It wasn’t so long ago that the Ford Motor Company grew its own trees to supply wood for the car dashboard, or Rolls-Royce bred cattle to provide the leather for its seats. How times change.
On any manufacturing production line now, the vast majority of parts like car entertainment systems, seats, or heating systems are pre-built by third parties, brought in, and fitted on the line. It’s called the dynamic supply chain. Henry Ford said in his 1922 book My Life and Work, “If we can buy as good a part as we can make ourselves and the supply is ample and the price right, we do not attempt to make it ourselves.”
The same thing is happening in technology. Now that it is possible to move many resources to the cloud, chief information officers (CIOs) can begin thinking about their IT operations in a similar way. They too have internal resources€•budgets, staff, and internal IT systems€•but they also have a growing roster of external resources: suppliers of a growing range of IT services in the cloud. To meet the needs of the business, CIOs will need to balance these internal and external resources, just as Ford advocated almost 100 years ago. In this new model, IT won’t build service components anymore. Instead, through automation, they’ll be designing the actual production line€•leading the dynamic IT supply chain.
That demands a step-change in the role of the CIO. Traditionally they’ve worn two hats: one day manager of the data centre, the next a strategic leader determining the firm’s IT capability three years ahead. Now, with IT able to expand out to the cloud, CIOs no longer need to purchase new servers or redo their networks. Besides the cost savings, it also means that IT can move away from tactical tasks and focus on innovative work, like creating new services and designing quality assurance around those services.
In essence, cloud computing has the potential to accelerate the transformation of the CIO’s role into a strategic leader, focused on bringing IT capabilities to bear on critical business challenges. As CIOs evolve into masters of the dynamic IT supply chain, their traditional role will change both in focus and skill set. IT leaders will increasingly experience three key trends: the extended reach of IT, the abstraction of IT, and the sourcing of IT. Let’s look at each in turn.
Extended reach of IT
Traditionally, IT was used by staff to perform simple but important tasks€•process orders, for example, perform financial reporting, or manage human resources. If a system wasn’t working, staff were idle, but the business survived. Today, however, a firm’s IT applications have extended their reach way beyond the organisation’s corridors, to touch customers, partners, suppliers, and sub-suppliers. If a customer online transaction system goes down, the impact is seismic. Revenue stops and customer goodwill disappears.
In this climate of 24x7, cloud-based service, our ‘chief innovation officers’ need to take responsibility for the real end-user experience, transactions, and applications. Like car manufacturers, they can’t simply blame the suppliers if something malfunctions. The CIO must understand the real-time performance, risk and quality of business services€•irrespective of whether the underlying physical, virtual or cloud environment is run in-house or at a cloud provider.
The extended reach of applications brought about by the cloud also impacts security. The CIO can tear up that short list of employees who were scrutinised for having access to systems and applications. Instead, CIOs now need to think in terms of content-aware identity and access management which allows the organisation to extend enterprise security processes to a vastly larger constituency via the cloud.
If the CIO is still comfortable with all that, he or she needs to also consider how the cloud is extending the reach of IT into entirely new application areas, such as ‘big data’, face recognition, and HD tele-presence meeting services. He or she toned not be familiar with the database processes associated with the way big data is mined, but they do need to ensure the security and management surrounding all these new areas.
The abstraction of IT
One of the fundamental effects of cloud computing is the abstraction of technology. The abstraction of IT involves the management of IT as a higher level concept. Not managing blocks of data€•but possibly having a database take care of it altogether. Automation is at the heart of abstractions: traditional data centre management, for example, was associated with provisioning and starting and stopping machines, while automated data centre management suites (private cloud solutions) automate the management of this complexity, based on preset rules and utilisation levels.
That’s good news for the CIO. This automation enables them to divorce themselves from nitty-gritty IT management duties and become a strategic contributor focused on innovation. A good turnkey cloud computing platform, for example, enables organisations to build a cloud infrastructure in hours, and pull from a catalogue of reusable applications to rapidly deploy complex, online applications. Instead of manually provisioning expensive hardware infrastructure, the CIO can command new applications to be created, simply by ‘dragging and dropping’ components, without a physical trip to the data centre. And they can then devote the rest of their time to innovation.
The sourcing of IT
Sourcing solutions as services from the cloud adds new dimensions to the CIO’s duties. While many would argue that this is merely a continuation of the outsourcing trend, the sheer breadth of services that are being moved to third party cloud providers makes this a real step change for the marketplace. Take security and support. Ensuring the security of customer data, for example, takes on a new complexity when that data is in the cloud. Likewise support: if a firm sources three services from the cloud, and one does not work, who will fix it? The organisation needs someone to coordinate that support, since no-one wants it to be the user who calls all three suppliers€•only to hear it’s not their responsibility.
IT will be tasked with integration too. For example, if multiple IT solutions provide a single business service, it makes sense for IT to coordinate the integration of those components into a reliable service. With IT cost being an even larger part of total cost, costing will become a more crucial responsibility, including charging, checking invoices, and matching service providers’ results against what was purchased. All of this falls on the shoulders of the CIO: it would be their responsibility to vet the sourced cloud solution for availability, reliability, and security. That involves the CIO moving away from being a technologist who deploys the technology themselves to becoming the cloud-savvy generalist with a deep understanding of the business, that can optimise the IT supply chain.
While cloud will increasingly commoditise IT technology, the opportunity is ripe for CIOs to position themselves as innovators. By enabling business change through the aggregation of technology, IT leaders will increasingly reposition themselves, away from the traditional cost centre for electronic data processing towards an orchestrator who creates tangible business value.
Posted by Colin Bannister, CTO and VP, CA Technologies
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