For our customers, I see two aspects of hybrid cloud that are going to accelerate its adoption in the enterprise:

• Portable Computing: Virtual Machine (VM) compute capability unlocks two capabilities Avanade customers have been asking for: portability and consistent manageability.  VMs can be easily migrated on and off-premises, providing enterprises the agility to bring run workloads where it makes sense – perhaps in the cloud for digital marketing and customer engagement sites, or back on-premises to integrate with existing systems.  Furthermore, it brings us a step closer to operating and monitoring machines and applications across premises consistently through tools like Microsoft System Center.
• Spanning & Connecting On-Premises with Cloud: The general availability of Virtual Networking and Windows Azure Active Directory offers powerful features that span and connect on-premises datacenters with the public cloud.  These two services offer cross-premises secure network connectivity and identity, respectively, to extend existing IT to SaaS and cloud-deployed applications.

This hybrid approach to infrastructure and cloud-connected applications are the future of enterprise IT. We’re already seeing customers take advantage of these infrastructure services.  Perhaps the best example of this is Livingston Air, an Avanade customer who came to us to help them build their digital brand and presence that integrated with travel agencies, tour operators and service suppliers.  We helped Livingston Air use a cloud-first approach on Windows Azure to launch their digital presence using Windows Azure Virtual Machines to provide the customization and portability they needed.  You can read the case study here.

Gartner reported last year that the public cloud market grew almost 20% in 2012 to a total of $109 billion worldwide.  Clearly this shows that customers are moving beyond early trials and pilots and beginning to make serious use of the public cloud.  Enterprises are in increasing numbers looking to move and build new applications on public cloud platforms to improve agility and respond quicker to market demands. But this move to public cloud brings with it new complexities as applications become more composite – leveraging not only platform-level services like storage, compute and database offerings by cloud providers, but also use third-party SaaS services for foundational capabilities like email , messaging & analytics.

Opstera, an innovative Seattle-based startup, had developed some very innovative public cloud application management software that helped solve this challenge by monitoring the health of your application, the service levels of the public cloud infrastructure that the application is dependent on, and the various 3^rd party cloud services it consumes to bring an aggregate view of the Quality of Service of the application. Avanade had been working with Opstera for some time to look at how they could expand our cloud service offerings and are super excited about today’s announcement and the potential that this unlocks to help move our customers further along in their journey to the cloud.

As we blend Opstera technology into Avanade’s existing portfolio of cloud managed services, customers will benefit from a comprehensive choice of private, public and hybrid cloud innovation.  This comes on the heels of Avanade’s recent acquisition of Azaleos, a leader in communications and collaboration managed services. Our continued investment in innovative technologies like Opstera’s software allows us to help customers manage increasingly complex cloud environments.  I am also thrilled to welcome Paddy Srinivasan and Ranjith Ramakrishnan to my team that drives Avanade’s software and cloud services strategy.

One of the reasons I enjoy my role at Avanade is because I get to have discussions with major customers around how disruptive technology shifts, (such as cloud), will make a difference to their business and IT strategies. However, it is quite rare for a customer to deal with these trends in isolation  (I wrote about this recently in my 2013 Tech Trends piece). Increasingly, they are being seen as converging and tightly coupled, to such an extent that treating one on its own can often lead to a charged discussion even on the definition of the term.

Customer engagement is usually around helping them design an ambitious programme supporting new ways of working, (both business processes and employee/customer engagement). Inevitably the conversation turns towards what the seismic megatrends are and what their organisation will need to take into account when considering their IT strategy.

Despite debate about semantics and what exactly is contained within each term, there is a general consensus around four trends:

• Consumerisation of IT
• Big Data
• Social Collaboration
• Cloud

In fact, it is incorrect to say that there are 4 trends driving change in modern enterprises. There are three trends driving change, and one capability, which is enabling it. I will explain in the figure below.

When coupled with the fact that the major cloud providers have had to build rock solid fabrics which can support millions of users rather than thousands, plus their datacentres are usually state of the art in terms of PUE (power unit efficiency), usage of cloud has the additional benefit of increasing overall service stability for organisations as well as fulfilling green social considerations.

Below is a chart that depicts the various trends and how cloud is enabling them.

Whichever of the major trends is top-most in your mind, building a coherent IT strategy that heavily leverages cloud delivery will be a key foundation to optimise this and have the beneficial side effects of supporting the other major megatrends.

The timing of this acquisition is particularly relevant as it helps us address certain business issues our global customers are facing. As I travel and speak with leaders, some of the top challenges I hear relate to improving agility to respond faster to market conditions, driving down costs and spurring innovation. Technology is a key enabler to these types of company priorities, and many CIOs are looking at cloud services to support those priorities. How companies use cloud services and in what form will differ based on size, industry, regulation, company culture and many other factors.

At the Gartner Symposium in Barcelona in November, Daryl Plummer presented on cloud computing and noted that the blending of traditional services, public cloud, private cloud, hybrid cloud and so on is evolving into what Gartner calls ‘hybrid IT.’ The ability for Avanade to support CIOs with solutions and services that align to a hybrid IT environment directly helps their companies address critical business goals.

Azaleos represents the types of moves Avanade is taking to grow our ability to offer customers a choice of delivery options – on-premises, public cloud, and managed private, public and hybrid cloud services.

I’m excited to welcome our new Azaleos team members to Avanade. Together we will help customers realize the best results from the Microsoft platform.

First, there is often a lot of confusion about the full scope and impact of Consumerization of IT, and often heated debate about semantic differences. Nevertheless, anyone advising enterprise IT will miss some crucial implications if it is reduced to “gamification and shiny devices” as one person said to me. This is absolutely a trend which must sit at the top table in IT decision-making.

I have mentioned before that there is increasingly large amounts of IT spend which is no longer under the direct control of the CIO function and that this is a result of the Consumerization of IT.

Regardless of the full and precise definition and impact of Consumerization of IT, I think it holds two major aspects.

Consumerization of IT is:

• The injection of end-user expectations on instant gratification and agility together with Device-and-mobility-led blurring of work-life activitie… AND
• the introduction of market-forces-led behaviours into individual and business unit decision-making around consumption of IT services. A.K.A. “The Power of Choice.”

This has never become clearer than today when faced with the evidence of this in action as I will explain below.

In an efficient supply chain in business, procurement money for raw materials and services normally flows to the supplier of lowest cost for identical quality. In IT, this would normally be from outside specialist providers (e.g. if you’re a bank then your competitive advantage is being the best at banking, not at email hosting). However, when this does not happen it is usually due to transaction costs, such as search costs, bargaining costs, and policing costs, in effect reflecting an imperfect market with barriers to entry. This will then drive towards internal supply.

Fast forward to 2012/2013 and we have globally accessible commodity cloud services delivering high quality SLA’s at a fantastic price due to the following:

• Search costs are reduced because it becomes much more like shopping among a known list of major players, information is fully available about the specifics of the service
• Bargaining costs are reduced as it is a purchase of a prescriptive service
• Policing costs are reduced due to industry standards such as SAS-70, ISO, etc. coupled with tightly defined SLAs, as well as a new standard set in terms of transparency of service outages and steps to resolution

In effect, the market becomes more efficient, barriers to competition and consumerization are eliminated, and we see the increasing consumption of IT services direct by the business from cloud suppliers such as SAAS/PAAS/IAAS, etc.

What does this mean for the role of traditional IT? There are two paths to follow.

To conclude: The maturity of the cloud has brought huge benefits and low cost of entry to business needs for IT Services. Enterprise IT should not resist this consumerization trend, but rather welcome it and use the freed-up scarce resources towards the objectives that will deliver the most benefits in terms of strategic business outcomes. 

Within the context of this, the Windows Server 2012 release is a significant release with over 100 new features touching almost every part of the operating system. While sorting through the long list of updates and improvements, it became clear to me that the folks at Microsoft have spent a great deal of time building an operating system specifically suited for cloud environments. Microsoft’s hypervisor, Hyper-V, is core to their private cloud platform and gets a big boost in Windows Server 2012. From a cost-benefit standpoint, this release puts Hyper-V at least on parity with VMware’s hypervisor.  The following are just a few of the key features supporting the flexibility of scale, reduced cost, and IT efficiency inherent in a cloud environment:

• Hyper-V Network Virtualization enables you to virtualize your networks and configure software-defined networking. This allows you to move networks in your datacenter or to a hosting provider without reconfiguration. It also provides network isolation among the VMs running on different virtual networks, enabling multitenant environments.
• You get support for new storage scenarios which offer high availability on commodity hardware (no costly extra-special hardware). This means you can get more “bang for your buck” by pooling diverse storage resources, and abstracting them for flexible usage in your datacenter.
• Speaking of storage, the addition of “Shared Nothing” live migration to Hyper-V closes a feature gap with VMware’s VMotion, letting you move a VM’s virtual disk, configuration, and snapshot files to a new storage location with no interruption of end-user connectivity to the VM.
• The new Server Manager dashboard in 2012 is also user friendly and supports management of multiple servers, letting you drill down into local and remote servers.
• Enhanced PowerShell automation provides more than 2,300 PowerShell cmdlets for managing Hyper-V.

In addition to the new cloud-enabling features, there are many other improvements that can help organizations operate more efficiently and support improved employee productivity, including:

• Centralized desktops and remote access solutions that have been made easier to deploy and to manage, providing an easier way to give mobile and remote users more secure access to corporate infrastructure.
• The caching and transfer improvements available for file services also make sense for branch offices and other satellite operations where connectivity back to headquarters isn’t great.

Bottom line – this is a significant Windows Server release. However, before you rush to upgrade, there are some factors to consider:

• If you’re a small to mid-size IT shop, with 30 or fewer servers, you might not necessarily gain significantly from the more advanced feature set and cloud capabilities.
• If your hardware is older than about 4 years, and your IT budget is tight, you might want to wait until you can afford to upgrade your hardware to run Windows Server 2012. At some point, you might also want to consider adopting cloud services for some of your workloads.
• If you’re not yet “moving to cloud” in your datacenter, then you might want to wait.

In any event, we’re seeing many organizations move to private cloud solutions in order to gain better agility in operating their IT networks and applications while maintaining control and financial oversight over their entire IT environment. A good private cloud solution should enable agility, empower organizations to gain insights into IT resource usage and costs, and help improve process and compliance controls. As always, we value our ongoing discussions with customers around the latest technologies, processes and how we can best help them optimize their businesses with IT solutions that meet their individual needs.

One of the key principles in economic investment curricula is the principle of “sunk costs.”  Bluntly, this means if you have invested in a proposition which you know is losing… don’t throw good money after bad.

When it comes to IT strategy, this same principle applies.  Traditionally, the extremely high cost of capital would form a gravitational drag against other interests and distort the original business case, such as SAN’s, mainframes, etc.  The classic example is the purchase of a SAN.  The high cost of capital would mean that the company would need to load the decision with as much usage as possible (marginally justifiable) in order to maximise ROI.

In a similar vein that follows “Pork Barrel Politics,” quite often any RFP looking to purchase a service from a supplier can become horribly overloaded with high expectations, which can ultimately compromise the potential of benefit.  Either the business sees the cost of the potential solution and needs to load with usage (as above). Or given the difficulty of procurement, the business sees this as a chance to get what it wants and will load extra requirements upon it, which often then will change the selected target platform adversely.

As I mentioned before, the great news is if you are considering cloudsourcing, then capital investment in hardware and software is effectively off the table. It is now possible for CIO’s to make rapid and agile decisions based on the business service imperatives rather than asking for one massive investment and then justifying it by loading it with every possible additional scope usage.

My final thought here is this:

“If you are reinventing your IT services, look to a cloud world where you do not need to worry about massive capital investment. Then, focus on building your services as lean as possible based on true alignment to business needs rather than what existed before.”

This trend has taken a further leap forward in recent years with the introduction of cloud technologies and the consumerisation of IT.  A recent comment I heard from a Gartner analyst reinforced that with the ability of business to consume IT “as a service”, the challenge was a large amount of budget spending that may be happening outside the control of the CIO.

I spend a lot of time in my role having conversations with either divisional IT or business leaders who are pushing for greater agility and financial control. Their attitude is: “I now have a choice that I didn’t have before. If I can’t get it from corporate, then I’ll simply go and buy it somewhere else.”

Which brings me to the role of the Architect. In my career, I have often come across an architect who ends up playing the part of a police officer. They see the elegance in design of “in a perfect world”, not realising that the reality is much more unstructured. They build a corporate service design which attempts to support the changing landscape. But, at its heart, it still harks back to times when IT was basically a monopolistic supplier.  The second danger is when the architect has been involved in the IT systems for so long that it colours their perceptions of what is right/acceptable for the business. This mindset fails to take into account that the business no longer has the same priorities.

It is not the position of an Architect to say “No” to the business.  The best model they should follow is perhaps closer to that of a legal officer — whose job is to understand what the business is trying to achieve and why. Then, if appropriate, they can suggest alternatives, strongly if necessary, and ultimately provide risk and guidance for the path that the business wishes to pursue.

As you can see below, the span of activities that drive architecture and governance as “compliance” is much smaller than the total span of activities. The governance is much more about guidance of the business energy and enthusiasm to the optimal channel of provision rather than interdiction or resistance.

The era of X-aaS and consumerisation is upon us.  If our IT products/services are difficult to consume or we are not adapting to the changing business, then the line of business can be every bit as fickle in moving to a new supplier as our end-customers can be in moving to a new brand.

In other posts, I have alluded to the fact that the cloud computing paradigm, (with it’s pay-as-you-go financial modelling and it’s prescriptive service descriptions), will present a disruptive factor in traditional sourcing, but I thought I would flesh this out a little more.

Fundamentally this is all about what I refer to as the change “From the Artisan to the Engineer”, and this is what i will describe today.

The blogosphere abounds with advice and postings for CIO and IT leaders to move up the value chain from IT as a cost centre, to IT as a strategic partner.  The trouble is, the most difficult thing to do in this situation for many IT organisations is to let go of the traditional activities and expertises which have served so well up until this point.  It follows an interesting parallel of the lifecycle of a developer itself, (shown in the table below).

As you can see, in order to deliver greater value in each step of maturity, at some level this means relinquishing hands on focus on the previous more detailed level. Nobody has the time to do all the detail themselves and still deliver value at higher levels. This is parallel for Cloudsourcing and Traditional Outsourcing.

I have been part of a number of outsources over the years, in one way or another, and have been watching the pattern changing in two ways.  First.. the era of huge (monolithic?) outsources is disappearing in favour of a portfolio of service delivery specialist areas.  Second, (thankfully), the increasing familiarity of the market with the outsourcing model is driving more and more “Outcome Based” arrangements rather than the traditionally micro-managed input.

What does the cloud bring?

1. Cloud brings transparency.  There is no ambiguity around the details of the service you are getting.  It’s not a custom service, it’s a prescriptive service and you can shop around and read the service description to understand exactly what is in it.
2. Cloud brings cost clarity.  It’s pay-as-you-use with a unit cost, and therefore very easy both to predict the spend, as well as to pull on different levers in the organisation to change the level and pattern of that spend.
3. Cloud brings modularity.  Because you are purchasing services and not components, (whether you are buying IAAS/PAAS/SAAS etc), each one is a wrapped service.  Therefore it becomes easier to treat your portfolio of service needs as modules.

So, the arrival of the maturing Cloud phenomenon, coupled with the already inbuilt trending changes in outsourcing means the following.

When one of our customers, NetHope, wanted to quickly setup a portal, SharePoint was an obvious choice, but Office365 did not support some of their use cases so we looked to Azure’s IaaS capabilities to help them.  NetHope’s mission is to act as a catalyst for collaboration, bringing together the knowledge and power of 34 leading international humanitarian organizations so that the best information communication technology and practices can be used to serve people in the developing world. The NetHope Cloud Services Initiative is focused on aggregating information on available cloud services that can help NetHope members achieve their respective missions faster/cheaper with cloud technologies.

Accenture and Avanade worked with NetHope on the pre-release Azure IaaS functionality to develop the NetHope Humanitarian Cloud Portal and utilized an Avanade asset that deploys SharePoint in Azure using PowerShell.  As a result, the portal was developed and deployed in 5 short weeks and will be a powerful tool for NGOs to find and collaborate on suitable cloud services with most of the functionality being SharePoint out-of-the-box. NetHope estimates that utilizing cloud technologies, members can save 30-50% in costs, reach their beneficiaries in key markets 30-70% faster and positively impact millions of lives.

We continue to be uniquely positioned with Microsoft and our ability to provide customers with an end-to-end public cloud solution on the Windows Azure platform, breaking down the barriers (security, compliance and compatibility) to public cloud with our Azure Agreement announced back in April.

I firmly believe that PaaS (platform as a service) is the place our customers eventually want to be—and where they will see the most benefit.  They will get there, but reality means we take baby steps and that’s ok.  With the new functionality Windows Azure provides, it allows for more choice and competition in the market and that is good for everybody.  If you have not tried Windows Azure yet, head over to the Windows Azure site and start trying out the new features.  You’ll be surprised.  And in this instance, that’s a good thing.

Giles Frith, an Accenture Cloud Computing Architect, co-authored this post.