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F500 Corporate IT, Cloud Innovators?

Cloud computing has been filled with surprises and unexpected behavior from the get-go

The way you know you’re in the midst of a technology shift and market disruption is when organizations don’t behave the way you expect them to based on past track records. Cloud computing has been filled with surprises and unexpected behavior from the get-go. First, Amazon, a retailer, turns out to be a technology powerhouse in disguise and changes the rules of IT infrastructure. Then, “real” technology leaders like IBM, Dell, EMC, HP and others make lots of announcements about cloud but essentially do little and re-brand existing offerings as “cloud-enabled.” Next, Verizon, the phone company, buys Terremark in a bid to become a global cloud leader. And of course, there’s always the fact that the federal government has embraced cloud widely and is spending large amounts of money to build private clouds and leverage public ones.

So, in a world that sometimes seems upside-down, how surprising is it really that the F500, and in particular, the corporate IT groups within these huge organizations, have often turned out to be the early adopters and drivers of cloud in all flavors – private, public and hybrid? When we started CloudSwitch, our hypothesis (based on all sorts of track records and past behaviors) was that within the enterprise market, mid-tier companies (defined loosely as several hundred million to a few billion dollars in revenues) would try cloud first. This was because we were betting that these organizations had enough pain from internal data center management (cost, over-provisioning, not their core business, lack of responsiveness to business users, etc.) that cloud computing’s benefits would overcome their initial concerns. And in fact, this is true of many mid-tier enterprises, who have indeed taken the leap into cloud over the past couple of years, along with the developer and start-up communities.

But the companies who seem to be driving enterprise adoption of cloud and defining many of the requirements for vendors in our experience are at the multi-billion-dollar revenue mark, and often within the F500. Our initial hypothesis here was that these companies would be too large and resistant to change to be early adopters, unlike the smaller, more nimble mid-tier players. But it turns out that these companies have such enormous capital expenditures in data centers and infrastructure investments that they’re determined to adopt cloud to move them to a lower cost curve (“get off the data center treadmill”) and help them break through the internal limitations on self-service provisioning and scaling that have frustrated their business users for years.

Even more unexpectedly, many of the people who are leading the way within these companies are managers and architects within the corporate IT group. It’s interesting to note that in previous technology shifts – SaaS and virtualization come to mind – the revolution was staged from within business units or at the developer level, and corporate IT came on board once these technologies were de facto standards. It’s possible that with these experiences in mind, corporate IT (and the CIO in particular) has decided to take the lead this time around, and not wait to find out what’s been going on without enterprise security, control or standards.

Last year, corporate IT was struggling to absorb the avalanche of information about cloud and to separate the hype from meaningful architectures and use cases. With some encouragement from the large technology vendors, corporate IT shops retreated into private clouds as the safe way to go. This year, with hybrid clouds all the rage, it feels like enterprises and IT managers are coming into their own. They’ve been speaking with more confidence based on their pilots and initial deployments, and have come to see cloud as something that can be shaped and driven by real enterprise requirements – not just a new set of processes/resources that need to be run as a separate and un-integrated silo.

In this hybrid model, F500 enterprises are working with vendor partners to build private clouds, and identify application categories that can run completely in public clouds, and those that need to span internal and external environments. They’re asking for management, orchestration and federation technologies that let them be vendor-agnostic and “position independent” (so apps can run in a given environment at a particular point in time, regardless of underlying infrastructures). This process is clearly a multi-year learning experience with the usual fits-and-starts as companies bump into the inevitable limitations of new technology and meet resistance from internal stakeholders. But the trend is clear. And although relatively few of these large enterprises are willing to go on record yet with their case studies, we can see first-hand the in-roads cloud is making among some of the largest pharmas, banks and manufacturing companies in the world, and it’s exciting to be part of the paradigm shift.

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More Stories By Ellen Rubin

Ellen Rubin is the CEO and co-founder of ClearSky Data, an enterprise storage company that recently raised $27 million in a Series B investment round. She is an experienced entrepreneur with a record in leading strategy, market positioning and go-to- market efforts for fast-growing companies. Most recently, she was co-founder of CloudSwitch, a cloud enablement software company, acquired by Verizon in 2011. Prior to founding CloudSwitch, Ellen was the vice president of marketing at Netezza, where as a member of the early management team, she helped grow the company to more than $130 million in revenues and a successful IPO in 2007. Ellen holds an MBA from Harvard Business School and an undergraduate degree magna cum laude from Harvard University.

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