Cloud computing represents a tectonic shift for business technology and the people who run it.
Cloud computing represents a tectonic shift for business technology and the people who run it. I recently had the chance to chat with David Nichols, principal and Americas CIO services leader for Ernst & Young IT Advisory Services, about the impact of cloud, shared services, and business-IT alignment in this new era: 
Q: How much demand are you seeing for cloud among your customers?
Nichols: There is a lot of demand for cloud. Most of our clients have dabbled in it, maybe done some data provisioning, or have salesforce automation. But they haven’t developed a strategy. They’re not really sure what is the biggest impact. They’re not really sure how to go about it. Is this a cost-reduction exercise? Can we really use it to drive the business? Or is this only going to help us drive certain aspects of our corporate strategy, but not really moving the needle on our ongoing business? So they really don’t know how far-reaching, how broad, or how much they really should do, nor do they really understand what should be their path through this.
Q: Are a lot of cloud projects coming up from the grassroots level, under the corporate radar?
Nichols: Historically, the IT organization brings these concepts to the business, and sells the business on it. It’s really turned upside down with cloud, in two different ways. One is the consumerization of IT, pushing cloud solutions into our everyday lives. Now, that’s getting pushed into the business as well. Then there are those who want to do an end-run around IT: ‘We can lease cloud services as part of our operating expense, and just start doing some of our work that way.’ IT finds out this stuff later, after the fact. Sometimes it’s a way to avoid the red tape or getting put into the queue for various IT projects. Sometimes it’s a vote of no confidence in IT.
Q: But on the brighter side, it may mean fewer things for IT to worry about, right?
Nichols: What makes IT uncomfortable is at end of day they still believe that they’re going to be responsible for it. So they would much rather have everything go through them in a consistent way, versus leaving IT to clean up the mess later. So IT really doesn’t prefer it that way, because they know they’re going to own it at the end of the day, no matter what happens.
Q: Are you seeing interest in private clouds as a way to deploy IT services?
Nichols: I am, from a couple of different perspectives. One, from an internal collaboration perspective, companies are finding this to be a pretty convenient way for people to collaborate with one another with some sort of internal private cloud. It means better and more convenient access to data from mobile devices. So the private cloud is really being boosted by adoption of mobile devices into the enterprise. Private cloud also works for companies that are very concerned about data being off-premise. Like the federal government, which is pushing out a major cloud initiatives, but its all internal private cloud. For many, the preference would be for a public cloud where it make sense, and then augmenting certain things with a private cloud hybrid model just to make sure they have all the bases covered.
Q: We’ve heard anecdotal accounts in which companies extending services to partners, essentially becoming cloud providers themselves. Do you foresee a blurring of cloud providers and cloud consumers?
Nichols: We have quite a few customers who are in that situation right now. One is a telecommunications company, where they do provide cloud services, and they also have a private cloud internal for their folks. So they’re basically trying to come up with all the policies and procedures for providing cloud services internally, but also being a cloud service provider to a certain group of clients that they have. So they’re a consumer and a provider. Their biggest challenge is that it doesn’t make sense to keep these separate; they want to take the learnings from one to help strengthen the other.
Q: So, everyone with a data center will be a cloud provider in some way?
Nichols: I think many companies are trying to use the cloud as a replacement or augmenting their current intranets. I think over time, they’ll be more comfortable moving more of that stuff to public cloud, as long as they have the right security models in place to make sure that its only viewed by people they want it to be viewed by.
Q: Are we also getting to the point in which IT departments will be competing with outside services?
Nichols: No, I haven’t really seen that. But what I have seen is in a lot of cases is IT will have to continue to justify their existence. They’ll have to evolve their service model, so user don’t feel as if they have to circumvent IT to get the services they want.
Q: So, IT needs to play is a consultative role, to help their businesses select the right resources.
Nichols: Right. Ten years ago, IT organizations were the judge and jury on what got used and how it got used. When you walked into a company on day one, you were assigned hardware and passwords. They would tell you, ‘there’s one way you do it, and you do it with our stuff. We’ll tell you how to connect.’ Those days are done. Now, society has made the decisions on the way we want to communicate with one another, such as social media platforms or using tablets. Companies who over-legislate on the use of devices will find they have opened up a Pandora’s box. Employees will simply forward things to their personal accounts. That introduces a whole new set of problems.