Thinking Bigger About Cloud and Mobile

Editor’s Note: Toby Redshaw has 30 years of insights from his experience as Global CIO at such leading companies as American Express and Aviva plus extensive business and IT leadership at Motorola, FedEx and in Silicon Valley. Always visionary and often contrarian, in this part 2 of a two-part SandHill interview on why modern IT is “conceptually simple but hard to do,” he focuses on cloud and mobile technologies. Click here to read Part 1 (“Using Modern IT for Competitive Advantage Isn’t as Simple as it Seems”).

SandHill.com: You include the cloud and infrastructure as an item in your list of 12 technology areas in modern IT that companies must do well in order to be competitive. How important is it, and is “doing it well” something more than smoothing out the wrinkles, so to speak, that occurs while new technologies evolve?

Toby Redshaw: Yes, it is. The cloud is a great example of a technology that’s conceptually simple. I can explain cloud to a 12-year old. The problem with cloud is executing it really well, knowing how to manage it and knowing where it’s going. This requires experience and a high level of diligence – you need to work with this stuff. Many people don’t understand that cloud done badly is much worse than technology done badly in the old pre-cloud way.

Doing it well is hugely important. Like the force multiplier for bad things, if I have an application and it blows up, I fix it. But if I have a problem in my cloud, it is a force multiplier for that explosion, and it blows up like dynamite.

Being able to manage cloud and infrastructure technology really well, especially in a green eco and cost-efficient way, is really important. People are realizing that one of the keys to rapid application development is having the right infrastructure ready to go.

My personal feeling is more and more you’ll see hybrid situations where you have a private internal “you manage it, virtualized” cloud type of environment connected to an external one that helps you smartly manage and mitigate growth opportunities. For instance, somebody in marketing comes up with a brilliant idea and IT says it’s going to take nine months to stand up the infrastructure. If you have a hybrid inside-outside cloud model, you just flip a switch. Or if you have a product that Ashton Kutcher thinks is cool and all of a sudden you’re selling 100 times more than you thought you would, you flip that switch.

SandHill.com: What’s the first line of defense since cloud is still evolving?

Toby Redshaw: Today both the cloud technology and cloud service offerings in cloud are immature. Despite its immaturity, there are clearly some software solutions (Workday, for instance) that are fantastic in the cloud. However, there are clearly some things for which the cloud is not ready, due to regulatory and security reasons. There’s also a whole layer in between that companies should look at. Do you build on the Windows Azure platform? Do you use Force.com for some things?

I think because cloud is new and learning intensive, if you’re not at least somewhat engaged with it, you are behind the curve. You have to find ways to play across that area. While it is conceptually simple, it’s learning intensive. It will evolve and you need to be there with it. This is not something where you can just sit back for a few years and then jump into the deep end of the pool when it’s really mature. You will sink if you do that.

But you do have to be diligent about what you buy today. There are some cases where if you buy the cloud stacks instead of the on-premise stacks, you will lose some capabilities. I think that’s just a two-year window and then will go away. But you do have to pay attention to it.

Because of how big the explosion is if you get it wrong, you really need to be very, very diligent in using cloud technologies and services. Just because something is in the cloud doesn’t mean that the provider has the engineering talent or security talent to make it work well.

SandHill.com: So security is the first area for diligence?

Toby Redshaw: Security and engineering. I think the thing that people most frequently don’t understand about cloud is that the design and engineering world for cloud is different than for ERP packaged applications.

With cloud, there’s no big upgrade moment. You drop in code in a way that has a zero-training footprint. That requires a different quality and engineering approach, a different cadence, and a different level of precision than you have when you issue a big release of software and thereafter everybody has to go through the upgrade path … releases of patch 1, patch 2, patch 10. Everyone is used to releases.

But since there aren’t releases with cloud technology, not doing the diligence on the engineering and architectural underpinnings of a cloud company puts you at risk for ending up with a cloud solution that really can’t deliver to the reason why you bought it.

SandHill.com: What’s difficult about the diligence? How does it differ from diligence for other software purchases?

Toby Redshaw: One of the real reasons companies buy cloud solutions is because the cloud providers aggregate the costs of the infrastructure and the stack across a pool of customers so all of them get a volume discount. But a key cost component is that the cloud companies build their technology using cheaper “Lego” pieces in order to create a product that has a lower cost structure.

In your diligence you need to keep in mind that you’re not really trying to pick the horse that will win the race today. You need to try to back the horse that’s going to win for the next three or four years. A software IT decision has a four-year shelf life. So you really don’t want the shiny one right now; you want the one that has that underpinning of strategy meets architecture, meets modern components, meets the new engineering paradigm and can execute. That level of diligence is a little bit harder.

SandHill.com: What’s the risk of companies deciding to wait a little until the technology becomes more mature?

Toby Redshaw: That would be like what happened with the steel industry in the 1920s. Big British steel was using the old method, and somebody invented a new method. The mindset of the guys using the old method was: We’re not going to blow up our own factories and build this stuff from scratch; we’re just going to live with our really big, fat cost structure. So where is British steel today? Nowhere. In the inter-war years, the two big success stories were German steel and people like Andrew Carnegie in America. They had factories that were quicker, higher quality, lower cost. That’s very difficult to beat.

But I think you see the reality of that in every large software company now saying, “We’re definitely going to the cloud.” I’m not sure how you do that – and do it well – with a giant code base that wasn’t architected that way and when you’re so entrenched with the previous engineering paradigm. Transitioning to modern IT is hard to do.

I can think of one older, larger, entrenched company that did well in transitioning to modern IT: Aviva. In fact, when Microsoft’s Steve Ballmer gave his speech a couple of years ago at Washington University where he said, “I am betting the future of Microsoft on the cloud,” the only company he mentioned when he talked about modern IT – in the context of innovative use of the cloud and social inside a company – was Aviva.

SandHill.com: Shouldn’t software testing resolve the issues that need to be included in diligence?

Toby Redshaw: The dark side of modernization of IT is our ability to create solutions and the machines and tools we have to do that has radically outpaced our ability to test and debug.

This is especially true in the startup world building on the cloud and true in working in the mobile world.

SandHill.com: Mobile and social media platform technologies are also quickly evolving. Are they as big a problem as the cloud when it comes to doing modern IT well?

Toby Redshaw: I take a bit of a contrarian view here. When I look at the patterns and growth in mobile and social, it doesn’t look like a big thing to me. Everybody always talks about there’s three billion mobile users or there’s 800 million people on Facebook. I don’t get impressed with the bigness of it.

What impresses me is how much it looks like the beginning of something – how much it looks like the start of putting in the railroads and the telegraphs, which changed everything. And very few people got that early on. A little company called Sears got it, and Standard Oil run by Rockefeller got it. It feels like the beginning to me.

SandHill.com: So you think it will evolve to be something different than what we now call mobile and social?

Toby Redshaw: Yes. I think mobile and social are going to drop into the background, and I think it’s going to be about experience and value.

No matter where you look – whether it’s your shopping experience, your travel experience, your family connectivity experience, the experiences you have oscillating between work and not work, or your engagement with advertisers – these things are all broken. They are clearly full of inefficiencies and friction.

I think the value propositions of mobile and social will be about taking time, friction and waste out of experience paths and experience flows for individuals and supply chains, whether it’s B2B, B2C, M2B, M2C. I think that’s what it’s going to be about. The mobile and social platforms will just be the space in which we play.

I think the way that a lot of people think about mobile – that it’s my mobile extension of my Web – is just wrong. I just don’t think that’s what it is.

We know from history that there were a lot of companies that saw the railroad as a way to improve processes inside their businesses. But there were also a few companies that decided to rethink what their business was based on this new world of railroads.

The fact that I have an intelligent IP node with me at all times is the paradigm – it’s not how do I create a cool little mobile app. This emergence of a ubiquitous IT network – ubiquitous because it’s full of mobile nodes – is part of the three underlying forces that create modern IT that I mentioned earlier (see Part 1 of this interview). Those forces created a quantum leap for IT and, although they are conceptually simple, they add layers of difficulty that companies must learn to handle well in order to remain competitive.

This is part 2 of a 2-part article. Click here to read Part 1 (“Using Modern IT for Competitive Advantage Isn’t as Simple as it Seems”).

Kathleen Goolsby is managing editor of SandHill.com.