As CIO of video game developer Electronic Arts Inc., Mark Tonnesen could sense the wave of fear that rippled through his IT staff when he made the case for moving the company's on-premises applications to the cloud.
If they wouldn't be maintaining and troubleshooting issues with applications -- tasks that were the day-to-day staples of their jobs, after all -- would they even be needed any longer? The staff needn't have worried. His answer was a resounding "Yes" -- but not for babysitting email.
"We outsourced that and went to the cloud, and instead we could work on things that were going to drive top-line revenue," said Tonnesen, who oversaw about 550 IT employees as well as 700 contract staff during his tenure at Electronic Arts in 2012 and 2013. Tonnesen, now a senior partner with The StrataFusion Group, a consulting firm that advises companies in the midst of major technology transitions, said that adopting a cloud strategy was not about getting rid of the IT organization. "We were not reducing people. We were not reducing budgets. We were just shifting roles."
In fact, Electronic Arts, maker of such blockbuster video games as Battlefield and Need for Speed, actually increased its investment in IT with the adoption of the cloud computing model, according to Tonnesen.
Cloud computing model catches fire
Cloud computing is ballooning. Cloud-related tech spending by businesses is on course to triple over a six-year period, jumping from $78.2 billion in 2011 to a projected $235.1 billion in 2017, according to research by IHS Technology released in February. In 2014, global business spending for infrastructure and services related to the cloud will reach an estimated $174.2 billion, 20% more than the amount spent in 2013, IHS predicted.
When companies started moving a growing number of applications and infrastructure to the cloud, handing over hosting and maintenance duties to public cloud providers, some industry experts speculated that IT might see widespread layoffs as a result. But as the cloud model has gained a strong foothold in organizations, researchers and IT leaders say those massive layoffs have not come to pass.
"Our research does not show significant layoffs from companies aggressively working in the cloud," said James Staten, an analyst with Forrester Research Inc. "We've seen (isolated) cases of a guy saying, 'If I don't get to play with the technology, I won't enjoy myself here,' so sometimes one or two people might self-select out."
IT role shifts from troubleshooting to strategic analysis
CIOs and researchers say what has happened instead is that the cloud has led to a change in the traditional role of IT, shifting the work away from the nitty-gritty maintenance and troubleshooting of the past and toward more business-value activities, such as strategic software development, big data analytics and the creation of enterprise architecture.
Our brightest minds were getting too involved in day-to-day tasks and were not able to be visible players in areas that were adding value to the company.
Don Baker, CIO of Mediaocean
At Electronic Arts, Tonnesen said adopting a cloud computing model meant that IT staff members actually had time to spend an entire day working on developing a new tech strategy. In previous years, they might work on a strategy for an hour here or there in between constant interruptions from departments needing IT to repair breaks in applications.
"We would get fewer calls about tools that were broken, things like 'Fix my email' or 'This system doesn't work.' All of those things were in the cloud and they were working. There was less break-fix, less support and more strategic discussions about where we were going next," Tonnesen said.
Don Baker, CIO of Mediaocean -- a company that provides a software platform for the advertising industry, including cloud computing solutions -- said the cloud has freed up his IT staff members from getting bogged down in the mundane maintenance duties that ate up most of their time in years past.
"There's been a big shift over the last 10 years in what I've been able to do with my staff. Our brightest minds were getting too involved in day-to-day tasks and were not able to be visible players in areas that were adding value to the company," said Baker, noting that Mediaocean's own internal IT applications run mostly on a private cloud.
Now these same IT people are meeting with new vendors, developing new technologies and thinking about how these technologies can be used to help Mediaocean take the next strategic leap into global markets and expanded product lines.
"We're able to stay ahead now, where in the past we were just keeping up or triaging things," he said.
Appetite for mobile and social apps spurs cloud use
With the explosion of mobile and social platforms, technology is infiltrating every aspect of business today, creating an ever-pressing demand for IT, said Michael Beckley, CTO of Appian Corp., a software company that sells products that work either on premises or in the cloud. Appian hosts both its customers' applications as well as its own internal applications in Amazon's cloud.
As is true for many companies, Appian's foray into cloud computing was both cautious and prompted by necessity. Internally, the company moved email to the cloud because its Exchange server was constantly going down. When that was met with success, other applications followed. With much of the app maintenance work taken off IT's plate, the staff is now able to respond to a wide variety of employee needs, whether it's building a new system, acclimating a new employee to IT services, or securely connecting an employee's mobile phone service to email, Beckley said.
"As I remember IT from my first job, they very rarely left the basement. Now they're spending a lot less time in some back server room and a lot more time with users at their desks, coaching them on their technology," Beckley said. "It's a different world. The job is more interesting. They're much more in tune with what's happening, and they're not just order-takers."
Go to part two of this SearchCIO feature story to read about the many ways CIOs and their organizations are squeezing more business value from cloud computing, from vetting the cost of public cloud services, to building private clouds to taking on a more strategic role in business operations.
About the author: Dina Gerdeman is a Boston area-based freelance writer and editor covering business news and features.
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