Second Report is here! The Challenges of Cloud.

In this second (of five) reports for Accenture on Cloud Computing we explore the challenges faced by firms.

Unlike other reports we do not dwell on technologically deterministic problems alone (security being one example). Instead we extend this discussion to include issues such as institutional lock-in. Such lock-in occurs when an organisations adoption of a SaaS can lead their users to become quickly locked into the ongoing development strategy of that SaaS whether it aligns with the organisations strategic aims or not. It is hard to get users who like a SaaS to stop using it if it aligns with their desires and aims even if it is against overall company objectives.

We also discuss Service Level Agreements – discussing why the challenges are not what people believe. The key is understanding the challenge of multi-tenancy for a service provider.



Our 2nd Report: Meeting the challenges of cloud computing – Accenture Outlook

Our second Accenture report on Cloud Computing is about to be published!  As a taster the above link takes you to a short synopsis (Published in the Accenture Outlook Points of View series). I will post a link to the full report when it is out.

While in danger of providing a summary on a summary, this second report builds on our first “Promise of Cloud Computing”  report to analyse the challenges faced by a move to cloud. We identify the following key challenges:

Challenge #1: Safeguarding data security

Challenge #2: Managing the contractual relationship

Challenge #3: Dealing with lock-in

Challenge #4: Managing the cloud

Once you read the paper I would love to hear your views – please use the add comments link at the bottom of this section (its quite small!) or email me directly on

I would also suggest you also review the whole report when it is out – much of the important detail is missing from this shorter synopses.

Cloud Computing – it’s so ‘80s.

For Vint Cerf[1], the father of the internet, Cloud Computing represents a return to the days of the mainframe where service-bureaus rented their machines by the hour to companies who used them for payroll and other similar tasks. Such comparisons focus on the architectural similarities between centralised mainframes and Cloud computing – cheaply connecting to an expensive resource “as a service” through a network. But cloud is more about the provision of “low-cost” computing (albeit in bulk through data-centres) at even lower costs in the cloud. A better analogy that the mainframe then is the introduction of the humble micro-computer and the revolution it brought to corporate computing in the early 1980s.

When micros were launched many companies operated using mini or mainframe computers which were cumbersome, expensive and needed specialist IT staff to manage them[1]. Like Cloud Computing today, when compared with these existing computers the new micros offered ease of use, low cost and apparently low risk which appealed to business executives seeking to cut costs, or SMEs unable to afford mini’s or mainframes[2]. Usage exploded and in the period from the launch of the IBM PC in 1981 to 1984 the proportion of companies using PCs increased dramatically from 8% to 100% [3] as the cost and opportunity of the micro became apparent. Again, as with the cloud[4], these micros were marketed directly to business executives rather than IT staff, and were accompanied by a narrative that they would enable companies to dispense of heavy mainframes and the IT department for many tasks –doing them quicker and more effectively. Surveys from that time suggested accessibility, speed of implementation, response-time, independence and self-development were the major advantage of the PC over the mainframe[5] –  easily recognisable in the hyperbole surrounding cloud services today. Indeed Nicholas Carr’s current pronouncement of the End of Corporate IT[6] would probably have resonated well in the early 1980s when the micro looked set to replace the need for corporate IT. Indeed in 1980 over half the companies in a sample claimed no IT department involvement in the acquisition of PCs[3].

But problems emerged from the wholesale uncontrolled adoption of the Micro, and by 1984 only 2% of those sampled did not involve the IT department in PC acquisition[3]. The proliferation of PCs meant that in 1980 as many as 32% of IT managers were unable to estimate the proportion of PC within their company[3], and few could provide any useful support for those who had purchased them.

Micros ultimately proved cheap individually but expensive on-mass[2] as their use exploded and new applications for them were discovered. In addition to the increased use IT professionals worried about the lack of documentation (and thus poor opportunity for maintenance), poor data management strategies, and security issues[7]. New applications proved incompatible with others (“the time-bomb of incompatibility”[2]), and different system platforms (e.g. CP/M, UNIX, MS-DOS, OS/2, Atari, Apple …) led to redundancy and communication difficulties between services and to the failure of many apparently unstoppable software providers –household names such as Lotus, Digital-Research, WordStar and Visi and dBase[8].

Ultimately it was the IT department which brought sense to these machines and began to connect them together for useful work using compatible applications – with the emergence of companies such as Novell and Microsoft to bring order to the chaos[8].

Drawing lessons from this history for Cloud Computing are useful. The strategic involvement of IT services departments is clearly required. Such involvement should focus not on the current cost-saving benefits of the cloud, but on the strategic management of a potentially escalating use of Cloud services within the firm. IT services must get involved in the narrative surrounding the cloud – ensuring their message is neither overly negative (and thus appearing to have a vested interest in the status quo) nor overly optimistic as potential problems exist. Either way the lessons of the microcomputer are relevant again today.  Indeed Keen and Woodman argued in 1984 that companies needed the following four strategies for the Micro:

1)      “Coordination rather than control of the introduction.

2)      Focusing on the longer-term technical architecture for the company’s overall computing resources, with personal computers as one component.

3)      Defining codes for good practice that adapt the proven disciplines of the [IT industry] into the new context.

4)      Emphasis on systematic business justification, even of the ‘soft’ and unquantifiable benefits that are often a major incentive for and payoff of using personal computers” [2]

It would be wise for companies contemplating a move to the cloud to consider this advice carefully – replacing personal-computer with Cloud-computing throughout.

(c)2011 Will Venters, London School of Economics. 

[1]            P. Ceruzzi, A History of Modern Computing. Cambridge,MA: MIT Press, 2002.

[2]            P. G. W. Keen and L. Woodman, “What to do with all those micros: First make them part of the team,” Harvard Business Review, vol. 62, pp. 142-150, 1984.

[3]            T. Guimaraes and V. Ramanujam, “Personal Computing Trends and Problems: An Empirical Study,” MIS Quarterly, vol. 10, pp. 179-187, 1986.

[4]            M. Benioff and C. Adler, Behind the Cloud – the untold story of how went from idea to billion-dollar company and revolutionized and industry. San Francisco,CA: Jossey-Bass, 2009.

[5]           D. Lee, “Usage Patterns and Sources of Assitance for Personal Computer Users,” MIS Quarterly, vol. 10, pp. 313-325, 1986.

[6]            N. Carr, “The End of Corporate Computing,” MIT Sloan Management Review, vol. 46, pp. 67-73, 2005.

[7]            D. Benson, “A field study of End User Computing: Findings and Issues,” MIS Quarterly, vol. 7, pp. 35-45, 1983.

[8]            M. Campbell-Kelly, From Airline Reservations to Sonic the Hedgehog: A history of the software industry. Cambridge,MA: MIT Press, 2003.

Accenture Outlook: The coming of the cloud corporation

I have written, with two colleagues, an article for Accenture’s Outlook journal which introduces the idea of the Cloud Corporation:

Accenture Outlook: The coming of the cloud corporation.

The article discusses various trends in outsourcing which will impact upon Cloud (and vice versa).

Cloud computing remains focused on cost cutting achieved through new technology, however lessons from the past suggest that this is only a minor part of the disruptive innovation which Cloud may offer. In particular we should not ask “what is cloud computing?” but rather “why is cloud computing?” – in essence exploring the pressures on innovation today which resonate with the idea of utility computing.

While the cost saving is an important incremental innovation on existing practices, it is cloud’s potential to allow new forms of organisational collaboration which offer the potential of radical innovation. Moving the data-centre outside the organisation asks us to evaluate the relationship between the data-centre and the organisation. Is it “ours” to horde and control, or are parts of it able to be shared, opened, exploited by others (partners, customers, suppliers etc)? In turn does this opening of the relationship between the organisation and its information recast the organisation itself?


The Outsourcing Enterprise: From Cost Management to Cloud Services

I am teaching/facilitating  an Executive Summer School this coming summer in which my research on Cloud Computing and on Utility Computing will be presented…  In particular the team believe that Cloud needs to learn the lessons of Outsourcing. At the moment the focus is (as it was with early outsourcing) focused on cost reduction and Capex / Opex transfer. But those who had their fingers burned with the outsourcing craze quickly learned that it is through strategic collaboration rather than cost reduction that value is achieved.  Cloud providers and companies considering the cloud need to learn these lessons if they are to avoid the mistakes of the past.


This course offers in-depth coverage of the key issues, developments and management challenges in today’s global sourcing marketplace. It provides a learning vehicle and tools, in terms of key frameworks, principles and practices, for those preparing themselves for general management  in major organizational functions or for more specific global sourcing roles, and also for experienced managers who wish to move to the next level. It  focuses on the needs of managers and senior executives working in client companies and service suppliers. It covers global sourcing, strategy, Information Technology outsourcing (ITO) and Business Process Outsourcing (BPO) including the most recent developments in sourcing and offshoring  for such major areas as HR, Finance and Accounting, Procurement, Legal and Knowledge (KPO) functions.

To find out more click here.

The Outsourcing Enterprise: From Cost Management to Cloud Services

Cloud and Business – Our survey results are in…

You will be aware that we have been running a survey along with “Horses for Sources” of industry attitudes to Cloud Computing. We received 1053 responses – an impressive sample of the business community. While I have yet to fully analyse the results HfS have done some initial sifting as shown in the following graph from their site:

Graph of results

As Phil writes in his Blog this suggest that business function leaders are more impressed with Cloud and are involved in driving its adoption – marketing to IT functions is less likely to impress than targetting business executives. Unsurprisingly it seems clear that Cloud is seen as driving down costs (50+% suggest this appeals to a great extent”) but I was most struck by the number who strongly believe it will facilitate virtual/distributed organizations (also around 50%).

This is important because it suggests they believe Cloud computing offers the chance for organisational change – not just replication of existing functions or apps. Further it is supported by Business Executives who (nearly 50% of them) belived it will “enable us to focus on transforming out business”.

Cloud, in my view, offers the chance to do things differently not just cheaply. It offers the chance for new forms of organisation to challenge existing businesses. In particular it offers the chance for businesses to collaborate in new ways. SalesForce for example allow their users to open up specific parts of their SalesForce offering to business partners simply and easily allowing closer collaboration (something which would have required massive EDI investment a few years ago). Who knows what new forms of business this technical facility, and business executive desire will open up…  One might imagine “clouds” of nimble agile small enterprises collaborating using Cloud systems to take on the big corporates. Such businesses nimbleness and close integration of systems (through the cloud) might be a potent mix.

Hybrid Clouds – Inside and Outside

I want to argue that our current categorisation of “Public and Private” cloud is inappropriate. Instead I want to propose a categorisation of “Inside and Outside” cloud.

Public and Private clouds imply a strict boundary between the organisation and the internet. The organisation is hidden behind a private firewall, while the outside is public.

But in reality everything sits within the cloud – including the enterprise. Using the cloud is not either-or but can be a hybrid. For example I met this week with Peter Cowley, ex MD of New Media at Endermol (makers of TV shows such a “Big Brother”). He pointed out that Endermol for some projects would  ship everything possible to the cloud (video, pictures, pages), but where personal information or critical information was used, the cloud services would hook back to an internal server. This internal server would be basic – supplying only simple HTML pages on the data, but would be integrated into the complex Cloud offering seamlessly. My Hybrid cloud is neither public nor private – it is a mix between inside and outside.

Similarly by thinking about “private clouds” internally – for internal users – we are focusing too heavily on the boundary of the enterprise. This limits options – for example allowing an outside supplier to capitalise on the “Inside Cloud” to offer new services to staff or outside customers.  For example in Telecos the internal fabric of the business (the network) might allow outside companies to run applications on it as a platform. For example an innovative ConferenceCall system – hosted within the Telcos “Inside Cloud” might be offered to the public  –  not exactly public, but neither private.

(see Creeger,M (2010) “CTO Roundtable: Cloud Computing” , Communications of the ACM, 52(8) p 50-56 for more details on the Telecoms case study).