Cloud Services in 2012: Reshaping the Role of the CIO

Rick Wright, Principal, CIO Advisory and Global Cloud Enablement Program Leader

According to a 2012 survey conducted by IDG Research Services for KPMG LLP, the cloud was second only to mobility among business trends where CIOs expected significant benefits.

Of course, the cloud is top of mind for most CIOs today. What’s interesting, however, is how CIOs are changing the way they think about the cloud—and what these changes suggest about the new role of the CIO today.

In a 2011 KPMG survey of CIOs and the cloud, the top concerns of respondents were data security, privacy, and regulatory compliance. Since then, these concerns have lessened. Although security will always be an issue, the industry has not seen a significant uptick in the number of security breaches caused by the cloud-based service model. In fact, most companies would acknowledge that their on-site data stores have fewer layers of protection than a major data center where security is rigorously enforced as an essential part of the provider’s business model. These data centers are also increasingly regulated by the government and subject to certification by industry groups.

At the same time, CIOs have greatly expanded their adoption of cloud services. Even a few years ago, cloud services were used mainly to support noncore business processes such as e-mail, collaboration, and IT operations. Now, core business processes involving data and lines of business are being supported by cloud service providers, resulting in a more flexible and cost-efficient delivery of IT services.

With this shift in thinking about the cloud, CIOs have new concerns focused primarily in three areas:

The complexity of implementation. Cloud services must be integrated into legacy IT environments, organizational structures, and user interfaces. Cloud services can often require new capabilities, processes, and procedures that call for user training and a reconsideration of business goals.   

New forms of data management. When data is stored within the enterprise as well as in a multitude of virtual locations across the Internet, the challenges of protecting, integrating, accessing, and otherwise managing this data can increase exponentially. 

Loss of control over core business process. As IT services for functions such as HR, finance, and sales are delivered over the cloud, CIOs will be more dependent on their outside providers for business-critical services.  

In effect, the cloud represents a complete shift in the role of CIOs and IT. In the 2012 CIO survey mentioned earlier, respondents were asked about the key things their organization was doing in response to new IT and business trends. Their number-one response was “overhauling IT organizational models, operations, policies, and procedures.” We believe that cloud adoption is a primary driver for these changes and will continue to be a disruptive technology in the years ahead.   

So what do CIOs need to do in adapting to new technology paradigms created by the cloud? First of all, they should take a fresh look at how services are designed, developed, and delivered to their internal customers. The CIO will have to understand business needs, translate these needs into specific requirements, and then address these requirements by engaging a provider—all within a much shorter time frame than before. What used to be measured in years will now be accomplished in months, or even weeks.

The CIO also has to develop new skills in managing a growing portfolio of vendors providing cloud services. Where a CIO might have had a dozen software and hardware vendors in the past, that number can easily increase three or four times with cloud services. At the same time, interactions with cloud service providers will become more frequent and include complex discussions about service delivery options and service level agreements.

Finally, CIOs should keep in mind that the cloud is not so much a new technology as a new model of service delivery. Accordingly, CIOs will adopt a new role as service integrator. The more clearly they understand this new role, the better they can leverage the benefits of the cloud for their organization.

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