CIOs are struggling with the impact of cloud services according to the results of the inaugural Wikibon/ServicesAngle IT Transformation survey, but the largest problem is not the obvious one. Over the past year, writes Wikibon Chief Analyst and Co-FOunder David Vellante in his report “Wikibon IT Transformation Survey: 2012 is The Year of the Cloud”,  Wikibon community members report their companies have moved from an attitude of cloud derision to active implementation of cloud strategies, with hybrid public/private approaches increasingly popular. That, however, is proving to be a fairly straightforward process.

The much larger issue is that cloud services are forcing IT organizations (ITOs) to transform themselves from cost centers to internal service providers. This requires a radical transformation of attitude as well as a reorganization from traditional silos into multi-skilled teams and technologies providing specific services. This is vastly complicated by the extremely tight budgets most IT shops work with today, which give them no money to fund this transformation, and by the need to continue to build custom solutions to support some business needs. Few CIOs have actually implemented charge-back for the services they provide, but companies are using “showback” methods to make users aware of the costs of the services they use.

Simultaneously IT is struggling to control the continued skyrocket growth of the volume of traditional data. IT shops are increasingly implementing dedup and other data management tools to control this growth, but Wikibon believes that no single technological silver bullet will provide an answer to this problem.

And this is primarily growth in traditional structured data. CIOs and CTOs are certainly aware of Big Data technologies such as Hadoop and the advantages that a few pioneers, mostly large Web-based companies, are deriving from them. Many respondents report that while they understand that data is central to their companies they are confused about how to proceed. Also, their plates are already full and their budgets stretched to the breaking point, forcing a wait-and-see attitude.

Respondents are also concerned about modernizing their internal applications, with 36% reporting that they are in an active software modernization program while 23.6% report that they need to modernize their application portfolio but haven’t figured out the best path and 13.7% admit that their portfolios are tool large, and their applications are bloated. DevOps, the combination of development and operations into cross-functional teams, is gaining traction, with Wikibon community members that have implemented it reporting hyper-productivity. They cite caveats concerning moving too fast and risks associated with software quality.

Overall, Wikibon’s conclusions from this survey are:

• First, IT organizations (ITOs) must find ways to visibility extract monetary value from data to gain the budgets they need to management data and monetize it for organizational benefit.
• Second, 85%+ of ITOs are in the midst of radical transformation designed to increase responsiveness to business demands. Organizations not pursuing this transformation are likely to fall behind their competitors.
• Third, the interactions between development and operations creates chronic project delays. ITOs need to cross-train development and operations staffs and should aggressively investigate DevOps to eliminate the waste of the traditional siloed approach.
• Fourth, ITOS should pursue Big Data initiatives by finding an LOB “sugar daddy” with both the authority and means to access, package, and go to market with data products. IT staffs need to develop the skills and implement the processes to support the new data elite and evolve technology organizations to support these initiatives.

Finally, Vellante writes that 2012 is indeed the Year of the Cloud, and IT organizations are under increasing pressure to compete both with internet giants and cloud service providers. Organizations that do not adopt some kind of cloud strategy – private, public, or hybrid – will probably fall behind their competitors. ITOs must focus more on cloud facilitation and brokering than on developing infrastructure.

As with all Wikibon research, this report is available free-of-charge on the Wikibon site. Interested parties are welcome to become Wikibon community members by registering on the site and to correct and comment on this and other research and to publish their own research and industry announcements.