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Thought Leaders In Cloud Computing: Jim Stikeleather, Chief Innovation Officer, Dell (Part 4)

Posted on Saturday, Sep 24th 2011

Jim Stikeleather: One of the things that is talked about more and more is that organizations are recognizing more than 80% of the IT budget is spent on keeping the lights on. Instead of being chief information officers people are chief infrastructure officers, and keeping the lights on doesn’t do anything in terms of creating value for the business. So, what they are talking about is how IT needs to focus on either creating value for the business, which would be creating value for the business’s customers, or creating some form of competitive differentiation.

In the past, Dell beat everybody because of our supply chain capabilities. That was the source of our competitive separation. Everything else is simply housekeeping, things like ERP, HR, and benefits and payroll. Those will start to be outsourced; not just the technology parts but actual business services associated with them, so that the organizational structure of  a large company will change. If you hire a new employee, the manager will sit there balancing what needs to be done: I’ve hired this employee, one transaction will go to one company that set up all the benefits, another transaction will go to another company that set up all the payroll, a third transaction will go to yet another company that will fill out all the government forms for proof of citizenship or the right to work and those kinds of things. Another company will set up the user ID and related functions. So, the concept of outsourcing is not just the IT, it will be the entire set of business services, for each of those services, companies will be running in their own environments.  In this way, integration becomes not just a matter of integration with IT, it becomes integrated across this entire spectrum of business services. You’ll then see, in addition to the long-tail effect of SaaS things like companies that handle payroll, companies that do benefits, companies that do education, and so on. That integration is a tremendous opportunity.

The second area I refer to in this argument is that we have a lot of legacy systems.  Some will fade out over time, but there may be legacy systems that you really want to keep because they are a source of competitive differentiation or competitive separation, or they are a source of customer value creation for you.  You have to decide: Do want to reengineer them and bring them onto the cloud to take advantage of the cloud with its metered capabilities and the ability to run something wherever you need to run it?  here’s going to be a tremendous opportunity for our color reengineering services I’m not 100% sure that that’s the exact term but taking the functionality incapability of the legacy system and then reengineering it in some way shape perform so that they can take advantage of both the core structure and the agility and flexibility of the Cloud.

I think those are the more immediate areas where there will be change. I think the next area where there is a really a good solution yet to be developed is in what I would call big data analytics. We are now collecting so much information you almost can’t even you know do the you know I’m going to run a huge statistical program at night and to figure out what its trying to tell me. We really need and again this may be offered as software as a service is you know this ability to take in huge amounts of data almost real time, and delivers you know some type of analytics and performance back to organizations because except for a few companies I don’t think most had a handle on how to deal with this massive amount of data they had, and they were not effective in applying analytics to it. So, those are what I see as the shorter term opportunities in the cloud right now.

Sramana Mitra: So, the integration opportunity is something you view likely taking shape in the form of services, correct?

JS: When I say services, it could be offered as SaaS, it could be offered as people coming in and building the adapters for you. But I think long term, where the logic of utility and cloud computing goes is in offering a set of adapters as SaaS. Let’s say I go to the company A for my payroll and company B for my benefits, then all I have to do is go to the integration service of let’s say system A and system B are my two things, make sure the information is all communicating among its different parts.

This segment is part 4 in the series : Thought Leaders In Cloud Computing: Jim Stikeleather, Chief Innovation Officer, Dell
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