So, which is it? Should IT be focused on streamlining itself and outsourcing its functionality, or should IT be a central component of how the parent company actualizes its business strategy?
The thing is, both perspectives are right, and the Cloud CIO needs to discern which approach is right for each part of his or her application portfolio, and apply the correct IT strategy to fully bring to pass IT's role within the corporation.
There is no doubt that certain sectors of IT have been commoditized and the possibility that an internal IT organization can operate them better than a specialized provider is vanishingly small. An outsourced approach to these sectors is obvious. Tying up capital, operational budget, or precious headcount in supporting a commodity application is clearly wrong. And the first article is quite right in characterizing the use of a cloud provider like Amazon as a foundation for an IT organization running these type of applications as foolish. Managing virtual kit is still managing kit, and managing kit for an application where you provide no significant value or differentiation is a mistake.
That does not mean, however, that a CIO must conclude that his or her job is nothing more than coordinating contracts and putting up a service catalog portal with links to all the outside services. Far from it.
No outside provider of standardized services can possibly help one's company differentiate itself with IT-infused offerings. The only way to infuse a company's business strategy with IT is for the IT organization to implement company-specific functionality. And that requires leveraging IT products and services that are on the leading edge of innovation, because that's where differentiation is possible. And it requires leveraging those products and services in an innovative fashion, taking advantage of the new characteristics they offer - and not treating them as the traditional IT products and services delivered slightly differently.
Let me offer an example. Earlier, I agreed that using Amazon (and this example applies to all cloud providers, so it's not specific to Amazon) to host commodity functionality is a mistake. If you can't provide differentiation in an application area on your own infrastructure, using a cloud provider isn't going to help.
I would go further, though. Using a cloud provider as substitute infrastructure is just as big a mistake. Cloud providers do offer basic computing resources which require significant work to assemble and manage. So the question is, when does it make sense to take on that burden? The answer is, when you can take advantage of the characteristics of the cloud environment to create something difficult or impossible to do within a traditional infrastructure environment. If you're not achieving benefit from using the cloud to do something different, it's not worth the trouble.