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Thought Leaders in Cloud Computing: Mal Postings, CTO, IT Advisory Services, Ernst & Young (Part 2)

Posted on Thursday, Nov 3rd 2011

SM: Given that vantage point, tell me about the organization’s cloud computing philosophy. Where are you coming from? What is the overall guiding principal that you are bringing to your clients?

MP: That’s a great question again. I think from an Ernst & Young point of view – again we have to realize we are not an IBM or Accenture. We are different. For us, it’s around the cloud risk and assurance. Cloud is a new paradigm shift. We had main frame. We went to client server. We went to Internet. Now, we’ve gone to cloud. Everybody knows that kind of stuff. But fundamentally, going forward, we’re saying, well, there’re certain things around cloud risk and assurance, whether it’s the compliance, the security, business continuity, the overall risk. We are, as a brand, really good at understanding risk and assurance. And to be honest, the cloud part of this assurance is one extra part. It’s not a new part. It’s an evolutionary part of what we’re doing. The second part is around the whole technology and operations. There’re different architectures. There’re different standards. There’re different ways you look at doing systems development. Systems development, I think, is a real key area.

I was working with one company and they developed a whole development environment in the cloud. There’s and as a development environment, and these were all spinoffs of the software as a service. What we’re talking about now is new ways of doing software development, onshore, offshore, etc. We’re looking at companies that develop an environment around process quality and product quality. So, companies will say, I’m not really too bothered about who develops my code as long as he fits within my methodology, which is cloud based. That, I think, is a key aspect.

As I move forward to answer your question, the whole cloud model in finance, we at E&Y work on both sides of the coin, obviously, with the clients and the providers. The providers are asking us, how do we charge for our services? We’re moving to a capex (capital expenses) from an opex (operating expenses) model. But then, what’s the agreeable opex model within the clients? And then the clients are saying to us, now, I’m paying so much a month, so I’ve not got the capital expenditure. And the good news is I’m always running on version N or N – 1. How many companies today are running on version N – 3 or worse? I tell you, it’s, like, 80% of companies. One of the barriers to the adoption of cloud is their already running on versions so old, that just to update their software versions to go into cloud, to go into a pay-as-you-go model, is hugely expensive. They’ve been under the covers running on old versions of software. That is a key issue. The last part is the whole servicing and provisioning. What we’re seeing here at E&Y is gone are the days where throw the keys to an EDS or an IBM saying, go run my outsourcing.

Now, it’s about a best-of-breed approach. Microsoft may be my Internet collaboration email, could be Google, could be Cisco, Webex, but the key thing is companies realize that they’re going to have to manage multiple suppliers. How do they do that governance? How do they do that management across multiple providers? That’s another area that we’re looking at. You can tell I’m pretty passionate about this. I think we’re in a good position, and I think, seriously, the markets going well. It’s a good time.

SM: Let me ask you to drill down a little bit, so we can zero in on some of the issues that we want to get more granular feedback on. One of the best ways would be to actually ask you about certain trends in the market and what is your approach in dealing with these kinds of trends? So, what do you see as a good philosophy, a good strategy for the productivity suite of a major enterprise like your customers? For instance, I’m seeing a lot of movement from clunky systems like Lotus Notes, for instance, and there’s a migration going on to other, much lighter weight, much more cloud architected, cloud friendly systems, even like Google. Can you speak to that?

MP: Yes, absolutely. Here’s the key thing, email is moving into collaboration; collaboration has been moving into Intranet – people like Ralph Szygenda at General Motors – over the last four or five years. So, what is the strategy around internal productivity? The key thing here is a … lock in. If you go Microsoft, you go Exchange, you go SharePoint and you do the whole Microsoft way of working. SharePoint, by the way, is probably the Microsoft savior of the year. The problem with SharePoint is the lack of governance and the storage costs go through the roof.

The best solution, I believe personally, could be more of a Cisco approach with Webex. But Cisco doesn’t know how to market its approach. Lotus Notes, yes, okay. One would expect that, unless they come up with something really good, that is dead. The key thing here in this area of personal productivity within an employee base is that the world is moving from email to collaboration to Intranet. Those are the key three steps. We’re moving from having an email system. The email system is now moving into a collaboration system, and you know what? This collaboration system, be it SharePoint, whatever is so rich in terms of being so easy to create new collaborative environments, but the problem is the storage costs go through the roof and there’s no governance. But that’s happening at the moment, and it’s great. But then it moves into the Intranet.

Here’s the interesting point, at the end of the tunnel – I’ll give you Microsoft as one example, and I’m not I’m pro or con Microsoft at all – they’re saying, well, we’ll now do a B+ agreement because we know that we’re now running … every employee is going to go to your SharePoint environment. That becomes your Intranet. But that comes with some kind of storage, and you need to view your corporate videos. So, Microsoft is saying, when your license comes up for renewal, we’re going to do the B+ agreement. From my point of view, as the CTO of E&Y, when I talk to CEOs, is be really careful when you make decisions around starting from email, going into collaboration, going into Intranet, because they’re inextricably linked. But then underlying that, you have security issues; you have collaboration issues; you have governance issues.

This segment is part 2 in the series : Thought Leaders in Cloud Computing: Mal Postings, CTO, IT Advisory Services, Ernst & Young
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