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Why major misconceptions surround the enterprise public cloud

Rob Enderle | Jan. 27, 2014
Enterprise IT spending stalled in 2013 (though it will likely pick back up in 2014). Many say it's because enterprises have less to spend, but columnist Rob Enderle thinks it's because they've been spending a bit foolishly -- by reimbursing users for personal cloud services instead of examining cheaper ways to provide the same services themselves.

However, this lack of sales and marketing staff means an IT department can't present its offerings in a compelling fashion, so IT generally lags behind a service such as Amazon when it comes to ease of use. In one internal survey I reviewed a few weeks ago, users clearly said dealing with a firm such as Amazon was worth the extra cost when compared to working with internal IT. (This internal work was done for a large multi-national enterprise that doesn't want to be mentioned.)

An optimally run IT shop, according to this internal analysis, can provide cloud-based services, on average, for about $100 per user. Amazon and services like it are about $200, if purchased individually and not in bulk, while and a proprietary platform such as Oracle costs more than $500 per user.

The relative cost of an Oracle solution increased thanks to licensing cost and the multipliers for VMs needed for a Web-like service. (No wonder folks are screaming about Oracle software license costs.) Coincidently, I got this report the same week I read about the mammoth Oracle failure in Oregon. It's worth reading this case study because, no matter how bad your job is, you will feel better about it once you finish.

If you IT folks haven't conducted a cost analysis of your service providers yet, it is well past time. If IT wants to compete with Amazon, it needs to fully step up. If OEMs want to preserve their sales through IT, they need to help IT market the related services and create an interface competitive with services such as Amazon. Neither of these is optional, either. Services such as BMC's MyIT (partnered with EMC and VCE) and Egnyte can go a long way toward making IT relevant while solving ease-of-use problems.

To Create a Solution, You Need to Understand the Problem
This is the second time I've seen detailed analysis suggesting that IT — either as an intermediary for services such as Amazon or as a provider of the services themselves — can do so far more cheaply than when users, as they currently do, go directly to a cloud provider. Other clear benefits include compliance and increased security. But if IT can't pitch its advantages, it won't matter; users will still bypass IT, and the enterprise will still waste money that could have been better spent elsewhere or gone to the firm's bottom line.

Like that blacksmith, once you understand the problem, you can craft a solution. The trick is both understanding the problem and agreeing to craft the entire solution. In the end, enterprises still have tones of money to spend; enterprise OEMs just lost their connections to a large portion of them.


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