In the economic realm, economists often refer to 'structural change'. 'Structural change' is when long-term game rules have been fundamentally altered, and truisms based on the old model no longer apply (e.g. 'real estate value never decreases', 'over the long term, the stock market always rises in value', 'my children will experience more opportunity', 'owning is better than renting'). If I propose economic and cultural aspects underlying the world around us are radically changing and old models do not provide good guidance, you may not be surprised. Because underlying economic mechanics have changed (i.e. investment yield,counter party risk, credit liquidity, personal consumption habits) economic bailouts based on existing models are not as effective (much to everyone's chagrin). We are forced to re-build the economy and meet new long-term realities imposed by structural changes that occurred during the last twenty years (i.e. financial industry market participation, credit expansion, credit risk management and hedging, asset valuation). To be effective, participants must recognize a new model is in force.
Shouldn't a structural change within Information Technology be recognized today? Cloud computing proponents think so... Disruptive forces (i.e. commoditization, tightening economics, industrialization, business practice acceptance, and a resurgent desire for trust and credibility) are creating a new reality. Organizations can abide by old model rules or gain advantage by adapting.
The normal IT response is to adopt an 'architecture bailout' focusing on products and technology. But many 'architecture bailouts' (i.e. Object oriented programming, Component Based Design, Event Driven Architecture, and Service Oriented Architecture) are pursued as incremental, bolt-on practices. Rarely do organizations transform people, process, and technology to match realities imposed by structural change. But 'What is IT Transformation Really?', Brian Watson of 'CIO insight' furthers the discussion with this call to action: "[Position] your IT shop as the “internal consultant of choice,” versus available consulting or advisory services". How many of us know 'the cost of compute hour', 'the cost of storage per GB', 'the cost of web service development', 'the cost of our application platform'? To determine which aspects of IT to shift into Cloud, we need to fully understand the economics of IT instead of architecture and technology.
Many Cloud computing messages target IT business model adaptation (i.e. pay-as-you-go, externalizing IT services, service consumption) instead of another architecture bailout (i.e. grid, virtual machines, autonomic computing, SOA). The conversation is shifting in the right direction, and Chris Howard is leading with research proposing a process to determine when to engage internal resources (core) or disengage the task and rely on external service providers in the Cloud.
Today's economic players are proposing a transformational response and stepping out of their comfort zone to lead. Meeting structural changes imposed by Cloud computing will require significant action by IT leadership. A recent blog post by Mike Rollings states an incremental responses will often be ineffective and leadership is a critical. Jack Santos has an excellent blog entry on leadership and collaboration (the embedded 2 minute video is uplifting).