Cloud // Infrastructure as a Service
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4/23/2014
09:06 AM
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IT Control Is An Illusion

With all due respect to GM's Randy Mott, doing most IT work in-house and outside the cloud isn't a winning strategy.

The InformationWeek Conference a few weeks ago featured two speakers with polar opposite views on IT management. General Motors CIO Randy Mott argued for more IT span of control. Former Netflix cloud architect Adrian Cockcroft argued for less. They both made compelling cases, but I think Cockcroft's view eventually will prevail.

Mott's span-of-control argument jibes with his three-year initiative to flip GM's reliance on outsourcing, from 90% outsourced IT to 90% in-house. He makes a strong case for moving IT in-house, citing how expensive, slow, and undifferentiated traditional outsourcing work can be. (Mott notes that GM's IT budget has gone down during the insourcing effort, though that wasn't a main goal.)

Mott made a number of important points during his 45-minute on-stage discussion with InformationWeek editor-in-chief Rob Preston: Real innovation happens when IT pros are tightly aligned with company strategy and the CIO has a seat at the CEO's table; IT must produce clear strategies, governance, and metrics; IT is a strategic asset, with speed of innovation a major success factor; and sustained competitive advantage comes from a focus on continuous improvement, creative process, and technological change. No arguments from me there.

[Are applications safer in the cloud? Read Fight Software Piracy With SaaS.]

But Mott started to lose me when he said things like "real business applications on an enterprise scale do not come from venture capitalists." Really? Try telling that to Virgin America, Coca-Cola Enterprises, Delta Airlines, Proctor & Gamble, or (ahem) Toyota, all big customers of Salesforce.com. (Let's all remember that Salesforce was funded by VC firm Sunbridge Partners back in 2000 -- strong, scalable ideas come from everywhere.)

Preston has spent time with Mott and has written that Mott isn't arguing that VC-backed startups produce no meaningful enterprise IT innovations. But Mott is skeptical that their systems and applications can scale, affordably, to meet Fortune 100 needs. I'm skeptical that continuing to rely on the same old providers (GM has signed enterprise license agreements with 11 tech giants) will lead to innovation and competitive advantage. They're as fossilized as any large organization.

As startup legend Steve Blank noted in a recent commencement speech: "In spite of all their resources, large companies are responsible for very, very few disruptive innovations." If you truly want to provide differentiated services, relying on the same cast of characters is a terrible idea.

Image: Dennis Hill (Flickr)
Image: Dennis Hill (Flickr)

Mott went too far. He classified software-as-a-service as a form of outsourcing and declared that SaaS is a path of "no integration," which is a blanket statement. During an interview Preston conducted with Mott a few weeks before the InformationWeek Conference, Mott dismissed SaaS as a way for customers to "get even, not get ahead." That's not always true. The right SaaS platforms with the right APIs offer you plenty of integration opportunities and the ability to add value on top of those platforms without having to write your own foundational systems.

Modern IT is more about reuse and repurposing than starting from scratch. To take the idea of doing everything yourself to an extreme, does GM mine ore for steel or attempt to build every component for every one of its autos? Clearly not.

One audience member challenged Mott on his anti-outsourcing stance, arguing that outsourcing is useful for areas that aren't IT core competencies, a belief that I share. What are GM's IT core competencies? Mott said that, at

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Jonathan Feldman is Chief Information Officer for the City of Asheville, North Carolina, where his business background and work as an InformationWeek columnist have helped him to innovate in government through better practices in business technology, process, and human ... View Full Bio

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ChrisMurphy
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ChrisMurphy,
User Rank: Author
4/23/2014 | 9:49:55 AM
Outsourcing
Really important insight here, Jonathan. I'd add that we heard from top IT leaders at two other major companies at the InformationWeek Conference -- GE and Capital One -- who also said that they were shifting significant work away from outsourcing and back to in-house IT teams, believing that there's competitive advantage from faster and more responsive IT. Mott's view wil be too extreme for many, and his depth of wariness of cloud I don't hear widely shared among CIOs. But he challenges IT leaders to ask a hard question: Is this thing really non-core to what we do? A number of companies that swung to 70% outsourced IT are finding that they had the wrong answer to that question in key areas.
SaneIT
IW Pick
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SaneIT,
User Rank: Ninja
4/23/2014 | 9:48:28 AM
In our out
I think throwing hard numbers like 90/10 out there when talking about IaaS, DCaaS or even SaaS is a mistake.  If you are looking at how you do IT based on the amount of work you do internally vs the amount you do externally and you have fixed targets then I don't think you're going to be flexible enough to withstand the rapid changes that every company is seeing right now.  I wouldn't put a % on either side, my approach is to do the things that we can do faster, less expensively and better in house and push anything that is easier to manage and less expensive to maintain on the cloud out to the cloud.  We have a couple of core applications that we just can't push out to the cloud even if we went with an IaaS because we are constantly touching it.  Those applications we'll keep in house and keep them close because they need the attention.   Everything else is fair game, if a company comes along that does it better than we have done it in house then we'll move.  I don't want to lock myself into either mentality that 90% should be in-house or that 90% should be outsourced that way I'm not forcing square pegs into round holes just for the sake of making an artificial target of my own making.
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