A Management Consultant’s View of Cloud Computing or Why McKinsey shouldn’t leave it’s day job !


Context:

There have been lots of discussions on McKinsey’s “Clearing the air on Cloud Computing”[1]. So I decided to take a close look at it.

In short, paraphrasing a colleague and a good friend, Chris Wiborg, “There is a reason McKinsey is in Management/Business Consulting and not Technology Consulting !”

Summary:

  • The folks at McKinsey got the drivers and strategic value right, but totally missed the technology and are dead wrong on the tactics.
  • First of all, while complaining that there are 22 definitions, the McKinsey folks added one more ! Looks like they are not satisfied with the other 22 !
  • They didnot understand the significance of private clouds and focused narrowly on EC2 as THE alternative. Again, like the Berkeley study, very anemic cost models.
  • Their recommendation to CIOs is dead wrong. I wish these folks stayed at the management consulting level (which they are very good at) and not try to make sense of something they are still learning … ;o)
    • Reading assignment : The RESERVOIR architecture document. Read, chew on it (not literally, of course), debate and then pontify !

Clint (a.k.a The Good):

  • Excellent analysis – over-hyped, with potential for unrealistic expectations, significant hurdles for big enterprises, …
  • They are right on the dot on the tremendous promise of cloud computing (P.4) viz: Faster Time To market, Lower upfront costs, Easier to scale out and most importantly creation of new value chains.
    • Good work folks …
  • They are right on the adoption – Clouds are most attractive to start-ups and small businesses

Lee Van Cleef (a.k.a. The Bad):

  • MkKinsey’s first observation was that there is no one definition of cloud computing. They found 22 definitions.
    • So what do they do ? They added a 23rd one ! As if that would solve all the definition problems ;o(
    • First of all there is no need for THE definition of Cloud Computing. Multitude of definition means that different constituents find value in different ways … which is a good thing. And a 23rd definition is not going to make all the 22 go away and make everybody fall in line !
    • My humble suggestion is to leave the definitions alone –Let folks, who are on the ground, define it the way they see value and utility
  • Another very important distinction is the public clouds vs. private clouds. McKinsey totally ignored the private cloud space. This has been symptomatic – even the high minds in UCB missed this.
    • In the eyes of McKinsey, it is either virtualization inside one’s data center or Amazon’s EC3. Such a narrow view – total lack of understanding of the domain. Sorry

Eli Wallach (a.k.a. The Ugly):

  • In McKinsey’s view, “Rather than create unrealizable expectations, CIOs should focus on virtualization”. Yikes, as ScoobeDoo would say it.
    • A recommendation only a management consultant (with no practical experience) can give
  • “Aggressive virtualization” as they call it is the wrong strategy
    • What happens is that if CIOs follow this narrow-minded totally impractical strategy, the respective organizations will spend resources (narrowly focused on virtualization) and will miss the bigger benefits of Cloud Computing.
    • After all the effort in virtualization (like ROI calculations, budget negotiations, evaluation, software and hardware purchase, and so forth) they will have to start Cloud Computing all over again, yet another cycle of  ROI calculations, budget negotiations,… an approach that would bring tears of joy in the eyes of a management consultant ;o)
  • My recommendation to CIOs would be –
    • Embrace Cloud Computing Infrastructure as the overall architecture with virtualization being one aspect.  If a CIO is initiating new infrastructure work, it should be Cloud Computing not virtualization.
    • They will not only be able to realize the economies of virtualization but also leverage the opportunity to create new applications based on the Cloud paradigm.

References:

[1] http://uptimeinstitute.org/content/view/353/319
[2] http://www.decisionstats.com/2009/04/mckinsey-attacks-cloud-computing-having-no-sense/
[3] http://bits.blogs.nytimes.com/2009/04/15/when-cloud-computing-doesnt-make-sense/

Personal Note:

After writing the blog, for some reason I got the urge to listen to the sound tracks of the title music for “For A Few Dollars More” and “The Good, The Bad and the Ugly”. I bought the mp3 tracks from AMZ and so finally they came out ahead ! They have found ways of monetizing even cloud blogging !

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