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IT will shift to a hybrid cloud and become an IT services broker

IT executives and experts explain why a hybrid cloud could be the IT services model of the future, and how hybrid IT will change IT as we know it.

This is the second in a two-part series about cloud computing strategies. In this part, IT executives and experts discuss why hybrid IT and a hybrid cloud approach will become the dominant cloud adoption strategy. In the first part, IT executives and experts explore what it takes to build an internal cloud, as well as the reasons enterprises are adopting a cloud approach.

SuperValu Inc. operates more than 2,500 retail locations nationwide. A vast amount of personal customer information flows through its systems, and high on its list of IT priorities is securing identity and access management. For now, a private cloud, or internal cloud, appears to be the safest bet for managing personal data. Identity management in the public cloud isn't out of the question, Phillip Black, senior manager of identity services at the Minneapolis-based retail grocery chain, told It also would be cheaper than building a private cloud; but given regulatory concerns, he is leaning toward a hybrid cloud as the optimal approach.

Black was among many attendees at this year's Gartner Catalyst Conference in San Diego wrestling with where and when to use cloud computing and shift to what some experts are calling a hybrid ITservices model.

According to Gartner, a hybrid cloud is one that keeps some data and applications in-house (such as applications and systems containing more sensitive data, or ones that have too many integration points with other internal systems) and provides hooks, or private tunnels, into applications and data that might reside in an external cloud provider's data center. In the case of SuperValu, for example, the email system could be managed and housed with a public cloud provider, but identity management and access and archiving of data would stay on premises, Black said.

Using a public cloud would reduce costs and simplify lifecycle management, Black said. "We would no longer be responsible for making sure the physical servers [for email] are up or the software is up to date, and I won't have to worry about my people getting support calls in the middle of the night." Nevertheless, the devil is in the details.

"Do we move Active Directory off premises and have a secure [virtual private network] that goes between us and the cloud provider?" Black asked. The company could use Microsoft Azure for Active Directory, but that solution is still young. Then, there's Microsoft's Unified Access Gateway, which would let the company do some Active Directory directly in the cloud and send that traffic [back to it] through a central location, he added. "That's pretty cool, but we are waiting to see how things shake out."

Hybrid IT versus hybrid cloud

Private, or internal, clouds -- in which enterprise IT departments pool resources and offer services internally on demand -- will become so co-mingled with services outsourced to the cloud that IT departments will become what it's calling hybrid IT, Gartner says.

Hybrid IT will consume and offer resources to end customers, some from the public cloud and some from internal clouds. The choice will be based on a number of factors, including how critical the businesses' applications are, cost models, risk tolerance and the need to satisfy customer needs, said Gartner analyst Drue Reeves during the conference.

"The point is that IT is the broker between the customer and cloud services. You'll be the facilitator of all these services, and the first and last line of defense protecting your company's digital assets," Reeves said.

In hybrid IT, location of the service is not important for IT, Reeves said. What matters is the ability to control the consumption of services, vet cloud providers on behalf of the business and use IT's technical knowledge to guide the business as to which applications are better kept in-house or moved to a public cloud, he said.

So, why bother moving to a new services model in the first place? According to Reeves, with a new model, IT will be able to:

  • Vet the best providers.
  • Negotiate the best service-level agreement.
  • Limit "shadow IT."
  • Maintain responsibility for digital assets.
  • Compete with external service providers.

Enterprise organizations, including 17 early internal cloud adopters surveyed by Gartner, are being measured already against Inc.'s service delivery capabilities, the research firm said.

One Gartner client did the math, and found that it costs 12 cents per hour to support a virtual machine (VM), and its enterprise IT organization 20 cents per hour. However, when backup, monitoring, the cost of the infrastructure, virtualization software and associated licensing and software management costs, security, capacity management per VM, and incident management on large workloads are added in, the differential between enterprise IT and Amazon was one-half cent per hour, Gartner said.

The good news is that many of those 17 enterprises said that they were not being formally held to the same service levels as those of According to Wolf, one client said, "You can't sue us [over service levels], because we're you."

Getting there from here

So, in this shift to hybrid IT, where should CIOs start? Gartner recommends they first take on the role of service broker by outsourcing some aspect of their infrastructure or an application to a cloud provider. They will gain valuable knowledge in terms of building a self-service provisioning portal and a service catalog -- two pieces of an internal cloud's foundation, the early cloud adopters said. IT chargeback methods also will become clearer, given that cloud providers charge based on use -- as CIOs eventually might choose to do at their own companies.

If 10 years down the road, we've outsourced much of what we do, will we still be more cost-effective than the cloud providers? It's a slippery slope.

The hybrid approach will prevail, as far as Gartner is concerned, given that enterprises will not let certain data or applications live on a public cloud for many reasons, including regulatory compliance. Even so, they recognize it's necessary to move commodity services and apps, as well as infrastructure, to the public realm to cut costs and gain scalability and agility.

The shift does not sit well with some companies that have invested heavily in infrastructure. Steve Paynter, senior technical architect at Kindred Healthcare Inc. in Louisville, Ky., said the health care services company shares resources pretty extensively across a well-established infrastructure. This allows internal IT to provide services less expensively and compete with public cloud providers. The question is, he said, will his company lose critical mass if it moves more and more services to public cloud providers? "Will we no longer be cost-effective? If 10 years down the road, we've outsourced much of what we do, will we still be more cost-effective than the cloud providers? It's a slippery slope," he added.

Open Dealer Exchange LLC's move to cloud services was easier in some areas than in others, said Abdullah Haydar, chief technology officer at the Troy, Mich.-based automobile finance company. Given that the company (founded by Automatic Data Processing Inc. [ADP] and The Reynolds and Reynolds Co.) is only two years old, it didn't have to deal with legacy infrastructure, for example.

Haydar outsourced Open Dealer Exchange's ERP, human resources and customer relationship management systems to cloud providers instead of building them from scratch. He also consolidated several email systems and outsourced email to Google Inc.; and he uses Citrix Systems Inc.'s GoToMeeting for Web conferencing and ADP's Network Phone service and a Voice-over-IP service from 8X8 Inc. for telephony.

Which systems didn't it make sense to move to the cloud? According to Haydar, those include:

  • Microsoft SharePoint, because it was too expensive to move it to a cloud provider.
  • The company's enterprise content management systems, because it made no sense to pay for the costs of moving static data between its systems and those of a cloud provider.
  • The call center's PBX system, because, based on his analysis, it also was less expensive to keep this system in-house and integrate it with the telephony cloud providers' system.

Let us know what you think about the story; email Christina Torode, News Director.

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