CIO 24/7 Podcast No.6 Cloud Computing

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1 CIO 24/7 Podcast No.6 Cloud Computing

2 Welcome to edition six of Accenture s CIO 24/7 podcast. We bring you practical real world insight on IT delivery and strategy straight from the leaders of Accenture s internal IT department. I m your host. With me today to explore practical applications of Cloud Computing is. Currently Ken is Accenture s Global Director of Business Application and plays a key role in setting the technology strategy and direction of our internal IT. Ken recently posted thoughts about Cloud Computing in an article at blogs.accenture.com There is a lot of discussion about what Cloud Computing can do and in the next ten minutes we ll review some of the practical experiences we ve had at Accenture or some of the real opportunities that still lie ahead. Thanks for joining me today Ken. Thank you Chris. It s a pleasure to be here and cloud is clearly a topic on everybody s mind and it s certainly one that I ve got a lot of passion and interest on so I m thrilled to be talking about it. Right, you had some interesting insights in the article at blogs.accenture.com and in it I thought the tradeoff between some of the economic versus functional realities of cloud computing was very interesting. And one of the ideas there is whether companies are doing this for economic reason or whether they are gaining functional advantage in doing so. Any additional insight there? Yes Chris, I think there is a lot of different reasons to do any type of technology change as we ve looked from mainframe to client server to web and you talk to all the companies who went through those journeys you would find that sometimes there is that economics drivers, sometimes there was functional or business drivers, sometimes there was just the right opportunity to do this thing at this point. I think cloud as a next generation has some of those same things. If you look at where Accenture has begun to use cloud you would see different cases where we had different drivers. Sometimes there are clear economic savings, sometimes there may have been economic savings but it wasn t our driver. We drove to it a software as a service solution because it was the best fit for our business. The fact that it happened to be a cloud computing or software as a service solution really was a secondary benefit to us. We were looking for the business value of why we were going forward to implement this application. Okay so you are saying that really this is another tool in the architect s toolbox about hosting. There may be business reasons for or against but considering this is part of your overall portfolio at this time. Right. Rather than this titanic shift of where we have to take everything and move it someplace else. I think the question of titanic shift is how zoomed into the timeline are you? Have we had a titanic shift from mainframe? In most industries most new applications are not being developed on the mainframe today so that s a pretty titanic shift but when you were there did it ever feel like that? Did the CIO of a company ever say, starting this day we will no longer ever do main frame again, we will only client server or we will now only do web. It doesn t usually play out that way. Now there are probably a few instances for certain companies where that type of edict was issued but that certainly hasn t been the norm for companies I have worked with and certainly hasn t been the norm for Accenture. Okay so are there certain things though to be afraid of like I often hear of security concerns or just the loss of control concerns. Are those concerns that are legitimate or are those things that people should be looking out for specifically? Sure there are always concerns but again I think they are parallels in past paradigm shifts so we went from custom software to package software and at the time of that change people were fearful we won t be as responsible, we have to rely on a third party. Who s checking the quality of their code? Well you know what, most companies today are pretty comfortable with third party software so again I think there are security risks, there are the notion of whose protecting the companies valuable data assets and can you trust a third party to do it?

3 Those are pretty real concerns, right; I think the concerns are just as much on the relationship side as they are on the technology side. If you go a walk to one of Google s data centers you will typically find better physical security than you would find in the data center of a Fortune 500 (Fortune five hundred) company, so it s not that these people can t do it they don t have the tools or the experience it really is a relationship and trust thing, not much a technology thing. Okay so if it s so we ve got a number of different objections to overcome and what we are seeing though is companies are getting more comfortable with some of those or as they learn more about the technology, they become more acceptable of some of those risks or some of those downsides to the cloud? Again I think they get comfortable with them, the technology and the standards continue to mature again drawing a parallel with mainframe migration. Many times people said we can t secure things off the mainframe like we can on the mainframe and so there is a lot of trepidation around it and the reality is there is some truth in that. The security wasn t as good but at some point it became good enough and it continued to get better. I think that s where we are with cloud. In most cases, for most you can ever paint a blanket picture but it s good enough and if one of the other advantages of the economic play or the functional play or the speed to market play create enough value for your organization it overcomes those risks, those risks are not zero but in most cases they re not extremely large either. Okay so once you become comfortable with the tradeoffs then maybe those are some of the signals that it s time to move as part of your overall analysis of the situation. Are there any other signals or any other things you d be advising a customer about when it s time to move or what are some of the best applications to consider moving first? I d say people tend to move less critical applications first, it s just a risk management play because even though the technology may be robust, how to run it, how to operate, how to interact with the third party provider is something that you have to learn very similar to other types of outsourcing experiences. I think how do you know when you re ready, I think most companies are ready to begin their journey if they haven t already begun. Again many times things that are viewed as revolutionary are actually evolutionary if you go a little bit closer. So many big companies have already invested in virtualization as an example on the servers of the storage and some of those investments actually lend themselves pretty well to moving to a cloud environment. It s about how your applications inter-operate with each other, it s about how agile you are in managing that environment and the cloud environment in many cases is really taking that journey that you ve already begun on your virtualization path and moving it to a scale that promises at least to be more efficient because that is really to me the fundamental play in a lot of the cloud computing is the scale play. Accenture s a big company, how many servers do we run? Twenty hundred or so. Google keeps it a secret but most people think its millions. There is a very clear scale play involved in this and if you read Nicholas Carr and The Big Switch, its fundamentally his analogy to the electric industry, electricity generating industry in the middle nineteenth century is very appropriate. Factories had coal burning power plants right next to the factory. We have electric burning computing plants called the data center right next to the office. Eventually we got to the point where everybody realized you know what we probably don t need to have all the electric plants we can get better utilization and better costs by looking at it as a broad utility and I think that s one of the fundamental tenants that Mr Carr preaches and I think it may take us a while together but that analogy feels pretty strong to me especially as the internet, and the network and the connectivity has really in most of the developed world become ubiquitous. Okay so if I can summarize here, the point of view is this is a major shift in thinking about how we host our applications but the migration to the new technology is going to be as evolutionary as any big technology changes have been around the last thirty, forty years. We re looking Accenture internally has taken some smaller steps to move some of our less critical applications but the momentum is growing and that s the way we would continue to advise other companies to look at it and certainly the last chapter hasn t been written here.

4 Absolutely I think if I look at software as a service or any of the other cloud layers, no-one is going to switch their entire enterprise in a short period of time from one technology basis or platform to another. It is really a war of attrition that some applications you ll move to the cloud when they get to the end of their natural lifecycle. That really in the software as a service play where we ve looked at a lot of things but we ve also in the last two years purchased applications to run in our own data center. Right, so again you have to understand the specifics of each case. If I look at the infrastructure as a service offering I think that s where we re talking about perhaps more wholesale changes because I can move existing things. I can t afford to re-write our five hundred applications we use across the globe, global and local applications, that run Accenture and rewrite them on a new platform or replace them with software as a service offerings. Right, but if I can run them more effectively and more efficiently on some cloud without a large investment in remediation again, that would be a case where it would primarily be an economic decision because it s probably not about new capability if I am just moving an existing application, it s probably not about speed to market because the application already exists. It would be on the infrastructure layer more focus on that economic reality and I think that s where people need to understand their current cost basis and how they work, what things they have in flight, not just where their cost is today but where the trajectory of their cost is going and moving to a new paradigm like cloud can I change that trajectory? Because that s what every CEO is asking of every CIO is do more work for less. Do the incremental. Not just save money, not do less, do more for less and you know most CEOs in the last ten years are starting to run out of ideas on how to do more for less. Excellent, so I think that kind of brings us full circle back to the economic versus functional benefits so why don t we wrap here. I think we could probably easily talk about this all day and I m sure there s many seminars and conferences that will do just that. If you want some of Ken s additional insights on cloud computing please visit blogs.accenture.com and follow the links to the IT discussion. Thanks again for the insights here today Ken. Clearly a lot of potential here, it will be interesting to see how it continues to develop in the marketplace as we go forward and thanks again to those listeners for joining CIO 24/7 where you can hear insights on practical innovation from leaders in Accenture s CIO organization.

5 Copyright 2010 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.

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