Tomorrow I’ll be at the GigaOm Structure 10 cloud event and I’ll see Tom Roloff who will be speaking there.  Tom is a great guy but very much on top of one of the biggest trends – IT and Cloud convergence.

I sat down and talked with Tom Roloff at EMC World.  We had a great chat about how IT is changing and vendor lock-in.

Industry analyst Dave Vellante of Wikibon Project and I covered alot of areas, including:

* Seventy percent of IT investment goes toward maintenance (running the business)
* Assessing the value of application portfolios
* Software pricing
* The allure of the public cloud and where private cloud fits
* Vendor lock-in
* Transformation
* Competiting with small consultancies
* Predictions on cloud computing

Watch live video from SiliconANGLE.com on Justin.tv

The 70/30 Mix

It’s generally accepted that the majority of IT investment goes toward running the business (RTB), and only 30% toward growing or transforming the business (GTB TTB). However this has been a fact of life for years. EMC’s Joe Tucci and EMC broadly believe they can change this mix and “move the needle” more toward a 50/50 split. This is a major challenge that I’ve discussed previously with Tom Roloff. EMC’s strategy is to use use virtualization as the lever to reduce operational costs. This is a good strategy but the key challenge EMC will face is that IT organizations rarely get rid of stuff. While virtualization is helping change that dynamic, the key roadblock remains entrenched applications and antiquated business processes.

EMC consulting, and other consulting organizations must help clients evaluate their application portfolios and then provide concrete ways to transform the 70/30 mix by aligning the application portfolio to business processes and rationalizing and transforming underperforming assets.

Predictions

Roloff made two interesting predictions:

1. Software vendors are going to have to change pricing strategies
2. There will be hundreds of public clouds but tens of thousands of private clouds

The implications of these are that EMC will be able to preserve its traditional piece of the pie– which I believe because storage has always been an elastic market– and grow with the private cloud (less obvious but potentially transformative). Software pricing is often onerous and SaaS is changing the model. However in the long run it remains unclear that on-demand SaaS is less expensive than on-premise software. Nonetheless, the allure of on-demand cloud models is the flexibility, agility and shifting of expense toward opex from capex.

EMC’s 2000-person consulting organization is positioning to be a strategic catalyst for the transformation to the cloud. To the extent that this group can build relationships with CIOs and business executives, EMC will be able to increasingly leverage its consulting organization in its sales motion.