How traditional IT service delivery models will be affected by cloud and mobility?

Cloud and Mobility are 2 disruptive technologies that are expected to play havoc with the traditional IT delivery models. Though almost everyone accepts there will be impact, still one is not sure of the magnitude. This post explores the impacts of these 2 technologies on the lives of traditional  IT service organizations and the IT professionals and how they need to tweak their service offerings and capabilities to survive in the changed technological landscape

Cloud adoption is yet to become the main stream because of barriers like security, regulatory/compliance regimens and bandwidth constraints. But still  it is generally expected that operational efficiency and economy of scale that cloud brings to an organization will ultimately drive all the IT managers to switch to cloud at some point in the future not far away.  Most surveys confirm that cloud adoption will be significant by 2015 and will become the main stream by 2020.

The question is very natural that how the traditional IT service companies are going to be affected- what are the opportunities and threats?

Threats

• Companies that provide remote infrastructure/network maintenance services for enterprises are going to be affected by the very large, state-of-the-art cloud data centers. Owning big cloud data centers is generally thought to be big boys' play turf. Though the top 5 Indian IT companies have the financial might to play this game, we should not forget the fact that this is a very niche technology area and Indian companies are mostly app developers rather than technology creators
•  With very large data centers, one gets the ability to manage hundreds of servers at a time. Most of the admin works are done by the semi-technical cloud customers themselves through the self-service console .  Also big servers will replace a number of small, physical servers using virtualization.  Job cuts/re-skilling of existing administrators will happen in this area.
• Companies that provide application maintenance and management will be affected though not as directly as the infrastructure service providers. This is little bit tricky. With multi-tenant application model, I expect there will be a general resistance to the custom change requests and enhancements. Hence companies that earn through enhancements and bug fixes will have decreased revenue which may ultimately affect developers.
• Low revenue turn out is expected in the application manageability services too with patching, resource throttling etc. will move out of the hands of traditional players
• My extremely pessimistic mind says there will be low demand for application development services too as there will be increased pressure on the IT managers  to use the existing popular vertical solutions on the cloud. With cloud is something like the app store of Apple Inc., social concepts will come into play.  A very good application on the cloud will be freely promoted by the users feedback and the word spreads fast. Currently there are multiple software vendors (ISVs) providing the same or near same solution. There will be a cut in the number of such providers because either you need to be a pioneer in the domain (think 'Apple') or you need to have a big differentiator in terms of customer benefits. Most probably the applications will be competing at the global level rather than at a local level
• Packaged application service providers will also face similar threats as the custom app developers. There will be resistance to customer specific customizations.
• Apps developed using legacy technologies will die fast as they may not be compliant with the cloud. In the anxiety to get into the cloud and enjoy the competitive advantage, there may be rash decisions towards dumping legacy apps. This will affect the legacy, but rare skilled developers
• With mobile, IT managers will be extremely careful in choosing what features their app is going to provide as resources are a constraint with mobile devices. Hence generally I expect a normal PC application would shrink when it becomes mobile which is a bad news for application developers. Usability and resource utilization will become the differentiators for applications and packaged products rather than the diversity of features and depth of functionalities

Opportunities

• More and more legacy applications will dumped resulting in either cloud compliant re-development from scratch or re-engineering to fit the cloud. This will be a big opportunity for traditional application developers
• There will be demand for applications that integrate with social networks like FaceBook and Microsoft Live
• There will be demand for applications that integrate with popular cloud applications like Google Apps or Office 365