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Cloud computing making IT redundant? Experts weigh in.

Cloud computing…all hail the cloud…

In his latest article, Financial Post columnist David George-Cosh suggests cloud computing is making IT departments redundant. In the article, Georg-Cosh discusses how cloud computing/on-demand software (such as Salesforce.com) is saving companies money, in part by eliminating the need to have on premise IT departments, expensive servers and enterprise software.

As this is a hot topic in the IT/SaaS sphere these days, I decided to get in touch with a few of my fellow bloggers, experts in their own rights, and get them to weigh in on the debate.

Before we get to the opinions, a clip from the Post article:

Voices.com, a voice-over management company, utilizes Salesforce.com’s content management software (kind of a Microsoft Outlook on steroids) and has quickly become the backbone of its business, says chief executive David Ciccarelli.

Before deciding to use Salesforce’s software, Mr. Ciccarelli says Voices.com was looking at a piece of software that would have cost about $1-million to implement. “Not only was that out of the question, but we would have to hire an IT team to be around all the time to troubleshoot problems and deal with upgrades,” he said.

Saving 990,000 nice! Salesforce.com being discussed as Outlook on Steroids - Ug!

Experts Weigh In

My two cents:

While I like the idea of IT departments going the way of the dino’s, I believe George-Cosh’s thinking is a little premature. This idea has been the subject of quite a few debates on the web lately and I tend to agree with the line of thinking that suggests Saas/cloud computing is putting pressure on IT departments to evolve rather than disappear.

Interesting to me was that Salesforce.com’s vice-president of corporate strategy, Bruce Francis, was quoted in the article saying “Cloud computing gives IT departments a strategic advantage by enabling them to focus on innovation, not infrastructure.” My interpretation is that Francis and I are of the same viewpoint…seems GC directly quoted a source that conflicts with his theory.

No argument on whether SaaS saves companies money from me. My experience has been that it definately does.

Jeff Grosse, Sales Systems Solutions Analyst for Lawson.com and CRMfyi.com founder:

It’s no surprise that most software sellers are now realizing the need to at least talk the SaaS game.  They’re seeing the success of companies like Salesforce delivering business intelligence without the need for perpetual licensing of software.  SAP talked down the relevance of SaaS until they realized they would be left behind if they didn’t talk about it and say, “Deal me in.”  IBM has put a new emphasis on their version called Blue Cloud computing.  Microsoft is trying to get there with all the “Live” stuff, though I really look at Microsoft as a laggard.  They’re just playing the catch up game.  

I think of the Salesforce partner Appirio where Chris Barbin and Narinder Singh run their whole company with only laptops and SaaS applications.  Unless things have changed, they don’t own a server.  That’s the power of letting someone’s solution mold your process and take something out of the box that has already been innovated and made simple through the complexity under the covers.  And in today’s world of “having it your way,” you can now even have that while taking someone’s out of the box solution, Salesforce being a prime example.  

I can’t help but agree with the mantra Salesforce has been preaching for years…..let IT work on the more interesting work.  Who thinks it’s really fun procuring servers, setting up OS’s, patching, setting up backup routines, examining the seven layers of OSI, maintaining a database, and coding your way to a simple app?  OK, maybe IT likes doing some of that, but what if you could put those really smart people on something innovative that’s constantly being enhanced and added to?  What if those programmers that you used to be able to only ask to write complex s-controls could now start working on Visualforce and Apex triggers that go quite a ways beyond the sedentary tools they’ve been given by other application vendors in the past?  What if they could work on the integrations, not on the mundane?  Obviously you understand my point.

But IT must make the case for their own relevance.  Many of them tend to talk about the long term ROI and crossing the line a few years down the line where SaaS becomes more expensive than on-premise solutions.  That may be true, but one also has to weigh the value of the innovation you’d see over that same length of time from each respective solution.  Which is more flexible and which is seeing added functionality upwards of three times a year?  Which one can you not embroil yourself in a three month project and testing just to prepare for a minor upgrade?  Which one can I come in on Monday morning and expect to not be a land mine?  

Finally in my random thoughts, I think of the value SaaS is providing the small to mid market as is discussed in the article.  It’s brining application functionality and at a price point they can handle.  The stuff they could afford before SaaS was often times questionable whether there was even an ROI.  Today, you can find dozens of examples where ROI is found in months, not years.  And to Salesforce’s point at numerous Dreamforce sessions is that this allows that small to mid market businesses to benefit from the blowfish effect.  They don’t appear to be rinky-dink.  Instead, many of them are probably asked how they can do what they do as a small business.  

So for what it’s worth, there’s my two cents.  Keep up the good work Adam.

Steve Anderson of Gokubi.com:

I work with nonprofits that have annual budgets from ~$500K-$5M, so they generally don’t have IT departments at all. If they are lucky, they might have one dedicated IT person, and that person spends a lot of time managing desktops and their website and putting out fires. Salesforce.com has been invaluable to these groups, and the others with no IT. So much is a non-issue–backups, security, upgrades, client software, integrations, etc. I find these nonprofits are looking for more on-demand software once they’ve had experience with Salesforce.com.

Darren and Boyan of Warrior Point:

There is no doubt that on demand computing is going to continue to chip away at the IT department. The traditional job of operational IT was to troubleshoot hardware problems, maintain servers, deploy software, etc. SaaS emerges and presents a very compelling value proposition because it solves this problem for all businesses. These traditional jobs are becoming commoditized and what happens to work that’s not part of our core competency? It gets outsourced. Many small businesses have limited budgets and their core competency is not IT. Even to set up a small network for 10 users to collaborate would blow the bank. From my experience as a Salesforce.com Consultant, I have found that most small to medium sized businesses rarely have an IT person let alone department. Instead, Salesforce.com allows them to designate a specific power user as their administrator. So now your administrator is much more than just an ‘IT person’; he/she can also add value through other roles in sales or marketing for example.

With that being said, we should still expect to find the traditional IT department in some businesses. If the core business revolves heavily around an IT solution, then the IT department will not be replaced.  Large banks, credit card companies, insurance companies might be reluctant to switch because they have very specialized and complex business processes. More importantly, their data may be locked in proprietary legacy systems and business interruptions might be too costly or risky. Legal issues might also be a factor.

The future of the IT department, the way we see it, will be in smaller teams. Most operational IT will be gone, but solution developers will not be. IT will no longer be made up of pure technical employees. There will be more focus on mapping business processes to technology.  SaaS allows employees to implement solutions by pointing and clicking without being technologically savvy. You’ll most likely see less and less DBAs and Network Admins and more and more Business Analysts and Project Mangers in IT.

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