There‘s a tectonic shift occurring in IT. Just as mainframes, PCs and the Internet reshaped enterprises in the past 10 years, the "Cloud" will influence the next decade of IT. While millions of people and thousands of businesses already use it - whether they know it or not - we believe the benefits of cloud computing are just beginning to unfold.

The only constant is change

Doug Neal, LEF Research Fellow and coauthor with David Moschella, Mark Masterson and Donal O‘Shea of "Doing Business in the Cloud," believes the IT industry is undergoing the same fundamental changes manufacturing experienced 20 years ago when massive warehouses of inventory were replaced by on-demand delivery.

"From an IT perspective, a lot of places are running out of space for certain apps and are expanding their data centers," Neal says. If you have a data center, he asks, "How would you like to get three times the work out of it for a very marginal increase in cost, and that cost occurs only when you hit peak load? And wouldn‘t you like to double or triple the Green impact of your data center?" This is possible with cloud computing, he says.

Today, peak load capacity, or "safety stock," is kept at the lowest possible level - the individual server. The consequence is that overall server utilization for the entire data center is typically very low, sometimes even single digits. The cloud allows us to access capability on demand, essentially keeping the safety stock in the cloud.

While there are a number of compelling reasons to move to the cloud, it‘s not going to happen overnight. Initially, companies will favor development and testing in the cloud. Once comfortable with that, firms will begin to move disaster recovery to the cloud. In the future there will be a switch in which production moves to the cloud and disaster recovery, along with the most sensitive data, will be hosted in the local data center. "Doing Business in the Cloud" addresses this transition and offers case studies on companies that already benefit from its use.

Data center is not the dodo

Despite the rise of the cloud, traditional data centers won‘t go away.

"It‘s hard to imagine, but if the Internet goes down you still need to have the ability to function," Neal says. "You still have to keep a production data center. You have to have some capacity locally." But we‘re talking about a decade-long transition here and there are issues around security that still need to be sorted out. One area the cloud can‘t fulfill yet is transparency: Where‘s my data and who‘s touching it? It may be that cloud providers will offer increased transparency on demand - by the drink - for those firms who insist upon it.

In the past, says Neal, companies would buy special hardware and software to ensure reliability, and it was quite expensive and complicated to manage. In the future, the LEF sees companies like CSC acting as intermediaries and managing the complexity of dealing with the many different cloud providers.

However, IT has work to do with regard to overall security.

"Previously, the whole notion of security was perimeter defense," Neal says. "Build a wall. Create a castle and you‘re OK. But there‘s this fundamental reality that it can and will be penetrated. As my co-author, Mark Masterson argues: We need to re-conceive security not as a wall, but as health." The Jericho Forum notes, rather than protect us, the firewall has become a barrier to business.

Shifting IT‘s perspective

Historically, IT departments have worked toward creating one-size-fits-all solutions for users. Moving forward into the cloud, the LEF says "No" to doing the same thing for everyone.

"Part of what IT has to learn is to treat people, applications and data differently," Neal says. "We should empower the people who are responsible about IT and restrict those who aren‘t. There are some things we don‘t need to hold close. This is a huge inevitable shift."

The employees that are proficient in both technology and business, called "double deep," will lead this transition and be the source of economic value creation.

"In the past, IT knew about IT and nobody else did," Neal says. "We would do things to or for our fellow employees. These double-deep employees change the game in which IT needs to become a facilitator and has to create platforms, and the nature of these platforms is that many of them have to be on demand."

Moving around ‘the stack‘

In "Doing Business in the Cloud," the LEF discusses the cloud as a source for new services at multiple levels of enterprises (Figure 1), starting with infrastructure at the bottom followed by platform, software application and process. Surrounding these layers is a new orchestration capability for scaling, security, identity and management. These layers form a stack with important consequences.

Going down the stack gives firms the ability to precisely do what they want. However, it is at the expense of much greater attention to detail. Going up the stack frees management attention, but at the cost of having to abide by decisions made lower in the stack.

Says Neal, "The number one thing about moving to the cloud: As I look at a set of data and our applications, where in the stack should it go and do I have an opportunity to move it up the stack? When people say ‘I‘m going to move stuff to the cloud,‘ it‘s not ‘I take stuff I‘m doing now in my data center, and just replicate it in the cloud.‘ It‘s ‘how do I transform it so that I spend more time on activities which are core to my business and increase my agility?‘"

For the original article, please go to http://www.csc.com/features/stories/31506-the_future_of_it_doing_business_in_the_cloud