In the early 1900s, large organizations needed another type of CEO: Chief Electricity Officer. Before there was an accessible and reliable power grid to plug into, organizations that needed electricity employed a CEO to make sure they had steady and cheap access to this vital commodity.
Given the aging data center architecture, it’s now the Chief Innovation Officer who is increasingly becoming the Chief Electricity Officer of the past, responsible for keeping the lights on of their IT infrastructure.
According to industry analysts, 80 percent of IT spend worldwide is allocated for maintenance, while only 20 percent is devoted to driving innovation. I believe that ratio needs to shift dramatically to enable enterprise IT to spend less time “keeping the lights on” and more time rolling out new services and apps, testing new business models and achieving greater efficiency. For the old guard to succeed in this hyper-competitive landscape, I believe businesses need to radically transform their IT infrastructure.
Across virtually every industry, upstarts are often outmaneuvering incumbents. The oft-cited advantage Amazon, Uber and others maintain over their legacy competitors is web-scale IT infrastructure, which delivers agility to rapidly grow the business and innovate at a breakneck pace.
Because they do not need to devote the bulk of their time and budget maintaining on-premises environments, these companies are empowered to innovate at a much more rapid rate. For instance, while Walmart was getting its unlimited three-day shipping service off the ground in 2015, Amazon brought one-hour delivery service to market in just 111 days.
Radical is the key word for these incumbents. Many companies are currently engaged in the process of completely changing their business models and how they deliver their product and services to customers. Unfortunately, their IT organizations struggle to keep up and, thus, simply add layers and piecemeal solutions to their existing infrastructure. The resulting transformation is incremental when it needs to be sweeping. It fails to make a meaningful impact on the 80:20 ratio of IT spending on maintenance versus innovation.
Forward-leaning enterprise cloud companies will simplify the datacenter — not make it more complex.
To turn IT into an innovation engine, businesses should bridge the gap between the public cloud services they want and the on-premises infrastructure they need in order to deliver the performance and experience their customers expect. The enterprise cloud has attracted considerable attention as a new infrastructure model that merges cloud and on-premises experiences, effectively unlocking the power web-scale companies enjoy for businesses that were built before the era of cloud computing.
Venture capitalists are looking at companies that can bridge the gap between on-premise and cloud to reap the benefits of both computing platforms. This includes players like Arista Networks, Pluribus, Cloudera, MemSQL, Nutanix and Primary Data that are creating the new enterprise cloud.
These forward-leaning enterprise cloud companies will simplify the datacenter — not make it more complex. One example is that solutions in the future could determine where applications should run and move the workloads to their corresponding place — with no interaction needed by IT teams once they set the parameters; this will forever change the way enterprise IT operates.
There is plenty of time before this ambitious vision will be realized. Because we are in the early innings of this game, it’s an exciting time to invest in the IT sector, and we are carefully watching for companies that could deliver the next game-changing solution. The winners will be those that build products that directly address these pain points. The investment opportunity is tremendous, but the market need is even greater.
Chief Information Officers who are able to implement web-scale IT infrastructure via an enterprise cloud platform and push their IT infrastructure to the speed of modern business will become Chief Innovation Officers. Those who fail to elevate IT from a time-consuming maintenance task will become extinct, like the Chief Electricity Officers of the past, along with their businesses.
*Article originally published via TechCrunch on 6/4/16