Why Private Clouds Will Prevail
Stu Laura, our intrepid CIO, was once again fit to be tied.
Laura: Those idiots on Mahogany Row are driving me nuts!
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Anderson: And this is different from the usual in what way?
Laura: Clouds! Public clouds! Private clouds! If a little knowledge is a dangerous thing, then these bozos are toxic!
Laura: One of our board members read that Amazon has dropped the price for using its cloud 16 times in the past six years! And he wants to know if "we can match that?" Of course we can't!
Anderson: Why not?
Laura: Because as big as we are, we ain't Amazon. I, and every other Fortune 500 CIO, much prefer having our own private cloud.
Laura: Because we are CONTROL FREAKS! I want my cloud right down the hall from me, right smack dab in the middle of my data center.
Laura: Aren't you listening? Because I am a control freak! Because I need to chew someone's rear end off if things go wrong. What am I going to do if Amazon has a problem -- scream at Jeff Bezos? Bezos is just selling excess capacity, and when push comes to shove, I'm not his major priority.
[ CIOs will soon see a major transformation in roles and expectations. See Gartner: CIOs Begin 3-Year Shift In Responsibilities. ]
Anderson: So you're worried about security?
Laura: Not anymore. That problem has been solved. I'll tell you what I am worried about: desktops.
Anderson: Desktops? Why?
Laura: They're sucking all of my resources! I have 20,000 desktops around the world, and it's costing me somewhere between $1,200 and $2,000 each to maintain those suckers.
Laura: No crap, Sherlock. And I'm under real pressure to cut my costs ... which is mainly support. Can someone please tell me why I'm even in the business of supporting desktops, laptops, smartphones? Why can't we just give every employee $1,000 and tell them to buy what they want ... and use the cloud instead?
Anderson: OK, I'll bite. Why not?
Laura: That is where I want to go, and I will be damned if I know why my strategic vendors haven't stepped up to this. See, while Amazon has the size, there's no way in hell they will ever be a strategic vendor to me. I want IBM or HP or Cisco or Oracle or EMC to own this -- somebody I can count on to make it work and somebody I can ream if it doesn't! I want someone who solves my integration problems before forcing me to do it. If I'm going to save $16 million or $20 million, it's going to come out of support, so I need a real backstop.
Anderson: So you're sold on virtualization?
Laura: Look, I resisted it for a long time. But it's far less risky than I thought. The uncertainty threat is manageable, and the numbers just work. And if I don't do it, who will? This is what always happens: I have to get out ahead of my divisions and be more than a high-end purchasing agent. I have to drop my cost per transaction each year ... and increase availability ... and decrease latency ... and ...
Anderson: Is that possible?
Laura: Look, if I can show that we can save $20 million and INCREASE latency by only a hundred milliseconds, is there anyone who wouldn't take that tradeoff?
Anderson: What's the downside?
Laura: There is some upfront cost, and there's no guarantee on the metrics. But why the hell not?
Anderson: Whom do you have to convince?
Laura: Whom? What, are you some Ivy League snob? I have to convince the divisional GMs! I have to convince the compliance officers! I have to convince the board! And the C levels!
Anderson: Are they bitching?
Laura: Of course they're bitching! They want to know why it takes us six weeks to buy a server to get a new application up. Even now, they're putting applications up on Amazon and using their Amex card to pay for it! I'm losing control!
Anderson: What do they want?
Laura: They want higher reliability, higher availability, higher speed of application development. And they want reduced cost. Did I mention that my year-end review is coming up? How do you think that's going to go?
Anderson: I'll bite again.
Laura: "Well, Stu, what did you accomplish this year? How did you do with your goals? Your stretch goals? What have we done to reduce risks, Stu? Have we dropped our costs, Stu? Have we been able to keep headcount flat, Stu? Have you looked into this AT&T/IBM cloud solution, Stu? Or the VMWare/Cisco/EMC solution, Stu?
"The GMs are complaining that it takes too long to get new applications up, Stu. Do you know that in the past the big ate the small, but now the fast eat the slow, Stu? What are we doing about Big Data, Stu?"
Anderson: So is all of this possible with private clouds?
Laura: Unfortunately ... yes!
Howard Anderson, founder of Yankee Group and co-founder of Battery Ventures, is currently the William Porter Professor of Entrepreneurship at MIT. He can be reached at email@example.com.