The Cloud Broker’s Role in Creative Destruction

October 18, 2011 Appirio

By Michelle Swan

Gartner Symposium – one of the largest gatherings of CIO and IT leaders in the world – kicked off this week in Orlando, Florida. For a Silicon Valley-based company like Appirio that works with a lot of early adopters, it’s always interesting to step back and hear the concerns and hopes of the rest of the IT world.

Gartner Symposium draws IT leaders from around the world, across sectors, many of whom have budgets in the millions or even billions. So, when we hear Gartner analysts, a traditionally conservative bunch, tell people to “blow things up”, “embrace customer intimacy over business architecture” and “make cloud your first approach to computing,” it makes us want to stand up and applaud (some people actually did). It also makes us stop and think – what’s changed?

This is a group that two years ago advised us not to get “too far ahead of our skis” when talking about helping companies cloudsource 100% of their business.  Now they are advising companies of all sizes to take a cloud-first approach. Granted, there were many caveats to this in following sessions and we (along with I’m sure Gartner) think that few companies are ready to move their entire business to the public cloud today.  However, the message came through loud and clear. To build a post-modern organization that is agile and in touch with customers, cloud is a critical factor. It’s an enabler for the big trends we’re seeing around mobile, social and big data management.

The cloud – and the providers and intermediaries that help customers effectively use the cloud (which Gartner calls cloud brokerages)  – is a major component in Gartner’s battle cry for “creative destruction.”  Creative destruction is the process of destroying old ways of doing things to open up room for new thinking, kind of like controlled burns helping to clear the path for new growth, and it’s something to seriously contemplate.

Why “Desperate Acts of Creative Destruction” Are So Needed

There are many reasons why now is the time for creative destruction in IT. Why IT needs to be, as Gartner analyst Tina Nunno puts it, “less of a service provider and a greater leader.”

The biggest reason is that the expectations of IT’s customers inside and outside of the business have changed. The consumerization of IT and explosion of mobile and social technologies means you need to change the way you reach these customers. You must be where they are (which is everywhere), influence and listen vs. tell, and anticipate what they want. Otherwise, some companies may no longer be in business. Analyst Daryl Plummer (@DarylPlummer) puts it well when he says “Every one percent in customer satisfaction could add one year of life to your business – focusing on customer outcomes is your company’s fountain of youth.”

Technology – especially in tough economic conditions – can have a huge impact on business success.  According to Gartner, two-thirds of CEOs believe IT will make a greater contribution to their business in the next 10 years than in any prior decade. Yet IT organizations are at risk of being marginalized. By 2014, CIOs will have lost control of 25% of their IT spending, and it’s possible by 2017 that CMOs may have a bigger IT budget than the IT organization. Some argue that the shift in budget isn’t a bad thing (after all, HR doesn’t own all the headcount for a company) but if IT isn’t part of the conversation and helping contribute to the businesses bottom line, it’s going to lose a seat at the table.

The Cloud Broker’s Role

One of the biggest things IT can do is to evaluate how technologies like the cloud can help businesses align better with today’s reality. Take a calculated risk and blow some things up.

This sounds easy, but can be daunting (and even career threatening) without a little help and guidance.  This is where cloud brokerages or brokers come in. We use brokers all the time in our daily lives to make our lives easier, get something cheaper or cover our risks – whether that’s buying insurance, trading stocks, making travel arrangements, etc. In a world that’s as fast paced and complex as cloud computing, it makes sense for a similar role to emerge in this industry.  Someone who can help IT leaders who are intent on creative destruction to quantify and hedge some of the risk, to come up with a solution that may use a collection of cloud services, mobile and social technologies, or to customize that solution and connect it to existing processes.

So who is the best partner to help?  Is it the same traditional IT vendors or service providers that make their millions maintaining the status quo? Are they really going to be motivated to help you destroy the old way of doing something to make room for the new? Maybe. But it’s not going to be easy for them – or you.

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