Cloudy Infrastructure the Top CIO Priority in 2011

January 31, 2011 Timothy Prickett Morgan

If you thought the terms “e-business” and “on-demand” and “converged infrastructure” were tiresome, then “cloud computing” might just give you a stroke. Like the term or not, companies are keen on having more flexible IT infrastructure with utility-style pricing. And every survey that anyone is doing these days is showing it.

Just like the home personal computing wave transformed all of business desktop computing to graphical environments–and made Microsoft the undisputed king of the desktop and a shoe-in for the data center–applet-style applications for smartphones (I hesitate to call them applications) and server virtualization are making CEOs and end users alike look at their CIOs funny. They want things to be simpler and less costly. Or at the very least, they want the people who use the most resources to actually pay their share of the budget.

Like IBM, Unisys has a base of proprietary system customers it has managed to keep engaged and modernized over many decades, and it has to take the pulse of those customers to make sure it is making them happy. It also has to take a wider view of the market and do research to help it understand how the broader IT market is behaving and thinking. In a recent poll conducted this month of IT managers at 262 companies, 44 percent of those polled said that cloud computing was their top priority, with mobile devices and extending applications out to them being cited by only 24 percent of those polled. Only 17 percent of the IT managers that Unisys talked to were focusing on security as Job number 1 for 2011, and only 15 percent were ranking cutting costs at the top of their hit lists.

The analysts at Gartner did a similar survey of the IT top brass from September through December last year, and they are also saying that cloud computing is their top priority. Gartner talked to 2,014 CIOs in 50 countries who are in 38 different industries (including local, state, and national governments) and who represent more than $160 billion in annual IT spending.

Averaged across these CIOs, IT spending budgets are going to be essentially flat moving from 2010 to 2011, with only a 1 percent increase. Spending levels at these companies are not, generally speaking, higher than 2007 and earlier levels, and they don’t expect the salad days to return, either. However, for every one CIO who said they were cutting spending, there were three that said they were increasing spending. So the trend is in the right direction. CIOs have figured out that if they can save money for one project–say server consolidation enabled by virtualization–they can make a good case for plowing that money into another project–for instance, maybe an online CRM system that augments an existing ERP system that lacks a proper CRM. The amount of money can be substantial. Gartner says that the typical IT shop devotes 66 percent of its IT budget to keeping things going in day-to-day operations, but that switching to cloud computing and SaaS-style applications, anywhere from 35 to 50 percent of the infrastructure and operational budget can be freed up.

Maybe you can then ask for a raise–and actually get it! If you get to keep your job, that is. . . . And if you are starting a new company, you will only do cloud and SaaS as a matter of course, just like the Chinese government is able to go straight to cell phone networks and straight to high-speed rail because these are the best new technologies and there is no economic or political resistance to them.