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Posted: August 19, 2013

A cloud-driven power shift

IT is no longer keeper of the keys

Jeremy King

You might have heard that the inevitable shift by corporate America to cloud computing will spell the end of the traditional information technology (IT) department. As companies migrate towards browser-based applications accessed via the internet, they save costs by not needing to invest in their own infrastructure, including servers, storage, backup and software as well as the high-priced professionals to keep them running, thus the elimination of the IT department.

That’s not quite true. However, the switch to cloud computing, just in its infancy, will strip IT of its traditional gatekeeper role of buying systems to run different departments such as accounting, human resources and sales. We are coming from a world in which the IT department had the greatest influence in buying systems because they were tasked with making them run, as well as deciding what hardware to install the applications and databases on and what middleware was necessary to make everything run smoothly. IT held the keys to the kingdom, right down to the choice of individual personal computers that were used to access any of its systems.

The cloud strips IT of that role and hands it over to the people who should be making the decisions: individual department heads, such as finance, sales or human resources. Those people should be making decisions on software assets on the basis of how they best carry out the company’s mission and their department’s function. This brings with it a beneficial corporate cultural change.

Now organizations don’t have to go to the head of IT to get their desired software approved. There is no technical gatekeeper role. There are no infrastructure requirements, no complex hardware. All that’s needed is a device with a browser and an internet connection. Other than verifying the safety and security of the vendor’s application, the IT department isn’t necessary in the selection process.

We still need IT departments, just in a different way

For most mid-market companies, a CIO will be a thing of the past. These companies will no longer need a high-priced executive to manage complex databases, infrastructure, applications and disaster recovery centers as they did with on-premise, legacy systems; those functions will be outsourced to the cloud providers. Companies also won’t need to keep developers on staff to write code that keeps the various on-premise systems talking to each other after an upgrade. But while CIOs and developers will no longer be full-time positions, they will still be in demand.

We are going to see a shift towards outsourced CIO firms that will fill the gap and step in on an as-needed basis when a CIO is required. The rest of the IT department will stay intact in a traditional capacity, focusing on lower-level networking and help-desk functions. Staff whose job used to be the upkeep and maintenance of the on-premise system will now have the opportunity to take on a more innovative function, working directly with other departments to streamline processes.

Resistance is futile

I realize that what I am suggesting represents a threat to the traditional IT department and its managers. That’s only natural because their jobs are at risk. After all, IT management had a comfortable arrangement. They had the final say on every major software system implementation. The problem can be traced back to training. Most IT people have a specific skill set that is geared towards running legacy software systems. When you have specific knowledge, you tend to propagate and implement the systems where you can apply that knowledge, and stick with the vendor platforms to which you are accustomed.

Legacy vendors are ingrained in the culture of IT departments. IT managers have strong relationships with these vendors and, in some cases, are treated to expensive dinners, golf, trade shows and the lavish parties that accompany them. I know some IT managers who were flown out to the Masters for the weekend. These perks provide little motivation for change. In fact, it is the exact opposite. Many IT managers fear change and may attempt to prevent a potential move to the cloud by raising objections in order to protect their comfortable status quo.

Most of the objections that IT managers raise about the cloud are double-speak. The most common one is security. However, it is slowly dawning on corporations, including major corporations that have migrated to the cloud, that reputable cloud vendors do a much better job on security than any individual company can do. No system will ever be foolproof. Every system, be it an on-premise legacy system or a cloud system, can be compromised.

But the livelihood and business model of cloud providers depends on good security. They have a great deal of expertise, experience and resources to address the issue. Would you rather have a team of experts working on your security or one guy who doesn’t keep up-to-date on all the security issues because he is more involved with maintaining these complex software and hardware systems?

Resistance to the benefits of the cloud has proved futile. Although cloud adoption is in its early stages, it is moving quickly. Many IT managers have seen the writing on the wall and are taking advantage of an opportunity to broaden their skillsets. The IBM Institute for Business Value surveyed 572 business and technology executives and found that three-fourths have implemented some form of cloud computing in their businesses and that 90 percent expect to do so in three years.

In an article published in Forbes, a survey conducted of Fortune 500 CIOs showed that nine out of 10 respondents said they received the savings they expected. The Forbes article also said, “In addition, four out of five say their cloud efforts have helped their organizations achieve some sort of competitive advantage, and two-thirds say cloud has helped their organization’s efficiency and effectiveness.”

Smarter, better use of technology

The change in the IT power structure will bring other cultural changes as well. The HR, sales or finance managers will have to educate themselves about different cloud applications. The hiring of these managers may depend more on their experience with applications. Vendor selections will be less personal as vendors become managed by finance and accounting departments and system decisions become more about economics and function rather than relationships. More cloud sales are done virtually with WebEx demonstrations and face-to-face meetings with vendors are less frequent. The IT department is no longer a separate fiefdom that needs to be guarded by its keepers.

These are all positive developments. Along with achieving operating efficiencies, the bottom line for companies is to use technology to improve upon what they do best, not to become technology companies.

Jeremy King is the National Cloud Solutions Practice Leader for Hein & Associates, a full service audit, tax and advisory firm with offices in Denver, Houston, Dallas and Orange County.  He specializes in the implementation and support of cloud solutions, for which his broad financial background and hands-on experience as both a CFO and COO offers him a unique, user-driven perspective.  Jeremy can be reached at jking@heincpa.com or (303) 298-9600.

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Readers Respond

I agree that the role of IT changes with the advent of the cloud, but disagree that their role as gatekeeper is over. Company information systems need to work together. If Finance, Sales, Purchasing and Operations all use different cloud services, there will be a lot of manual integration to do without a gatekeeper at the helm. This will require different skills from a CIO (not a role I see declining either as IT's role becomes more strategic than tactical). Individual department heads are also going to need to learn new skills if they bypass IT. Evaluating issues like data security, data portability, retention and destruction, user access and managing costs related to usage spikes are not generally in a marketing manager's tool set. IT should be the consulting team that helps the department heads through the information management piece. By Cindy Wolf on 2013 08 19
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