Cloud Computing, Capital Spending and Unintended Consequences

Ann All

Here's one of life's rules of thumb that I think applies especially well to most technology implementations: For every intended consequence, there are usually at least three unintended ones. This rule is why time travel is a bad idea, plain and simple. And it certainly makes selecting and purchasing technology a tough exercise.


Bernard Golden, CEO of HyperStratus, a consulting company specializing in virtualization and cloud computing and author of "Virtualization for Dummies," hinted at one of the unintended consequences of cloud computing when I interviewed him earlier this year for a story on cloud computing. He said the cloud will call for shifts in processes as basic as budgeting, which will no longer involve submitting funding requests based upon relatively simple hardware and software cost calculations. He told me:


If IT organizations want to take advantage of cloud computing, they will have to modify or even jettison many of their existing processes.


Our interview came to mind when I saw a post by's Naked CIO, in which he discusses one of the theoretical benefits of cloud computing: its ability to reduce the capital expenses associated with IT.


The capital-intensive nature of most IT spending makes it tough to accurately predict future business needs and allocate the correct amount of resources. In a scenario right out of "Goldilocks and the Three Bears," IT leaders rarely get it "just right." They don't allocate enough and end up without the necessary resources to support business initiatives. Or they allocate too much and end up with lots of underutilized hardware.


Because of this tendency, cloud computing is an especially good fit for applications that see regular spikes in demand, said Jonathan Bryce, co-founder of Mosso, the cloud computing division of Rackspace, and another of the sources for my story. He told me:


You have access to the infrastructure if you need it, but you don't have to buy it upfront. If you're uncertain about usage, you'll probably end up buying the wrong amount of infrastructure.


Sounds great, right? The Naked CIO worries that cloud computing may adversely impact IT bonuses and incentives, which are often based on operational performance. He writes:


... If IT is adding operational expense on projects, applications and hardware which traditionally have never been operational, inevitably there will be fallout -- and you can bet this will fall in the CIO's direction.


IT leaders must prepare business executives for this shift, he says, and must consider all of the business impacts associated with a move from capital to operational spending. Of course, there are even bigger concerns associated with cloud computing. I wrote about one yesterday, the cloud's ability to make it easier to trim internal IT staffs. Depending on your perspective, that's a huge advantage or a huge drawback. (Remember the unintended consequences.)

Add Comment      Leave a comment on this blog post
Dec 2, 2009 1:36 AM David Harris David Harris  says:

Ann -

"This rule is why time travel is a bad idea, plain and simple." ... Time travel is a wonderful idea, I assume you never saw Van Damme's action/adventure movie TimeCop (1994)?


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