CIOs scanning the headlines recently may be ready to wash their hands of the public cloud. In April, Amazon Web Services suffered a multi-day outage that affected customers of its East Coast data centers, including companies such as Reddit and HootSuite that rely on AWS for their business. Last week, Microsoft BPOS customers lost email service for several hours on two separate days. Meanwhile, online file storage service Dropbox has been criticized for its encryption practices and for misleading customers about the security of their files. It's been a tough spring for the cloud.

But organizations shouldn't be making strategic decisions based on a Google News feed. The sturm-und-drang kicked up by these failures obscures the real issue: Your IT department is competing against the cloud for your business users. Outages makes headlines, but cloud providers recover and move on. And when the headlines are forgotten, providers will continue to compete with IT on metrics that matter to the business: cost, time to deploy, mobility, and yes, even uptime. The fact is, traditional IT shops should do more to emulate the cloud model internally, and embrace providers externally when the cloud can do a better job.

Cloudy On The Inside

The public cloud provides a model for how IT can become more adaptive and responsive to its business users. For years, CIOs have been advised to treat IT as a service. In the past, this meant taking a holistic view of all the systems involved in delivering applications--routers, switches, servers, software, etc.--and evaluating their performance as a whole, rather than simply monitoring and measuring discrete components as if they existed in a vacuum. It's a useful framework for troubleshooting, but in a traditional 6-to-8 week deployment model of racking physical servers, wiring them up to networks and storage, and configuring the OS and applications by hand, an internal IT shop will never be as fast or responsive to customer demand as an Amazon or a Rackspace.

The advent of highly virtualized infrastructures changes all that. Server instances can appear with a few keystrokes, and unified computing stacks turn the network and storage layers into heat-and-serve resource slices.

And when you combine virtualization with an increasingly mobile workforce, the notion of IT as a service evolves into a concept in which applications and connectivity are ubiquitous and flexible enough to be delivered to a user regardless of her location or device, and regardless of the application's origins. In other words, the end user shouldn't have to know, or care, whether an application is being run out of the corporate data center, or the cloud, or some combination. All they know is that the application is available when they need it.

Of course, IT as a service is a significant transformation, and one that takes time and resources. Cisco CIO Rebecca Jacoby says the company has been on this path for three years and the infrastructure is 80% virtualized--that includes servers as well as networking and storage. She also notes that of the 1,300 business applications run inside the company, 57% are now run in a private cloud environment. She made these remarks at a press roundtable at Interop 2011 in Las Vegas, a UBM TechWeb event.

And the transformation goes beyond technology. A service orientation affects the relationship between IT and business units. Oftentimes, IT regards its business counterparts as the people who get in the way of their core mission of managing the network. But IT's core mission is to serve the business. "I organize my team to understand which services and constituents they are responsible for," says Jacoby. "Every business function leader knows the IT leader."

Get Smart About Cloud Services

When it comes to external services, Jacoby put it succinctly in her keynote at Interop 2011 last week: "We have to think of ourselves as the sourcer of services as opposed to the developer of services." In other words, IT can't--and shouldn't--be the sole originator of business applications. Rather than try and bar the door to the cloud, IT should be seeking out services to bring to its users.