Local hamburger shops cannot compete head-to-head with McDonald’s. Clothes stores cannot compete head-to-head with Walmart. Local book stores? Yep. They, too, cannot compete head-to-head with Barnes and Nobles. Makes sense.
Why compete head-to-head with cloud (IaaS, PaaS, SaaS) providers? *
Take a look at thriving local restaurants, groceries, shops, and book stores. What do they have in common? It is a single-minded dedication to customer service. These thriving businesses do not complete head-to-head. Rather, they carve their own niche within the market and create a monopoly within that niche.
The second step in managing an IT team is to define and carve that niche. This begins by having a very clear understanding of our firm’s industry, organization, business units, and professionals. How does the firm compete in the industry? How are the goods bought and sold? Who are the people on the critical path, and what can our IT team do to improve their abilities?
When was the last time an IT team discussed these questions? For me, it was about two weeks back. During a knowledge sharing meeting, a teammate reviewed how my firm’s products are bought and sold, and how the technology he was building impacted that process. How about your team?
No one can understand an organization and its people better than the internal IT team. McDonald’s does not make a custom crafted burger for you. Walmart cannot custom stock products just for your needs. The same goes with Barnes and Nobles, and the slew of cloud providers tackling the commodity IT market. No one knows you like those closest to you.
The competitive advantage the IT team must cultivate and sustain is customer closeness. Know the people, know the business, know the industry. Then leverage commodity services while out competing on value-add services. Be the bistro to the cloud’s McDonald’s.
Wolfgang
* Now a good argument can be made that cloud providers do not actually cut costs. In particular, this seems apparent with IaaS providers. Check this out for yourself. Price out two servers that can host 16 vms with HA. Now take your lease rate for, say, three years. Add in your price for power and hosting. Compare that price with your IaaS vendor of choice. I find IaaS for consistent loads to cost almost four times that of a DYI infrastructure. But it does require a three year lock-in and cannot scale up and down with load demands. This finding gets to the “own the base and rent the spike” strategy.
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