July 6, 2017

The New Way Things Work - The Cloud’s Impact on IT and the Tech Sector

Tech Sector

The cloud’s impact on technology and business is already profound and we are in the early stages of adoption. In the startup world, cloud services have reduced the cost of bringing a product or service to market substantially. No longer do founders have to set aside a percentage of VC funds to buy servers and network equipment; they now just establish a credit line with a cloud provider and build in monthly operating costs for compute to their burn rate. The cloud has also allowed technologies to scale to a global level with far less IT operational staff. Going from idea to market has never been faster or cheaper.

The advent of automation around “continuous build” - the real-time deployment of software code has allowed companies to spend more on talented engineers and less on operations. This has led to ideas propagating faster and to cloud applications improving all the time. The end result is the consumer gets a better product for less money.

Enterprise IT

In the non-startup world, enterprises are migrating to the cloud in a few ways. Some organizations are moving their traditional data centers (co-located and in-house varieties) to services such as Amazon’s AWS and Microsoft’s Azure. These are not easy migrations and come with a host of challenges such as security audit compliance, supporting legacy applications on cloud platforms, much higher network bandwidth requirements and new worker skill requirements. Also, if you do it wrong it can end up costing more than the traditional data center. The benefits are moving from CapEx to OpEx for major IT expenditures and being able to scale up and down as the businesses needs change.

The simplest way to take advantage of the cloud in the enterprise is to design a plan to move applications out of the data center into a Software as a Service (SaaS) model. That is the ultimate cloud architecture  - no servers or application to manage. SaaS applications are truely utility computing - you pay for what you use. There are a number of barriers to a full-blown move to SaaS including: some applications not being available in SaaS format yet, integrations between applications that do not support the proper APIs (application program interface) and the lack of proper data encryption and management.  

Over time, these issues will be resolved as vendors move all of their offerings to SaaS. In the end, I believe there will only be SaaS. Imagine being able to connect to every application securely; from any device without a VPN, a world where using applications for work is easy - like using an iPhone is. It’s coming.

The Matter at Hand

All of this progress is a huge opportunity for companies to reposition IT teams. For the last 20 years, IT staff have become more and more narrowly focused on specific tasks as the complexity around technology grew. The end result has been that the majority of IT workers know very little about the businesses they are working for and it’s not uncommon for businesses to view their own IT group as a black box that few understand. The cloud and specifically SaaS will reduce the complexity of IT substantially and should allow IT workers to get closer to the business - in fact, they will have to or they won’t have much redeeming value. Computing is becoming ubiquitous and an IT team that understands how the business functions can help drive new market opportunities and further drive efficiency. Today that understanding is left up to a small percentage of the IT team - which is why it is so ineffective. There needs to be more engagement on that level and a SaaS world opens up that possibility.

This will also be an inflection point for many IT workers. Up to now, IT has been untouchable because of a supply and demand imbalance for talent. Most IT workers have only had to learn new technical skills to continue to participate in an industry where big salary increases are expected. The cloud will change that. Businesses will expect IT workers to be well versed in the business at hand. Building servers, storage, networks, security solutions and even applications will be left entirely to the tech sector - the providers if you will. IT has helped automate many jobs in the last 30 years; the cloud is ultimately going to automate most of what IT is doing today.

John Arsneault is the CIO at Goulston & Storrs, a law firm with offices in Boston, New York and Washington DC. He is also active in the tech startup space as a private equity investor.

Photo by Paul Csogi on Unsplash.