Cloud strategies are missing

20 Sep 2016

Clouds are easy to use, so we move all our services to an external cloud. Clouds are a risk, when they are not within our control, so we cannot use clouds. Those or very similar comments are common nowadays, when you ask a company about their cloud strategy. The reality is more complex, denial is not enough, and companies should have a thought through strategy in place to use clouds.

We had a discussion with a corporate about new services. Some of the components of the service would be in a cloud, and then we discussed where the other components should reside. We told the corporate they could also be within their own IT systems. But they said this is impossible, because it takes years to get their own IT to get any new things to work.

In some cases, it is smart to combine some cloud services and some in-house hosted services, especially to get new and old services to work together. It can create some technical issues, but in reality it can be even more of an attitude problem. Traditional IT is often skeptical with clouds, and the business units are tired of the legacy IT (and even the IT department) and wants to bypass them.

In some cases companies are ready to use cloud services, but legal restrictions or regulation is an issue. For example, in fintech we have seen that some regulators are open-minded to accept the use of clouds and define reasonable rules for the use. But then we have seen cases where some regulators don’t yet have any idea, how the industry could use the clouds, or what is a cloud, and then they want to go to some old world physical restrictions for servers and access to them, and in that way prevent the use of clouds in practice.

The API economy and modular architectures make it possible to decentralize services to many physical locations. For example, back office functions could be centralized globally to a few key critical locations, front-end applications could be near customers in many locations, and customer data in places that are needed by the privacy laws and other regulation. In this way a company can optimize usability, operating costs, and development work of a service, as well as future proof long term needs and requirements that are in part unanticipated.

That kind of model is also very amenable to utilizing third party services with in-house services and applications, like an API ecosystem is at its best. But to develop solutions like that companies need really pursue a strategy for their services and the use of clouds. And to really make that kind of strategy and implement it, all parties must be able to cooperate, and not only protect their own positions and legacy solutions. The cooperation and planning also requires that all parties have enough information and the right attitude.

It is easy to develop excuses for not using something new. But typically when you just try to prevent the use of new and more effective services, sooner or later users go for them, even if the optimal solutions would be to combine something from new and old. It is the reason the consumerization started to happen and many corporate users didn’t anymore want to use old-fashion, difficult to use and not competitive corporate services, when they got something better for a very reasonable price.

The same is happening now with legacy IT systems and clouds. Business units need to get new services rapidly to the market, and they cannot wait for legacy IT systems. In this situation the typical IT department comment is “new solutions, including clouds, are a security risk.”

Now also top management and business unit management starts to understand that this answer is not enough, if government agencies (for example FINRA, the US Financial Services Regulatory Authority, The U.S. Army, DOJ, Department of Education), many finance institutions and many leading global services already use clouds. And it means IT departments need to seriously learn to live with clouds and see what is their own value-added with cloud solutions and how they can improve their own services with them.

There are many kinds of clouds. Cloud computing is also a concept, not only a specific data center. Clouds and cloud models can really help many companies to get services faster to market, utilize fully the API economy and optimize operating costs. Now is really the time for the management, business units and IT departments to together find a feasible cloud strategy. And regulators must also update their knowledge and guidelines. Denial is not enough. Then companies can also use their own IT resources better with a comprehensive cloud strategy.

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