- Purchase Server Hardware
- Purchase Data Center Hardware
- Purchase Data Center Software
- Employ engineers to maintain all of the above
One could say that an On-Demand Enterprise needs no IT Infrastructure:
These functions won't go away, of course. They'll be pushed to the cloud where dedicated cloud computing service providers will perform all of these functions. What's the benefit you ask? Economies of scale. Only when these tasks are commoditized and centralized (with redundancy) can real value be squeezed out of the system.
This notion is not new. The utilities have been practicing this for many decades. But the notion of purchasing your computing power from the cloud has only in the last couple of years become compelling as SaaS vendors have so drastically improved their offerings.
What is a CIO to do? That depends on the size of the organization and the maturity of the organization.
For startup companies the value proposition is compelling. Run every aspect of your business from the cloud. If you have regulatory restrictions such as medical data about your customers (or are especially paraniod about your data), keep only those datastores on-premise.
For small and growing companies that have a few on-premise servers: Strongly consider SaaS solutions as new applications are needed to run the business. When it comes time to ugrade existing on-premise apps, consider replacing them with SaaS apps instead.
For large enterprises, develop an On-Demand Plan. This plan should include a pilot On-Demand project for critical (but not essential) business function. Sales Force Automation (SFA) or HR are good choices for many organizations. This pilot project should allow the Operations group to slow or even halt any plans they have for expansion (either in the number of servers or the number of resources or both).
Once the pilot is successful, the organization will clamor for the cost efficiencies of On-Demand applications in other areas of the business. Soon, only the most critical of applications / databases will remain on-premise.
Now some are undoubtably asking, "What of our friends in the Operations group?" They are still needed, only they will work not for CIOs but instead for Cloud Computing service providers where their skills are critically important (that's where the servers are). Oh, and they will manage servers not by the hundreds but by the thousands (maybe tens of thousands).
