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It’s getting hard to distinguish between cloud and in-house services

StuartRance on ‎06-05-2013 10:57 AM

There has been an entertaining debate on the ZDNet site recently, between Steve Ranger who wrote Why the cloud will never (entirely) replace in-house applications and Ken Hess who wrote Why the cloud will (entirely) replace in-house applications.


I’ve been thinking about this issue for some time. Last time I wrote about this (Is SaaS going to replace on-site software?), I suggested that some organizations might move completely to the cloud, but that others would retain some in-house applications indefinitely. At that time I thought it was just a matter of where the line would be drawn. Would in-house software be a very rare option for organizations with unusual needs, or a common choice for many?


What I didn’t realize, and what Steve and Ken have also overlooked, is that the sharp division between cloud and in-house is going to become increasingly hard to maintain. Things that will contribute to the blurring of this distinction include:


  • Many in-house IT services make use of public cloud to provide part of what they deliver to their users. Even the most ancient of legacy applications probably uses DNS to locate servers, and even though we may not think of DNS as a cloud service it is most certainly provided in a cloud-like manner. Similarly, many in-house services make use of email to communicate. As in-house IT evolves it is going to make more and more use of services provided from the cloud; even when the core data or business functionality are maintained in-house, it is likely that much of the functionality will be sourced from the public cloud.
  • Many organizations will provide added functionality on top of public cloud services, to meet the needs of their users. This could range from customized client applications that access a public cloud back-end to complex mash-ups that create added value from multiple public cloud services.
  • Vendors of in-house software are already looking to see how they can provide some of the attributes of a cloud service within their offerings. For example, HP Software has recently announced Service Manager Subscription (SM-S) which provides in-house software, with maintenance and support at a combined per user/per month subscription price. This enables them to offer a cloud-like experience for the finance department who value the op-ex budget model, while retaining the in-house experience for the IT department who may need to retain complete control of the data. These kinds of hybrid offers are likely to increase over time as vendors create flexible and innovative products to satisfy diverse market needs.
  • Many large organizations are creating private clouds to provide Infrastructure as a Service (Iaas) and Platform as a Service (PaaS) to their internal users. It is likely that this could extend to provision of some functionality in the Software as a Service (SaaS) space in the future. We are likely to see increasingly complex solutions that make user of hybrid private-public cloud even in environments where dedicated servers are no longer in use.
  • Organizations that claim to have moved entirely to cloud provision are likely to retain some in-house servers, even if this is only to provide DNS, DHCP and client software updates.


If we take all these trends into account, then it is likely that the cloud/in-house distinction is going to largely fade away over time. Some functionality will be provided from public cloud, other functionality will come from private or hybrid clouds. Some will be provided as part of client applications (do these count as in-house?) and some part will continue to be provided by in-house servers. 


The key question will not be whether you are going to get all your services from the cloud, but what vendor can help you to create the user experience that you need to fulfill your mission. This is where a company like HP has the edge, because we have a complete portfolio of products and services to support any kind of cloud or in-house deployment. For more information about HP Cloud offerings see:


Learn more about HP Consulting Services and how HP can help you shift your focus from operation to innovation.



If you want more ideas to help you think strategically about IT services, then read some of my other blogs (most recent blog is at the top):

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on ‎06-05-2013 12:55 PM

If you look at the needs for the rest of this century, integration and automation will be critical. ITs focus needs to be making this as seamless and transparent as possible for the end user. If the company is successful at the end of the day, where it is hosted or the underlying technology will likely be the least of the businesses concerns.


The key question is are you delivering value and making the organization more flexible, efficient and profitable. But maybe that's just me.

on ‎06-05-2013 01:05 PM



Thank you for this observation. I think you are entirely correct. Questions of what value IT is providing and how flexible and efficient it is are far more important than whether it is hosted in-house or in-the-cloud.

on ‎06-05-2013 02:33 PM

If a user is unable to tell the difference between an internal and external service provider, I believe that one of two scenarios has occured:

  • Cloud service providers cease being customer-centric and focus instead on the availability and capacity of their infrastructure and applications
  • IT departments' service management programs have been successful

In the first case - how many of those cloud providers will still be in business in 1 year (somehow IT departments have managed to do it for much longer!)?


In the second case, how much has the IT department had to have changed in order to keep their place as an internal service provider?


Whichever way you think about it - nothing will stay the same for very long.  How much time do you think we have to make the transition?


on ‎06-05-2013 02:39 PM



As usual, you make very powerful points. 


One thing that I did not discuss in this blog is my belief that internal IT organizations that don't transform into effective service providers really don't have much longer to get their act together. I believe that there is going to be a big shake up over the next few years and that IT organizations that don't REALLY get service management will be forced out of business by market forces.


Similarly those cloud service providers that aren't customer-centric won't last long, so I don't expect to see your first bullet turn into reality, but your second bullet is a significant part of what I am predicting.

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