organization in order to survive, as service-centric represents an advanced state of maturity for the IT function. Service-centric allows IT to operate as a business function—a service provider—created around a set of products which customers value and are in turn willing to pay for.

As part of the business strategy, these services are organized into a service portfolio. This model differs from the capability-centric model because the deliverable is the service that is procured as a unit through a catalog and for which the components—and sources of components—are irrelevant to the buyer. With the capability-centric model, the deliverables are usually a collection of technology assets which are often visible to the economic buyer and delivered through a project-oriented life cycle.

With the service-centric model, some existing roles within the IT organization will be eliminated and some new ones will be created. The result is a more agile IT organization which is able to rapidly respond to changing business needs and compete with commercial providers in the cloud service marketplace.

Cloud 3.0: A Business Enabler

Cloud 3.0 enables business users to source services that meet their needs quickly, cost-effectively and at a good service level—and on their own, without the help of an IT organization. Cloud 3.0 will usher in breakthroughs and innovations at an unforeseen pace and scope and will introduce new threats to existing markets for companies while opening new markets for others. In this way, it can be said that cloud is more of a business revolution than a technology one.

Rather than focusing on positioning themselves to adopt and implement cloud technology, a more effective strategy for IT organizations would be to focus on transforming the IT organization into a service-centric model that is able to source, integrate and manage services with high efficiency.

Back to the story and its two possible endings:

The first scenario suggests that IT will choose to ignore that its role is being threatened and continue to focus on the delivery aspects of the cloud. Under the second scenario, IT is rescued by transforming into the service-centric organization model and becoming the single sourcing control point for services in the enterprise. This will effectively place IT in control of fostering business innovation by embracing the next wave of cloud. For more information please visit

  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: