The cloud: From cost center to profit center

by | Aug 10, 2020

After a 20-year drought of killer applications, the wait is over.

Only a handful of apps in history can be referred to as a “killer app” — a computer program that is so necessary or desirable that it proves the core value of some larger technology. We’ve seen them before. Notably, the word processor, spreadsheet, and email. If we expand the definition a bit, the next killer app is the cloud.

The cost of the cost-center label

For decades, IT has struggled with the unfair label of being a “cost center.” Companies invest large capital outlays into IT for hardware and software licensing, along with the considerable salaries of the people that it takes to install, configure, and maintain those resources over time.

Too often, a business focuses on these considerable costs without taking into account the benefits these expenditures are providing to the business.

To make matters worse, IT systems have increased in complexity, so the time-to-value for businesses has also increased dramatically because today’s systems require much more hardware, software, and technical expertise to configure and properly maintain them.

So, when considering investing in cloud technology, C-level executives quite naturally ask if the cloud has the potential to make the business more profitable or to make matters worse.

But, what many executives miss with this question is that the cloud offers a way out of the cost-center trap altogether. The cloud is something that is so necessary and desirable that it proves the core value of nothing less than IT itself.

A valuable partner in the IT mission

In my book, Achieving Process Profitability: Building the IT Profit Center, I use the example of the spreadsheet VisiCalc, which at the time was described as “reason enough for owning a computer.” Spreadsheet programs were so valuable to companies that they easily justified the considerable expense, at that time, of buying and operating a personal computer.

To further this point, I argue against the concept of IT as a cost center and instead put forth what I call, “the Single, Universal, and Undeniable Mission of IT.” This mission, succinctly stated, is: “The mission of IT within a business is to make that business operate more efficiently, effectively, and profitably.” I believe that the cloud adds as much, if not more, value to business as the spreadsheet, word processor, or email app.

The cloud’s silver lining

If time equals money, consider the cloud’s incredible ability to contribute to profitability. With the cloud, time-to-value of deploying complex systems decreases dramatically.

Take deploying Hadoop, for instance. To stand up a Hadoop cluster takes weeks or even months if done on-premises, and then it constantly consumes considerable hardware resources. This doesn’t even account for the amount of research and training required to learn how to properly install, configure, and manage a Hadoop cluster and its associated “ecosystem” of products.

Conversely, with something like Microsoft’s cloud service, Azure, you can stand up a Hadoop cluster in mere minutes. Minutes. What’s more, when you are not using it, you turn it off, and it does not cost you a dime.

Mission: Control? No.

This is why it concerns me when I read articles like Mike Asay’s excellent article “BI wants to live in the cloud, but IT may not let it.”  Unfortunately, I have seen firsthand the resistance to the cloud within IT that Mr. Asay describes—the concern over loss of control and loss of job security. For me, this just shows that IT has lost its way and forgotten its true mission.

Keep your eyes on the prize

Today’s IT stands upon the precipice of finally throwing off the shackles of the cost center mindset. And the pathway to doing this is through the cloud.

As IT professionals, let us not fall prey to fear, uncertainty, and doubt. The cloud will not eliminate our jobs, but rather will allow us to focus on things that provide true business value. Let us remember that our mission is not to install and configure hardware and software or rule over our individual fiefdoms, but rather to make a business operate more efficiently, effectively, and profitably. To that end, the cloud is truly the killer app of our time.

About the author

Greg Deckler
Vice President, Cloud

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