A Double-edged Sword?

The fact is, cloud services represent a management dilemma for enterprises. The ‘democratization of IT' via cloud can undermine centralized control over spend, security, and compliance.

The ‘on-demand' and ‘as-a-service' aspects of cloud delivery represent a dramatic departure from traditional IT which focuses on buying hardware and building software. Cloud delivery dramatically speeds up the delivery cycle to a point that most traditional service providers are not yet ready to embrace. Perhaps a bigger concern has decreased certainty and predictability around who's ultimately in control of the environment and who's accountable for results. Traditionally, accountability stopped with the CIO. Cloud changes the game by democratizing technology throughout the organization, leaving accountability gaps around key areas like demand management, information security, and cost oversight.

In a traditional service delivery environment, moreover, a customer pays essentially a flat monthly rate for infrastructure and software, making budgeting, and planning relatively straightforward.

Who's in Charge?

The decentralization that accompanies cloud delivery complicates oversight and raises some thorny questions: Who is matching capacity with demand? Who is ensuring we're not paying more than we planned to pay? Are we in compliance?

The challenge is exacerbated by how cloud technology is currently being deployed in many enterprises. Ideally, a cloud strategy is a partnership between the CIO, COO, business unit leaders, and other senior executive stakeholders. In reality, business heads who perceive the CIO as not moving fast enough often circumvent the IT department to work directly with providers across the entire cloud stack. As a result, many CIOs are now challenged to rein in renegade business units that pursue ad hoc cloud initiatives.

Ultimately, the CIO typically remains accountable for the cloud delivery model but if he can't deliver, the business will find a solution elsewhere. Governance oversight is therefore essential if a CIO has to address the cloud's flexibility/control paradox. But as in traditional environments, getting governance right is easier said than done. The goal, specifically, is to strike a balance between the benefits of self-service delivery and the imperatives of corporate oversight. Going too far in one direction poses unacceptable risks, while going too far in the other negates the benefits offered by the cloud in the first place.

In a cloud environment, governance mechanisms address the myriad challenges around the fundamental operational and architecture changes cloud delivery models bring to the enterprise. Specific areas where governance plays a role include the following:

Demand Management: Many large organizations have sophisticated IT service delivery frameworks, processes, and tools to ensure the right IT projects are selected, funded, and implemented. These business-driven frameworks are commonly based on the ‘funnel' premise, whereby a set of projects ngoes into the funnel for the IT organization to work on. The size of the funnel depends on the size and maturity of the IT organization.

Cloud technology changes this model by widening the funnel, giving business units, and individual analysts more power to move projects forward. Demand will always be unlimited but supply will, conversely, always have constraints. As such, ensuring a demand management framework is still in place with the new service delivery model being is crucial.

Capacity Planning: Tightly linked with demand management, capacity planning is typically performed by IT, and is designed to ensure that ‘IT capacity' is adequate to meet business demand. When a funnel is in place, capacity is easier to predict and secure. However when the funnel widens or becomes more flexible, predictability becomes far more elusive.

Public cloud solves this problem by ensuring excess capacity is always available.

Utilization Analysis: Once demand and capacity plans are developed, day-to-day operations must remain consistent and aligned. While this requires tools that provide visibility into cloud utilization, many of today's cloud platforms and services offer only a very basic level of visibility. Organizations are therefore finding need to invest in smaller third party tools or build bespoke applications to gain the required insight into their environments.

Service Level Management: Today's cloud service levels tend to reflect the platforms they support: Simple and standardized. The price of this standardization is that service levels cannot be easily negotiated or changed. Nonetheless, effective monitoring and management of service levels in a cloud environment is just as critical as in a traditional managed services agreement.

Invoice and Chargeback/Showback Management: In a cloud environment, cost is very closely linked with business decisions: Use more service, pay higher fees to the cloud vendor; use less service, pay lower fees. Awareness of the consequences of business decisions is therefore critical in this new delivery model, and effective organizations use cloud invoices and associated chargebacks to establish linkages between business decisions and cost outcomes.

While the processes involved may seem straightforward, scaling invoice and chargeback management across an enterprise can be a daunting task. Simple questions like, "Is my invoice accurate?", can be exceptionally difficult to answer without effective governance mechanisms and tools in place to ensure visibility.

In many respects, integrating cloud into the service delivery mix is only the first step. The true challenge lies in effectively balancing the ‘democratization' of IT services via cloud with the need for corporate governance over this new service delivery model.