Air Combat, Communism,
Coal, and Clouds
Understanding Business Agility and
IT Spending in the Age of Cloud
Dave Roberts
Sr...
What are the benefits of
cloud computing?
2Tuesday, October 8, 13
3Tuesday, October 8, 13
1. Improved business agility.
3Tuesday, October 8, 13
2. Decreased IT spending.
1. Improved business agility.
3Tuesday, October 8, 13
How?
4Tuesday, October 8, 13
Most people don’t have a
good answer.
5Tuesday, October 8, 13
The ones who do will win.
6Tuesday, October 8, 13
History doesn’t repeat
itself, but it does rhyme.
-- Mark Twain
7Tuesday, October 8, 13
8Tuesday, October 8, 13
8Tuesday, October 8, 13
9Tuesday, October 8, 13
9Tuesday, October 8, 13
10Tuesday, October 8, 13
10Tuesday, October 8, 13
11Tuesday, October 8, 13
What is agility?
12Tuesday, October 8, 13
What is agility?
12Tuesday, October 8, 13
13Tuesday, October 8, 13
USAF Fighter Weapons School, Nellis AFB
14Tuesday, October 8, 13
John Boyd, USAF
15Tuesday, October 8, 13
Student
Boyd
16Tuesday, October 8, 13
Student
Boyd
17Tuesday, October 8, 13
40 Seconds
18Tuesday, October 8, 13
19Tuesday, October 8, 13
20Tuesday, October 8, 13
“40 Second Boyd”
21Tuesday, October 8, 13
Boyd never lost the bet.
22Tuesday, October 8, 13
Why?
23Tuesday, October 8, 13
OODA
Loop
24Tuesday, October 8, 13
O
O
D
A
25Tuesday, October 8, 13
O
O
D
A
bserve
rient
ecide
ct
25Tuesday, October 8, 13
26Tuesday, October 8, 13
27Tuesday, October 8, 13
28Tuesday, October 8, 13
29Tuesday, October 8, 13
Predictability is bad.
30Tuesday, October 8, 13
Worst&
Slightly&
Be/er&
Best&
Fast Transients
31Tuesday, October 8, 13
32Tuesday, October 8, 13
33Tuesday, October 8, 13
Lesson:
Whoever can handle the
quickest rate of radical
change survives the fight.
34Tuesday, October 8, 13
How can we engineer
this outcome?
35Tuesday, October 8, 13
1. Small loops (small teams)
36Tuesday, October 8, 13
1. Small loops (small teams)
2. Communicate high-level
intent
37Tuesday, October 8, 13
Central(
Authority(
OODA(
High3Level(
Objec9ves(
High3Level(
Objec9ves(
OODA( OODA( OODA(
OODA(
38Tuesday, October 8, 13
39Tuesday, October 8, 13
“... by the time the surge comes along, what
[Gen. David] Petraeus did, which was brilliant,
was to decentralize our own O...
“The enemy was still stuck with a classical Maoist-
type of decision-making apparatus while the
coalition had a much more ...
Central(
Authority(
OODA(
High3Level(
Objec9ves(
High3Level(
Objec9ves(
OODA( OODA( OODA(
OODA(
42Tuesday, October 8, 13
43Tuesday, October 8, 13
Self-service access
shrinks the loops
44Tuesday, October 8, 13
Cloud enables small
groups to create
“fast transients.”
45Tuesday, October 8, 13
46Tuesday, October 8, 13
47Tuesday, October 8, 13
48Tuesday, October 8, 13
48Tuesday, October 8, 13
How can we best ensure the
right IT resources get to the
right people at the right time?
49Tuesday, October 8, 13
Fundamentally, that’s an
economic question.
50Tuesday, October 8, 13
Top$Down(
Command(and(Control(
Socialist(
Bo5om$Up(
Decentralized(
Free(Market(
Spectrum of Economic Models
51Tuesday, Oct...
52Tuesday, October 8, 13
Central Planning
53Tuesday, October 8, 13
Central Planning
Given enough inputs and smart people, you can
efficiently plan almost anything.
54Tuesday, October 8, 13
55Tuesday, October 8, 13
56Tuesday, October 8, 13
56Tuesday, October 8, 13
57Tuesday, October 8, 13
Source:(h*p://kcmeesha.com/2010/02/20/behind9the9iron9curtainshortages/Source:(h*p://kcmeesha.com/2010/02/20/behind9the9ir...
Source:(h*p://kcmeesha.com/2010/02/20/behind9the9iron9curtainshortages/Source:(h*p://kcmeesha.com/2010/02/20/behind9the9ir...
Ludwig von Mises
58Tuesday, October 8, 13
Ludwig von Mises Friedrich Hayek
59Tuesday, October 8, 13
Why?
60Tuesday, October 8, 13
The Economic
Calculation Problem
61Tuesday, October 8, 13
The Economic
Calculation Problem
1. You can never know everything.
62Tuesday, October 8, 13
The Economic
Calculation Problem
1. You can never know everything.
2. Things change all the time.
63Tuesday, October 8, 13
64Tuesday, October 8, 13
Shortage / Make MoreShortage / Make More
65Tuesday, October 8, 13
Glut / Make LessGlut / Make Less
65Tuesday, October 8, 13
66Tuesday, October 8, 13
Conclusion:
Central planning loses for
nation-states
67Tuesday, October 8, 13
What about smaller
organizations?
68Tuesday, October 8, 13
Thesis
Individual firms that allocate IT resources
using free-market principles will do better
than firms that favor central...
Free$Market$
Business$Unit$
Firms$
Products$sold$at$market$price$
Raw$materials$&$labor$
purchased$at$market$price$
IT$Dep...
71Tuesday, October 8, 13
Shadow IT
Rogue IT
72Tuesday, October 8, 13
73Tuesday, October 8, 13
Free Markets:
Multiple suppliers
Competition
Freedom of choice
Competitive failure
74Tuesday, October 8, 13
75Tuesday, October 8, 13
Cloud delivers the machinery
for accurate, granular
accounting and
billing.
76Tuesday, October 8, 13
Free$Market$
Business$Unit$
Firms$
Products$sold$at$market$price$
Raw$materials$&$labor$
purchased$at$market$price$
Market...
Free$Market$
Business$Unit$
Firms$
Products$sold$at$market$price$
Raw$materials$&$labor$
purchased$at$market$price$
Market...
79Tuesday, October 8, 13
80Tuesday, October 8, 13
81Tuesday, October 8, 13
81Tuesday, October 8, 13
What sort of IT cost reduction should
we expect from cloud computing?
82Tuesday, October 8, 13
1865
83Tuesday, October 8, 13
84Tuesday, October 8, 13
William Stanley Jevons
85Tuesday, October 8, 13
86Tuesday, October 8, 13
When would Britain
exhaust its coal mines?
86Tuesday, October 8, 13
87Tuesday, October 8, 13
Greater Efficiency ➡ More Consumption
88Tuesday, October 8, 13
The Jevons’ Paradox
Greater Efficiency ➡ More Consumption
89Tuesday, October 8, 13
Why?
90Tuesday, October 8, 13
The Jevons’ Paradox
Greater Efficiency ➡ More Consumption
91Tuesday, October 8, 13
The Jevons’ Paradox
Greater Efficiency ➡
More Consumption
New Applications
New Applications ➡
92Tuesday, October 8, 13
93Tuesday, October 8, 13
Cloud may make individual
workloads less expensive.
94Tuesday, October 8, 13
Cloud may make individual
workloads less expensive.
But you’ll use more, and
thus costs will increase in
aggregate.
95Tues...
But you won’t care if
each of those uses is
profitable.
96Tuesday, October 8, 13
Caveat:
IT intensity matters
97Tuesday, October 8, 13
98Tuesday, October 8, 13
99Tuesday, October 8, 13
100Tuesday, October 8, 13
@sandhillstrat
101Tuesday, October 8, 13
@BMCcloud
@sandhillstrat
102Tuesday, October 8, 13
Thank You
Dave%Roberts%
Sr.%Director,%Solu3ons%Marke3ng%
Email:% % %david_roberts@bmc.com%
Twi@er: % %@sandhillstrat%
Goog...
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Gartner Symposium 2013: Air Combat, Communisim, Coal, and Clouds: Understanding Business Agility and IT Spending in the Age of Cloud

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Update: Here's a link to the video of the session. I STRONGLY recommend watching this while going through the slides as many of the slides are pictures without captions and won't make as much sense by themselves:
http://www.gartnereventsondemand.com/session-video/SYM23/SPS24

The two most attractive benefits of cloud computing for enterprises are greater business agility and reduced IT spending. Unfortunately, most enterprises have little more than an intuitive sense for how these things will actually come to fruition. In this session, we'll examine business agility and IT spending against a fun and diverse backdrop of historical parallels! First, we'll gain an understanding of business agility through the lessons of aerial dogfighting by a noted fighter pilot. Next, we'll examine communist central planning models and why we should look to the free market to help structure our IT departments. Finally, we'll learn what Great Britain's coal usage in the late 1800s can tell us about IT spending in the world of cloud computing. Hang on for a wild ride!

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Gartner Symposium 2013: Air Combat, Communisim, Coal, and Clouds: Understanding Business Agility and IT Spending in the Age of Cloud

  1. 1. Air Combat, Communism, Coal, and Clouds Understanding Business Agility and IT Spending in the Age of Cloud Dave Roberts Sr. Director, Solutions Marketing david_roberts@bmc.com @sandhillstrat 1Tuesday, October 8, 13
  2. 2. What are the benefits of cloud computing? 2Tuesday, October 8, 13
  3. 3. 3Tuesday, October 8, 13
  4. 4. 1. Improved business agility. 3Tuesday, October 8, 13
  5. 5. 2. Decreased IT spending. 1. Improved business agility. 3Tuesday, October 8, 13
  6. 6. How? 4Tuesday, October 8, 13
  7. 7. Most people don’t have a good answer. 5Tuesday, October 8, 13
  8. 8. The ones who do will win. 6Tuesday, October 8, 13
  9. 9. History doesn’t repeat itself, but it does rhyme. -- Mark Twain 7Tuesday, October 8, 13
  10. 10. 8Tuesday, October 8, 13
  11. 11. 8Tuesday, October 8, 13
  12. 12. 9Tuesday, October 8, 13
  13. 13. 9Tuesday, October 8, 13
  14. 14. 10Tuesday, October 8, 13
  15. 15. 10Tuesday, October 8, 13
  16. 16. 11Tuesday, October 8, 13
  17. 17. What is agility? 12Tuesday, October 8, 13
  18. 18. What is agility? 12Tuesday, October 8, 13
  19. 19. 13Tuesday, October 8, 13
  20. 20. USAF Fighter Weapons School, Nellis AFB 14Tuesday, October 8, 13
  21. 21. John Boyd, USAF 15Tuesday, October 8, 13
  22. 22. Student Boyd 16Tuesday, October 8, 13
  23. 23. Student Boyd 17Tuesday, October 8, 13
  24. 24. 40 Seconds 18Tuesday, October 8, 13
  25. 25. 19Tuesday, October 8, 13
  26. 26. 20Tuesday, October 8, 13
  27. 27. “40 Second Boyd” 21Tuesday, October 8, 13
  28. 28. Boyd never lost the bet. 22Tuesday, October 8, 13
  29. 29. Why? 23Tuesday, October 8, 13
  30. 30. OODA Loop 24Tuesday, October 8, 13
  31. 31. O O D A 25Tuesday, October 8, 13
  32. 32. O O D A bserve rient ecide ct 25Tuesday, October 8, 13
  33. 33. 26Tuesday, October 8, 13
  34. 34. 27Tuesday, October 8, 13
  35. 35. 28Tuesday, October 8, 13
  36. 36. 29Tuesday, October 8, 13
  37. 37. Predictability is bad. 30Tuesday, October 8, 13
  38. 38. Worst& Slightly& Be/er& Best& Fast Transients 31Tuesday, October 8, 13
  39. 39. 32Tuesday, October 8, 13
  40. 40. 33Tuesday, October 8, 13
  41. 41. Lesson: Whoever can handle the quickest rate of radical change survives the fight. 34Tuesday, October 8, 13
  42. 42. How can we engineer this outcome? 35Tuesday, October 8, 13
  43. 43. 1. Small loops (small teams) 36Tuesday, October 8, 13
  44. 44. 1. Small loops (small teams) 2. Communicate high-level intent 37Tuesday, October 8, 13
  45. 45. Central( Authority( OODA( High3Level( Objec9ves( High3Level( Objec9ves( OODA( OODA( OODA( OODA( 38Tuesday, October 8, 13
  46. 46. 39Tuesday, October 8, 13
  47. 47. “... by the time the surge comes along, what [Gen. David] Petraeus did, which was brilliant, was to decentralize our own OODA loop, if you will, by delegating the responding authorities down to brigade and, in some cases, battalion level...” 40Tuesday, October 8, 13
  48. 48. “The enemy was still stuck with a classical Maoist- type of decision-making apparatus while the coalition had a much more streamlined decision- making apparatus that allowed them to react very quickly on the street.” 41Tuesday, October 8, 13
  49. 49. Central( Authority( OODA( High3Level( Objec9ves( High3Level( Objec9ves( OODA( OODA( OODA( OODA( 42Tuesday, October 8, 13
  50. 50. 43Tuesday, October 8, 13
  51. 51. Self-service access shrinks the loops 44Tuesday, October 8, 13
  52. 52. Cloud enables small groups to create “fast transients.” 45Tuesday, October 8, 13
  53. 53. 46Tuesday, October 8, 13
  54. 54. 47Tuesday, October 8, 13
  55. 55. 48Tuesday, October 8, 13
  56. 56. 48Tuesday, October 8, 13
  57. 57. How can we best ensure the right IT resources get to the right people at the right time? 49Tuesday, October 8, 13
  58. 58. Fundamentally, that’s an economic question. 50Tuesday, October 8, 13
  59. 59. Top$Down( Command(and(Control( Socialist( Bo5om$Up( Decentralized( Free(Market( Spectrum of Economic Models 51Tuesday, October 8, 13
  60. 60. 52Tuesday, October 8, 13
  61. 61. Central Planning 53Tuesday, October 8, 13
  62. 62. Central Planning Given enough inputs and smart people, you can efficiently plan almost anything. 54Tuesday, October 8, 13
  63. 63. 55Tuesday, October 8, 13
  64. 64. 56Tuesday, October 8, 13
  65. 65. 56Tuesday, October 8, 13
  66. 66. 57Tuesday, October 8, 13
  67. 67. Source:(h*p://kcmeesha.com/2010/02/20/behind9the9iron9curtainshortages/Source:(h*p://kcmeesha.com/2010/02/20/behind9the9iron9curtainshortages/ 57Tuesday, October 8, 13
  68. 68. Source:(h*p://kcmeesha.com/2010/02/20/behind9the9iron9curtainshortages/Source:(h*p://kcmeesha.com/2010/02/20/behind9the9iron9curtainshortages/ 57Tuesday, October 8, 13
  69. 69. Ludwig von Mises 58Tuesday, October 8, 13
  70. 70. Ludwig von Mises Friedrich Hayek 59Tuesday, October 8, 13
  71. 71. Why? 60Tuesday, October 8, 13
  72. 72. The Economic Calculation Problem 61Tuesday, October 8, 13
  73. 73. The Economic Calculation Problem 1. You can never know everything. 62Tuesday, October 8, 13
  74. 74. The Economic Calculation Problem 1. You can never know everything. 2. Things change all the time. 63Tuesday, October 8, 13
  75. 75. 64Tuesday, October 8, 13
  76. 76. Shortage / Make MoreShortage / Make More 65Tuesday, October 8, 13
  77. 77. Glut / Make LessGlut / Make Less 65Tuesday, October 8, 13
  78. 78. 66Tuesday, October 8, 13
  79. 79. Conclusion: Central planning loses for nation-states 67Tuesday, October 8, 13
  80. 80. What about smaller organizations? 68Tuesday, October 8, 13
  81. 81. Thesis Individual firms that allocate IT resources using free-market principles will do better than firms that favor central planning. 69Tuesday, October 8, 13
  82. 82. Free$Market$ Business$Unit$ Firms$ Products$sold$at$market$price$ Raw$materials$&$labor$ purchased$at$market$price$ IT$Dept.$ Raw$materials$&$labor$ purchased$at$market$price$ “Monopoly$pricing$&$ monopoly$money”$ 70Tuesday, October 8, 13
  83. 83. 71Tuesday, October 8, 13
  84. 84. Shadow IT Rogue IT 72Tuesday, October 8, 13
  85. 85. 73Tuesday, October 8, 13
  86. 86. Free Markets: Multiple suppliers Competition Freedom of choice Competitive failure 74Tuesday, October 8, 13
  87. 87. 75Tuesday, October 8, 13
  88. 88. Cloud delivers the machinery for accurate, granular accounting and billing. 76Tuesday, October 8, 13
  89. 89. Free$Market$ Business$Unit$ Firms$ Products$sold$at$market$price$ Raw$materials$&$labor$ purchased$at$market$price$ Market$compe;;ve$ offerings$and$pricing$ IT$Dept.$ Raw$materials$&$labor$ purchased$at$market$price$ Allow$BUs$to$purchase$ from$mul;ple$suppliers$ 77Tuesday, October 8, 13
  90. 90. Free$Market$ Business$Unit$ Firms$ Products$sold$at$market$price$ Raw$materials$&$labor$ purchased$at$market$price$ Market$compe;;ve$ offerings$and$pricing$ IT$Dept.$ Raw$materials$&$labor$ purchased$at$market$price$ Allow$BUs$to$purchase$ from$mul;ple$suppliers$ 78Tuesday, October 8, 13
  91. 91. 79Tuesday, October 8, 13
  92. 92. 80Tuesday, October 8, 13
  93. 93. 81Tuesday, October 8, 13
  94. 94. 81Tuesday, October 8, 13
  95. 95. What sort of IT cost reduction should we expect from cloud computing? 82Tuesday, October 8, 13
  96. 96. 1865 83Tuesday, October 8, 13
  97. 97. 84Tuesday, October 8, 13
  98. 98. William Stanley Jevons 85Tuesday, October 8, 13
  99. 99. 86Tuesday, October 8, 13
  100. 100. When would Britain exhaust its coal mines? 86Tuesday, October 8, 13
  101. 101. 87Tuesday, October 8, 13
  102. 102. Greater Efficiency ➡ More Consumption 88Tuesday, October 8, 13
  103. 103. The Jevons’ Paradox Greater Efficiency ➡ More Consumption 89Tuesday, October 8, 13
  104. 104. Why? 90Tuesday, October 8, 13
  105. 105. The Jevons’ Paradox Greater Efficiency ➡ More Consumption 91Tuesday, October 8, 13
  106. 106. The Jevons’ Paradox Greater Efficiency ➡ More Consumption New Applications New Applications ➡ 92Tuesday, October 8, 13
  107. 107. 93Tuesday, October 8, 13
  108. 108. Cloud may make individual workloads less expensive. 94Tuesday, October 8, 13
  109. 109. Cloud may make individual workloads less expensive. But you’ll use more, and thus costs will increase in aggregate. 95Tuesday, October 8, 13
  110. 110. But you won’t care if each of those uses is profitable. 96Tuesday, October 8, 13
  111. 111. Caveat: IT intensity matters 97Tuesday, October 8, 13
  112. 112. 98Tuesday, October 8, 13
  113. 113. 99Tuesday, October 8, 13
  114. 114. 100Tuesday, October 8, 13
  115. 115. @sandhillstrat 101Tuesday, October 8, 13
  116. 116. @BMCcloud @sandhillstrat 102Tuesday, October 8, 13
  117. 117. Thank You Dave%Roberts% Sr.%Director,%Solu3ons%Marke3ng% Email:% % %david_roberts@bmc.com% Twi@er: % %@sandhillstrat% Google+:% %h@p://gplus.to/sandhillstrat% 103Tuesday, October 8, 13
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