CEO Insider: Barriers to the Cloud

Published by on December 3rd, 2012

What is slowing Cloud Adoption for businesses?

Cloud Strategy word collage

Ever wanted to get inside your CEOs head and see what they are thinking? Yeah, me too. And while I know my head fairly well, my Vulcan mind meld needs some work.  Luckily, I’ve been fortunate enough to travel and talk with over 1,000 CEOs around the globe regarding the (cumulus) nebulous topic of the Cloud.

I bet you’re curious why there is a fervor of activity pushing CEOs to the cloud, yet adoption has actually been quite slow. How is that possible?  I think I found the answer.  More on that later.  So, “What is the CEO thinking?” and what barriers to the Cloud are preventing folks from running to it? Grab a coffee, pull a chair up next to the fire and let’s talk.

This Isn’t Brain Surgery, Or Is It?

Before we crack open the cranium of your favorite CEO, let’s briefly cover what his or her’s responsibilities are to the organization they are serving.  A CEO is responsible for three things.  In no particular order, they must 1) increase value of the organization 2) mitigate risk 3) be strategic. Fleshing those out a bit, the CEO must increase the worth of the company.  Most of the time this means growing the company, but they may also condense the business while increasing profitability. Avoiding or reducing risk is another task of most CEOs. All opportunities have a certain amount of inherent danger. The CEO must weigh the amount of risk with possible ROI on the opportunity. And lastly, the CEO must be strategic, making long term plans for the organization. Identifying opportunities, threats and disruptors early so that leadership can create a road map that yields the fewest potholes and tolls while picking up great passengers along the route.  Now let’s take a peek into the life of your CEO.

Cloud This, Cloud That

Probably within the last 90 days, your CEO has attended an industry event with sponsors such as Gartner, Forrester or 451 Research. These analysts are all about the Cloud. And their research is showing some very interesting data on groups currently using the Cloud in some capacity and why they’re strongly recommending that your CEO move some things to the Cloud now. 22% of US companies are Cloud advocates and embracing  the Cloud whenever possible and the rest of us (yes, myself included) are looking at the bus, reading the ads, talking to colleagues and vendors. Some have even bought the ticket, but not punched it yet. What’s keeping us from getting on the Cloud bus?  That’s coming, but what’s important to note is that the advisors to CEOs globally are providing compelling data on why they should move to the Cloud.  Fpweb.net just returned from the Gartner North America event and here is what we gleamed:

  • Cloud is not cheaper. It costs about the same as on-premises.
  • The Cloud is not your next data center. It enhances your existing data center.
  • Cloud makes you agile. You can get to market faster, scale up or down easily and focus your IT team on strategic initiatives which yield true competitive advantages.

So on with our story about your CEO. He or she arrives back in the office fired up about the Cloud. Armed with data and a vision, the CEO walks down to the CTO’s office and enters the realm of “do more with less.” The CTO nervously asks how the trip was, knowing it’s a loaded question since the CEO has no doubt been bombarded with Cloud noise which will ultimately lead to less sleep for the CTO and his team. “The trip was great.  I think it’s time to take a hard look at the Cloud.” The CTO’s nervous tic in his right eye returns as the CEO explains why they need to be more agile and that the Cloud can help.  So, the CTO is tasked to explore the viability of using Cloud wherever feasible in their IT operations. The CTO will soon discover and report back to the CEO that there are three major barriers to Cloud. What’s important to take away is that the CEO, CTO and his team of IT Pros are NOT on the same page right now. Here’s what it looks like:

Cloud adoption diagram

Furthermore, Cloud adoption is slow. Adding 2-3% per year right now. As you can see, the CEO wants his company to be more agile and move into the left column. Use the Cloud and become a Cloud advocate or smiley and join the 20% of companies who have embraced the Cloud. The CTO and IT Pros are lined up on the opposite side of the ledger. They’re busy managing on-premises, already stretched thin with limited resources and increased expectations to deliver “more with less.” Currently, the Cloud frowns is the norm with 80% of all companies not using the Cloud. So now we can look at some common reasons why the CTOs and IT Pros are shying away from the Cloud and how to turn those frowns upside down.

3 Barriers to The Cloud (by size)

Cloud Security (biggest barrier) – physical, logical, compliance and Patriot Act. 

It is a big jump to not have your own physical servers sitting in your own data center managed by your own people. You know where each byte of information lives and how it gets from point A to point B. This is all about control. And giving up this control requires you to trust but verify.  You must get close enough to the Cloud provider to trust them but also be able to validate and satisfy your security concerns. Assuming you move to a Cloud provider who has multiple customers, you must be able to secure your data not only from Internet bad guys but also from other customers on the Cloud provider’s network.  Highly regulated industries, like healthcare, pharma and energy have strict compliance regulations and while they are open to Cloud solutions, they do require specific environments to pass compliance audits. And then there’s the issue of data sovereignty or where your data lives. Many countries such as Canada and the UK mandate that their data must live within their border. Some of these policies were born in direct response to the USA’s Patriot Act and the Cloud which could in theory allow the United States Federal government to seize a multi-national’s data being stored in a data center on US soil.  Hence the Cloud provider must have a data center in the country of origin, and any disaster recovery solutions must also reside within that country.

Cloud Performance (medium barrier) – internet connectivity, applications and parity with on-premises. 

If your users are already using an application and you’re considering moving said application to the Cloud, you need to test it thoroughly. The big question is how fast will the application run over the Internet? Not only is computing load now a concern but also Internet connectivity of the provider and more so, your users. Many corporate WAN connections are “oversubscribed” compared to available bandwidth on the LAN where the application has previously been operating. If moving an application to the Cloud, you must also ask how often it will be patched and upgraded. New interfaces on major upgrades will require training. What about the customizations you’ve made to the app? Reality check – you realize that on-premises will almost always outperform a Cloud based application. There are simply fewer hops involved. But most Cloud providers are delivering pretty good experiences. Test for yourself to see what your users think.

Cloud Reliability (smallest barrier) – 5 nines, highly available and disaster recovery. 

Gmail delivers better reliability than 98% of corporate email networks in the US.  A properly architected Cloud solution will almost always outperform an on-premises solution because of expertise, monitoring and hardware resources.  If you require greater than 99.9 uptime, you can get five nines or higher via high availability solutions.  Disaster recovery options allow you to replicate your data from the Cloud provider to other geographically dispersed data centers or even back to your own data center.  If a hurricane struck your corporate offices and data center tomorrow what would your RTO and RPO look like?

Removing Cloud Barriers

As I hinted to before, if you are going to rely on the Cloud for delivery of an important application, you need to trust that Cloud provider. A big part of trust is transparency. People will make mistakes and machines will break. A Cloud provider who is open, responsive and diligent is a true partner and becomes an adjunct to your own staff. The other piece of trust is to verify. Nobody will care more than you do, so regularly check to make sure the Cloud provider is meeting your SLA and business objectives. And before you commit your company to any significant investment such as the Cloud, please do a Proof of Concept (POC). The POC is where the rubber meets the road. It will show how the application you need, used by your users, performs over your Internet connection. After all, it really is all about you.

CEO Roadmap to the Cloud

Cloud adoption is slow. Roughly 2% per year right now. In order to increase adoption and get CTOs and IT Pros aligned, we must dip our toe in the Cloud water (rain?). If you do a POC and everyone is satisfied with the application security, performance and reliability, you can move it into production in the Cloud. The reality is that companies are going to pick and choose what applications make sense to move into the Cloud. Hence, the hybrid cloud.  Keep mission critical items like ERP on-premises and offload complex, painful technologies like SharePoint, CRM, Exchange and Lync. Moving these things to the Cloud will allow your IT team to work on strategic initiatives – to innovate and give you a true competitive advantage. Let’s move the CTO from a cost center to a profit center. And lastly, the Cloud will increase your company’s agility and be able to respond faster to opportunities or threats. Ironically, my hybrid is my favorite club in my golf bag, and I think the hybrid should be in your bag for 2013.  Did we turn that frown upside down?

C-level Cloud diagram

About Rob LaMear IV

Rob LaMear IV has written 57 posts in this blog.

Rob, Fpweb.net’s founder and biggest evangelist, believes the best thing about Fpweb.net is its people and energy, hands down. As a graduate from Notre Dame, Rob has led lots of past business lives as a window washer, golf artwork sales, accountant and D1 soccer coach. Passionate about doing things right and homemade apple pie, Rob is a firm believer in the American Dream and knows if you can dream it, you can do it. As much as he likes work and technology, Rob loves spending time with his family completely unplugged, fly fishing or joining a pickup game of soccer in the park. Follow Rob on Google+

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