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Mark Peters
Mark Peters
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Bye-Bye, Traditional IT Buyer

Recent ESG research suggests the writing is on the wall for traditional IT purchasing processes. Three trends are putting pressure on the standard IT procurement formula.

For decades, the standard model for IT procurement has typically involved an IT manager being aware of an IT need and then quantifying it. This happens with more or less involvement from organizations’ buying and legal departments (which is either more or less welcome!). The IT manager will then hold some type of beauty contest among the usual-suspect vendors (directly or virtually via a partner). Then a winner is selected, usually based on criteria the buying IT manager determined before going into the decision-making fray.

But recent ESG research indicates that three factors are conspiring (well, maybe that’s too dramatic a word, but they're certainly combining) to put this formula under pressure. They are:

  1. Continuing growth in the adoption of cloud computing
  2. Changes in the demographics of IT personnel
  3. More involvement in IT decisions by non-IT personnel

Each of these areas changes the traditional dynamics, and, arguably, weakens the central role that IT managers have long had in determining what runs in their datacenters, and beyond. Let’s look at these three trends in a little more detail.

Cloud computing is the top 2014 IT priority and the highest concentration of expected increased spending. The combined number of organizations prioritizing cloud-based infrastructure services (i.e., IaaS), business applications (SaaS), and/or application development (PaaS) shows that public cloud computing services will be a key focus for 40% of IT organizations this year. As such, it follows that IT departments are most likely to increase spending in the area of public cloud computing. With cloud models, the traditional IT buying model is disrupted because it is more likely to be a cost/service-level/flexibility-based purchase than a specific IT vendor decision.

Younger companies and IT personnel have different buying proclivities. Just look at your kids (if you have them) to understand this. IT to them is not the marvel it has been to us older folks. It is simply a tool, and as such, it's just a low-risk utility, which can open them up to considering newer options, tools, and vendors much more quickly.

For example, according to the ESG survey, nearly three-quarters of organizations that have operated for 10 years or fewer currently use SaaS, compared with only 56% of those that have been in existence for more than 50 years. Meanwhile, IT professionals 35 and under are nearly three times as likely to believe Amazon Web Services is an important contributor to their organizations' future success than are IT pros older than 55. This demographic change means less focus on traditional vendors, and probably even the methods of choosing them.

Line-of-business involvement in the IT evaluation and purchase process is not a fad. More than half of the IT respondents in the ESG survey stated that the business groups and other professionals in their organizations have -- to some extent -- become more involved in the IT purchase process over the last 12 months. The implication for IT managers is twofold: The best outcome is having to accept the input of others into their decision making; the worst is that other groups go off (with or without IT’s blessing) and make IT purchases of their own.

Of course, this shift in IT procurement is not all a done deal yet; there still are plenty of beauty contests going on. The point, for those nearer retirement than college, is to avoid putting your traditional IT purchasing fingers in the dam of IT change, as you are likely to get very tired and/or very wet! Take a look in the mirror: The older you are, the more traditional you are likely to be in both your approach to IT purchasing and (not surprisingly) the IT purchases you ultimately make; consequently, there will be more expectations -- perhaps even pressure -- to change.

However, the great thing about age is the experience that comes along with it, which means, of course, that the pendulum is likely to swing back every decade or two, as it has always done.

Mark Peters is a Senior Analyst at the Enterprise Strategy Group, a leading independent authority on enterprise storage, analytics, and a range of other business technology interests. View Full Bio
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MarciaNWC
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MarciaNWC,
User Rank: Strategist
5/6/2014 | 6:53:08 PM
Re: IT buyers
It appears that EMC this week released a product based on the Project Nile englishmpd mentioned: Elastic Cloud Storage, according to this story http://www.computerweekly.com/news/2240220054/EMC-launches-Elastic-Cloud-Storage-ECS-with-ViPR-20

 

 
Susan Fogarty
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Susan Fogarty,
User Rank: Strategist
5/5/2014 | 8:10:54 AM
Re: IT buyers
Ah, thanks for the details, Englishmdp. The issue of balance you bring us is particularly interesting. I will be keeping my eye open for more in this area.
englishmdp
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englishmdp,
User Rank: Apprentice
5/5/2014 | 1:07:41 AM
Re: IT buyers
Susan, it is simply that vendors will want to offer choices - both supplying the cloud vendors on the one hand, while also having an increasing range of options so that end users (typically large scale it must be said) can enjoy similar cost and flexibility profiles to what they might get by using a public cloud. This is, if you like, the idea of a private cloud on public steroids. One specific example (drawing from the relative little that has been said so far) is the "Project Nile" from EMC, but there are many such things in the works froma variety of vendors. Dont forget that there's an intriguing business balance here: even if the "cloud-like" on prem abilities don't meet the actual price cloud providers pay, the end user may perceive it as a wash because of the impact of the CSP profit margin. Future decisions will be based far more on the preceieved relative risks of each route and the proclivity a user has to do things themselves (in other words, is IT a desirable / necessary core competency or not?).   
Susan Fogarty
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Susan Fogarty,
User Rank: Strategist
5/1/2014 | 9:14:58 AM
Re: IT buyers
English, those are interesting observations. I guess it is true that there could be backlash and a desire to regain control, especially if the providers aren't holding up their end of the bargain. I'm curious about these on-premises solutions designed to "out-cloud the cloud" -- would like to hear more on those.
englishmdp
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englishmdp,
User Rank: Apprentice
4/30/2014 | 4:27:25 PM
Re: IT buyers
Susan

Thanks for the comments. The reason I say that the pendulum could swing is simply because I susepct that "something" might happen to make it so. Do I know what that is...no. It could be as simple as users wanting to move off clouds (to some degree) because they start exhibiting some of the less savory aspects of sloth and change-control constraints that have caused in-house IT to lose favor. Our own research shows that complexity and price are more common obstacles for existing cloud users to increase adoption than for non-users to engage: in other words, sometimes the cloud ain't as good as the datasheets! Alternatively, many vendors are looking to provide equipment and options that "outcloud the cloud" - that is, giving similar values but on prem. And again I say that pendulums tend to swing - and so I suspect this will happen here for SOME reason. To your point I don't think it will be a 100% change, and I don't necessarily see users "buying most of the infrastructure products" but they may well reconsider the balance and/or want to find ways to retain system control while deloying utility infrastructure.    
MarciaNWC
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MarciaNWC,
User Rank: Strategist
4/29/2014 | 8:15:36 PM
Re: IT buyers
I agree that this shift is happening because IT has become so intrinsic to what each business unit does. And with SaaS, it's so easy for users to sign up for services on their own -- leaving IT out of the loop, and much to the chagrin of IT security.
Susan Fogarty
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Susan Fogarty,
User Rank: Strategist
4/28/2014 | 8:40:40 PM
Re: IT buyers
I suppose you can make that analogy. But to me it is more of a shift that is actually happening because IT matters so much. As technology becomes more and more embedded into every function of business, more people are involved in decision making around it and roles change.
kburg070
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kburg070,
User Rank: Apprentice
4/28/2014 | 3:44:51 PM
Re: IT buyers
To some extent this hearkens back to the "IT doesn't matter" argument of Nicholas Carr from a few years ago -- that as IT becomes more of a utility that runs things, it's less necessary for it to be proprietary to a company. Shared services is the logical extension of that.
Susan Fogarty
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Susan Fogarty,
User Rank: Strategist
4/28/2014 | 9:50:50 AM
IT buyers
Mark, I agree that this trend is happening across the board in most organizations, sometimes for better and sometimes for worse. Your statement at the end of the piece intrigues me. You say that the pendulum swings back and forth and will most likely return to the previous state at some point. We've always seen that in the past, but to me, it seems like cloud is one technology shift that will remain permanent. I'm not sure that enterprises will be able to ever take on the complexity of cloud provider environments once they have progressed to cloud. Do you think the pendulum will ever swing back that way, so that enterprises are buying most of the infrastructure products?
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