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Future IT operations strategy abandons ownership in favor of subscriptions

The cloud-first strategy of IT operations is proving itself the way of the future, as enterprises invest less in private data centers. Resistance is futile.

These are threatening and scary times for the IT admin with years of experience managing servers, storage and networks, and for the IT operations manager who made a career out of running small data centers and support organizations.

Cloud services are gobbling up enterprise workloads, turning them from internally operated functions to rentable services, even as businesses keep tight reins on IT budgets. Things look grim, and we're only just beginning the transformation to an all-cloud IT operations strategy, but don't lose hope. There's light at the end of the tunnel, certainly, but we must understand how dark and deep that tunnel is.

Buy-nothing strategies

The year 2015 marked a turning point for IT operations: The amount of new data center space built for internal, private use was less than that built for service providers, according to research firm IDC. The gap continues to widen; in 2017, roughly two-thirds of all new IT facilities will go to warehouse-scale clouds and other managed service providers.

IT spending is following a similar trend, with the amount going to traditional, in-house IT deployments gradually shrinking while the dollars targeted to workloads on public cloud and managed hosting services balloons by more than 50% between 2016 and 2020, IDC estimated. These trends are indicative of the larger shift from Capex to Opex, said Richard Villars, vice president of data center and cloud at IDC. Organizations "stop buying infrastructure, and pay-as-you-go becomes the standard model for data center facilities and infrastructure investments," he said at a VMworld 2016 presentation in Las Vegas.

Business execs are seemingly trying to make obsolete every piece of IT infrastructure they can find, plus all the people who operate it, replaced with rented services. This cloud-centric enterprise IT strategy paints a bleak picture for those who used to rack servers, connect switches and monitor computer rooms all day. Indeed, many of those jobs either moved to the mega cloud providers or are becoming automated away entirely. However, there's hope for those who love IT and want a long and fruitful career: Businesses undergoing digital transformation have more need than ever for technical professionals.

The appeal of Opex

Although the examples above single out IT infrastructure, the trend of renting only what you need has spread to most IT functions and in truth almost every other area of organizational overhead -- food service to facilities.

Asset-light operations are perceived as doing more with less. They also have the ability to act in response to business changes. Data centers are increasingly expensive, with even small facilities costing tens of millions of dollars, and require specialized skills to operate with anywhere near the same efficiency of a hyperscale cloud facility. Indeed, the cost per kilowatt of usable capacity at a warehouse-scale data center is less than 20% that at a small facility, one study found. An IT operations strategy built upon cloud infrastructure allows the organization to add new technologies as needed, rather than fitting the ever-changing technological demands of the business onto legacy IT estates. It's simply impossible for most organizations to justify such an investment in capital and personnel when they can rent an increasingly comprehensive set of cloud services from one or more locations that use state-of-the-art infrastructure.

Data center hardware spending
Figure 1. IDC shows on-premises data center hardware spending in decline, while service providers are increasing spend.

Move IT ops up the stack

Any time centralization, scale and automation disrupt an industry and displace workers, the survivors thrive by moving up the value chain -- the path to success in a cloud-first IT climate is to provide more complex, abstract and/or creative services and leave the routine IT operations and tedium to someone or something else. A cloud-first strategy isn't necessarily focused on staff reduction. Organizations want IT pros involved in developing and implementing new revenue-producing and/or cost-saving digital initiatives, not bogged down in maintaining static IT equipment.

IT staffers and executives who make the transition to a world of lean operations and cloud-first delivery should consider the following:

Automation requires direction, so be the control point. Cloud infrastructure needs the repeatable deployment of customized configurations designed for an organization's specific workloads. IT operations becomes more like application development and programming jobs. Those who master scripting and configuration languages and tools -- Python, Ruby, PowerShell, JSON and YAML to name a few -- will be the most valuable. These languages work with runtime automation tools such as AWS OpsWorks -- based on Chef -- Puppet, Ansible, Microsoft Azure Automation and Google Deployment Manager, to make IT pros proficient in templated cloud automation.

Managed services require service managers. In a world of third-party IT services, choosing the right product and making sure the vendor meets your requirements and its service commitments is imperative. People who can evaluate complex service and financial alternatives, build total cost of ownership models to find the best financial option, specify service requirements, negotiate service-level agreements and monitor vendor compliance as part of an IT operations strategy that incorporates diverse rented services and few or no hardware assets are strategic assets to organizations.

Operations, monitoring and analysis are made new again. Using cloud services doesn't relieve an organization of the responsibility to monitor IT performance, usage, error logs and security alerts. There are still operational roles for IT personnel ready to learn new ways to gather telemetry data from remote services, consolidate and analyze many data sources, use analytic software to create actionable dashboards, use scripting and other automation tools to eliminate tedious tasks and focus on the big picture as painted by business needs and changes.

You're losing IT infrastructure, not IT intellectual property. Many IT functions involve managing users, data and the business and the regulatory controls around them, none of which are eliminated by the adoption of hosted services. Data security management can require more work under a cloud-first enterprise IT strategy, as organizations need more sophisticated ways to control data movement and encryption, specify storage location and maintain access controls.

Details of the task change as organizations migrate to third-party services. IT security pros must enforce privacy and regulatory requirements using available cloud security and identity and access management services, as well as configuration options and application programming interfaces that integrate cloud services with existing enterprise directories.

Data center construction spending.
Figure 2. IDC's tracking of new data center construction shows a tipping point occurred in 2015, when service providers built more data center space than organizations creating on-premises resources.

Digital transformation requires a business mindset atop technology expertise. As IT flips from the ratio of being 80% focused on operations over 20% on innovation to the reverse, professionals who understand their organization's strategies should hone skills in mapping product and service goals to digital technologies, and appropriately communicating at many levels. IT team members can expect to take a digital strategy from idea to implementation with application developers, business executives and other staff. IT's relevance depends on the ability to translate these other team members' product/service requirements, development constraints and security controls into appropriate cloud architectures and data models.

Although the transformation of IT operations strategy from capital-intensive work into nimble, asset-light, cloud-first digital innovation can be unsettling for longtime IT employees, those who embrace changing roles will find ample career opportunities and professional challenges.

Next Steps

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This was last published in March 2017

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