Time for cloud computing to deliver

This time last year I took the rather brazen step of optimistically suggesting that IT spend would recover from its annus horribilis in the new year. But even with a record number of costly tech disasters around data loss and security, lessons still are not being turned into budget realities. It is apparent to me that, for a great number of organisations, recession may have technically left the building but in the world of IT spend, it is still here. Many strategic IT projects are still on ice and the willingness to take risks remains at an historic low.

The issue is the level of scrutiny being levelled at those in charge of IT spend. Set against this backdrop of increased transparency, the impact of IT on businesses and individual workers is likely to become increasingly profound.

That is actually good news in the long run. The extent to which IT projects will need to demonstrate how they boost revenues directly, crossed with the increasing desire of the board to both recognise and quantify these benefits, will really shake up those responsible for delivering systems.

Gartner’s latest mid-term forecast reveals an increasingly visible link between technology decisions and outcomes, both for the economy and society. A very bold forecast is that, by 2015, new revenue generated each year by IT will emerge as the “primary factor” determining the annual compensation of most new chief information officers. This shift will apparently be powered by IT’s increasingly direct involvement in enterprise development efforts and a growing trend towards harnessing the power of social networks to improve communication, both within companies and with stakeholders.

Gartner further predicts that, also by 2015, tools and automation will eliminate a quarter of staff working hours associated with IT services. This is because the IT services industry will more and more come to emulate other industries, such as the manufacturing sector, as it gains maturity. This will see IT service providers replacing bespoke services with more generic “industrially-produced” offerings. It is expected that cloud computing – that spectre which still frightens some FDs, and rightly so when providers do not explain the benefits clearly enough but simply keep blathering about it – will accelerate the use of tools and automation in IT services, and that companies will shift from complex, expensive in-house technology infrastructures to “on-demand” self-service provisioning of commodity services customised to meet the specific requirements of individual clients. The good news is that Gartner thinks that this shift can help productivity levels to increase, leading to more cost-efficient logistics.

If this was not enough, the market forecast goes on to predict that – again, by 2015 – 20 percent of non-IT companies will be offering services to third parties through our friend, the cloud. So not only will companies be using cloud to operate their internal systems, they will be using it to sell to their customers and to supply their products and services. Such a model, which could for example see larger companies buying services wholesale and then retailing surplus capacity to smaller businesses, is another way for IT to add value to businesses – in this case: cold, hard cash.

It is time to fasten our seatbelts again and brace ourselves for the technology rollercoaster that awaits us in the new year. But at least it seems that, with increased transparency on the minds of many, we can finally look forward to tighter links between IT investments and commercial results. This echoes what FDs – and indeed what Financial Director and this column – have been saying for more years than we care to remember: that IT cannot remain about technology for its own sake, but must become more accountable and aligned to the needs of businesses as a whole.