Article by Jim Finnan
Who needs the IT department when it comes to purchasing cloud services for your business unit. After all the internet is all about eliminating the middle man from the transaction.
Many IT departments are kept out of the decision making process as well as the procurement process when it comes to purchasing cloud services to run apps geared toward certain business units within large organizations.
This act of defiance irks the IT department, as it should in many cases.
Surveys of senior IT managers consistently show that cloud computing and software as a service (SaaS) are being tested or used for non-critical applications at fewer than half of U.S. corporations.
But in looking behind the scenes we discover that those surveys are grossly inaccurate. This is according to many of the same analysts who conducted them, because they don't count the business units that are buying cloud services behind IT's back.
In 2010 only 13 percent of IT decision makers said their companies were already using external infrastructure-as-a-service (IAAS) clouds and planned to expand that use.
"The actual number was double that, and that was only talking about IAAS," according to Galen Schreck, vice president and principal analyst at Forrester Research.
Even Schreck's number underestimated the gap between how many cloud apps IT thinks an organization is using and the real number, according to Frank Gillett, VP and principal analyst at Forrester.
"Informal buyers" from outside IT buy IAAS twice as often as "formal" buyers inside IT, and the informals make five times as many software buying decisions as the IT people who are supposed to be in charge, according to Forrester.
"It often comes as a big shock to the infrastructure and operations people within IT to find they grossly underestimated the cloud services in use at their organizations," Schreck says. "They realize they have no idea what the application owners [in business units] and developers are up to."
This is a scary scenario for many IT departments because they view the purchase of cloud services as the wild wild west if they are not consulted.
Without central control of purchases, there is no homogeneous IT solution provider across the organization. This leads to issues of inconsistent service, lack of collective purchasing discounts typically available at higher user volumes, and lack of standard IT policies in general thus making for an IT management nightmare.
It really is an issue of control, business units want flexibility and IT departments want orderly secure apps that run together on the same vendor's set of virtualized servers.
Informal buyers even have their own tech budgets. According to a Q4 2010 Forrester survey 69 percent of 3,000 business managers reserved part of their operations budgets to buy tech services directly, rather than through IT.
Experts say letting managers buy any service they want, when they want leaves the company bleeding money from multiple subscriptions to Salesforce and suffering "cloud sprawl"- too many separate logins, too little integration between instances of the same service and rates that are too high because subscriptions are bought one at a time rather than in bulk.
What can IT do to avert such problems? "Get out in front of the whole thing," Gillett says.
Here are a couple of suggestions on how to better manage the relationship between the IT department and individual units for cloud computing acquisitions.
Create a way for business units to get what they want
Among the value-adds that IT can bring is security. Business units pay little attention to the kinds of data they're using on what platforms or what risk that creates, Schreck says.
IT managers who can demonstrate how they can increase security without making the whole process more kludgy will get support from business managers.
Create definitions of the types of data the company uses and which can be used or shared in environments with different levels of security, adds Schreck. That will go a long way toward showing business managers that IT knows how to protect them and help expand their abilities at the same time.
In short, create security and usage policies that are easy to follow and business units will go along, he says.
Providing checklists or buying-decision matrices that help business managers look at tech companies and figure which are safe to hire and which require more investigation can be a winning strategy.
Create a fast, streamlined procurement process
Informal buyers are taking over big parts of the IT buying process not because they want to, but because IT isn't giving them what they feel they need as quickly as they think they need it. "Users are saying, 'If we think you don't offer good collaboration services, we can go outside for that.
If you don't have easy storage options, we can go to Dropbox. If your instant messaging is crummy, we'll use Skype," Schreck says. "IT doesn't really have the ability to say 'No' to a lot of things anymore. Users can just go around them."
The trick for IT is to move quickly enough to make end users feel they are making some progress, according to Sean Hackett, analyst at The 451 Group.
Modify or slim down traditional procurement processes so they can support quick decisions on cloud or SAAS. That'll keep IT in the game without giving up too much of its own prerogatives or requirements, Hackett says.
Cross-posted from CIO Zone