Throughout history, philosophers, teachers and religious leaders have used stories and parables to help us understand intangible, often complex, concepts. One of my favorites is the Indian parable of the elephant and the blind men.
It runs roughly like this: six blind men were asked by the king to describe an elephant after being allowed to touch just one part of the animal.
The blind man who feels a leg says the elephant is like a pillar; the one who feels the tail says it is like a rope; the one who feels the trunk says it is like a tree branch; the one who feels the ear says the elephant is like a hand fan; the one who feels the elephant’s side insists is like a wall; and the one who feels the tusk says it is like a solid pipe.
The blind men argue with each other each insisting that, based on their own experience, they are right (in some versions they actually come to blows.) The conflict is resolved only when they stop talking, start listening and collaborate to ‘see’ the full elephant.
The parable has been interpreted in many ways. The message I take away from it is a reminder that, while anyone’s individual subjective experience is true; it may not be the totality of truth. It is only by listening to and accommodating different perspectives that we can ‘see’ past the complexity and reach a simpler understanding of the world around us.
Elephants and IT
What has this to do with business IT? Well some technology trends – including the shift to cloud computing – initially appear complex because we all have our own perceptions of what they mean, but they are actually fundamentally simple ideas that, if done right, can deliver real, tangible benefits. Secondly, the time for argument is over – the train is leaving the station and it’s time to jump aboard.
This is important because of the current debate over what it means to be ‘a cloud company.’ Each of us probably has a subjective view of what takes to transform a business into a cloud company. Most employees, particularly those in software and IT services businesses, will probably concede that the shift to the cloud is real and happening now.
I would go further, and argue that the degree to which cloud computing is baked into the corporate DNA of a company over the next few years will determine which companies thrive, and which wither and die.
This is primarily because cloud computing enables companies to be more efficient, move faster and innovate quicker. (It may, or may not also save money.) Cloud computing coupled with other technologies including big data analytics and in-memory processing, also enables companies to anticipate changes in customer demand and respond to disruptive threats from inside or outside their sectors.
So what are the attributes of a cloud company and how is cloud computing likely to reshape businesses? Based on my experience talking to cloud service providers, their employees and customers, here are some suggestions.
Cloud Company DNA
First, and perhaps most obviously, a cloud company delivers services to its external customers (and internal employees) primarily on a subscription or XaaS (anything as a service) basis, to any device, anywhere at any time.
So, for example, a software company that has traditionally sold software licenses to its customers will now also offer them the same functionality as a subscription service over the public internet, over a private network, or a mixture of the two. Similarly, an IT infrastructure company might offer it computing, storage or network switching capabilities as a service rather than physical hardware.
Importantly, in my view, customers should have a choice of how, where and on what device they consume the service – a decision they, rather than the service provider should make. Most of the time drawing a distinction between public, private and hybrid clouds is a red herring or irrelevance.
While I believe that economies of scale will drive most businesses towards the public cloud over time, some companies may still want to access IT software and services locally from their own servers or pay for a mixture of software licenses and subscription-based services that can be ramped up and down to match demand.
Because customers want to be able to pick and choose the software, services and devices they use – and change them from time to time with the minimum of fuss – the cloud will also drive companies towards more open standards and frameworks and away from proprietary systems and hardware/software/service bundles that have traditionally been used by some vendors to lock them in.
Companies that adopt cloud computing will be able to focus more on their core business operations and spend less time operating and maintaining their own their IT infrastructure. Overall, their business model will become simpler.
The switch from a software license (or hardware) sale to a subscription model also has important implications for both supplier and customer finances, tax and accounting. For the supplier it may result in a transition period during which customers are switching from one to another, but in the longer term it should result in more even and predictable cash flow. For customers the main financial impact may be to remove IT investments from the capital expenditure column (and amortization schedules) into operating expenses.
The shift from traditional software license sales to a subscription model also has profound implications for sales, customer service and maintenance, and more broadly for the organizational structure of a cloud company. Over time it is likely to reduce the number of employees who work primarily at customer sites, and increase the number of remote support staff available 24 hours a day.
Customers will also expect their software/services to be updated much more quickly and transparently. Ultimately suppliers will be pushed towards a continuous refresh cycle and away from monthly, quarterly or even yearly updates. That means software engineers will need to adopt new working practices. More generally product cycles will continue to shorten and iterative improvements will become even more the norm.
Within customer organizations, cloud computing is likely to continue to shift IT purchasing power away from the chief information officer and IT department, and towards line of business managers, especially the chief marketing officer and chief financial officer.
Generally it will accelerate changes in the role of the corporate CIO and may spur the creation of new executive functions like ‘chief digital officer’ who will play a more strategic role in determining the pace of digitization and maximizing the return on IT investments. These changes make it even more imperative that IT companies open channels of communication directly with business managers and board members, rather than relying on traditional relationships with IT professionals.
Cloud Company Employees
Many of these changes have analogues within a cloud company itself. For example, employees in a cloud company should have access to most internal services on a self-service basis, immediately and from almost anywhere using a desktop or mobile device – much like they would choose an app download or stream from a consumer online site like iTunes. Access to these online services should be easy and preferably through a common user interface that doesn’t require the use of multiple passwords and security tokens.
The transformation to a cloud company is also likely to change the culture of the company itself because cloud companies, almost by definition, are more agile, respond faster to internal and external factors and are quicker to innovate.
Just like the blind men in the Indian parable, we may not immediately have been able to agree on the true nature of the elephant, but it is in all our interests to recognize that the shift to cloud computing is real, and to cooperate in order to understand the nature of the beast.
What do you think?