The traditional IT model is that customers purchase hardware up-front (CapeEx purchase model), making a significant investment but also taking on most of the technology risk. At the same time, the proliferation of product features and complexity is outpacing the ability of customer to consume these features: this was termed the “Consumption Gap” and is manifested in longer software and product upgrade cycles and a decline in the percentage of features used.

Cloud represents a new model, based on consumption economics. It meets a new set of customer requirements around lowering cost and complexity, reducing (or sharing) risk and breaking out of product upgrade and refresh cycles: “Customers are rapidly losing their awe of complexity. Simplicity is the new hallmark of sophistication.” (Consumption Economics: The New Rules of Tech).

Cloud and the concept of “X as a Service” is rapidly becoming “the new normal”, enabling organisations to only pay for the capacity they need and to eliminate the risk of traditional on-premise infrastructure and applications.

It’s also enabling the CIOs to think differently about how they generate value for the business. While cloud can pose a threat to the IT organisation by allowing business units to purchase IT services directly from suppliers, it also provides the opportunity for CIOs to have a greater impact on the business strategy – and in providing rapid deployment of services that as the business demands them.

  Tradition Data Centre Private Cloud Public Cloud
Definition of expectations Low. Often no internal service levels High. Service catalogue based on orchestration tool Highest. Clear SLAs and service levels
Staffed by Typically Low High. Designed to scale in pre-determined increments Highest. Can be easily scaled to meet business requirements
Scalability Lowest. CapEx varies, but total cost generally highest including admin overhead Low. Designed to be easily administered Highest. In most use cases, lowest TCO
Customer Satisfaction Slow. Can take days to weeks to add servers or new applications Fast. Designed to rapidly deploy new applications Fastest. Minutes or hours to deploy a new application
Risk Varies, but often high due to lack of DR and physical infrastructure Typically lower. DC and redundancy integrated in design Very low. Highest levels of redundancy, physical security and DR



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"The New Normal" slideshare

“I skate to where the puck is going to be, not where it has been.”
Wayne Gretsky, the most successful ice hockey player of all time

“The Cloud model is forcing CIOs and their teams to think and behave differently”
Don Holley, Mindset in a Logicalis blog on Cloud and the CIO

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