I recently caught up with Mike Kelly, CIO to Red Hatters worldwide, while he was attending a conference in San Francisco. With 18 months under his belt at a company that is defining next-gen tech, Mike was ready to talk open source, hybrid cloud, and how CIOs finally have a chance to lead like never before.

 

As the pioneer of open source, Red Hat has a really unique business model around monetizing software. I'm curious, how’s that model holding up in what is fast becoming a cloud-first world?

I'd say it's holding up quite well. As a company, we continue to be very successful monetizing that business model. When we look at how we evolve in the cloud world, we believe that the open hybrid cloud is the dominant and most appropriate model. It's not going to be an all public cloud world, and it's not going to be an all private cloud world. The world is going hybrid and multicloud.

What’s exciting is that much of the innovation for the cloud is happening in the open source community. As great stewards of that community, we've continued to work upstream and examine things as they come out, and we're pretty pleased that many of the cloud providers run their environments on open source stacks.


Why is the world going hybrid?

Two reasons. First, unless your company is completely digital native, your CIO is looking at what’s appropriate for their applications and their assets, and whether they need to run those things on-premises or in the cloud. We define the hybrid cloud with four footprints: on-premises bare metal, on-premises virtual, private cloud, and public cloud.

The platform we've advanced, the OpenShift platform, allows for container-based applications to be developed so that they can run on any of those footprints. Hybrid is the most likely outcome because CIOs aren’t looking for an all-or-nothing type activity.

twitter logoUltimately, CIOs don't want to be locked into one cloud provider.Mike Kelly CIO, Red Hat 

The second reason is that ultimately, CIOs don't want to be locked into one cloud provider. We've made decisions throughout our IT careers around not locking in with one vendor so that we maintain competition and some independence across those things.


You’re in a unique position, in that you're an intimate partner with some of those major cloud providers and you're also a major user of cloud yourselves. That puts you at an interesting intersection of the cloud market. What can you share about what you inherently understand to be the strengths and weaknesses of the cloud environment?

I do think we have a unique perspective because we have partnerships with all the major cloud providers. And the reason we're so committed to open source is that the problems that we're trying to solve are just too big for one company to solve for everybody. We’re really proud of our partnerships with the big cloud providers, and we try to create mutual value across that board while keeping the customer top of mind.

The best thing we can do is help customers embrace this model. While I don't know that I have anything terribly unique to add to the value proposition of cloud, I will say that we leverage the opportunity to work closely with cloud providers, for our specific workload, as we try to really represent what we believe customers are up against, which is open hybrid cloud.

Whether companies want to work with AWS, Microsoft, GCP, or even Alibaba, for that matter, they have the ability to do that because we have these strong partnerships in place to run our platform on their clouds. I guess that is pretty unique.


What are the outstanding questions IT leaders have about cloud these days?

Pretty much every CIO has worked with his or her team to create a strategy for adopting cloud. Most of them have done that by looking at their portfolio of applications, and then determining roadmaps for those applications, and deciding where they're going to go next. That would be inclusive of applications that they've purchased and applications that they've built.

I don't know that there are a lot of providers these days who are actually offering on-premises solutions. The SAPs, Oracles, Microsofts, and others of the world offer cloud only now—you don't even have the option to buy and install locally. For custom applications, what's most relevant for me at Red Hat and I imagine for other CIOs as well, are strategies to develop, maintain, advance, and develop those new applications. Will you build them cloud natively? That is, will you commit to one of the three provider platforms and use their pre-defined means for developing applications? Or do you want to look at developing containerized applications that can run in a multicloud environment?

OpenShift is that container platform that allows organizations to develop applications. Because they're containerized, they're able to run on a variety of cloud platforms, whether big providers or on-premises. And you can have solutions that actually span those four footprints we talked about earlier.


As companies embrace hybrid cloud environments, how are they managing their costs?

The lure of a cloud provider is that you’re going to have a lower cost, higher quality of service that innovates faster than anything that you do yourself. But learning how to decompose and translate cloud invoices is an ongoing challenge.

What often happens is that you get in and you enjoy those cost savings until demand spikes. And all of a sudden, the demand you were throttling because of your own inability to deliver as quickly as people would like you to is no longer constrained. You have to have good forecasting accuracy, and good growth assumptions, and good cost management, and frankly, good cost transparency around how you are managing this because you can't just move to the cloud and forget about it.

You have to make sure that you're paying attention. Otherwise, you'll incur charges you didn't expect to incur and the great story you told your peers in the business, about how you're going to save money, goes away. It’s too easy to consume.


How do you articulate to the business what you're achieving in cloud? How do you justify your investment?

My situation is a bit unique because, obviously, we as a company are very bullish on this model. I try to represent that model as best I can, but I do it in the same way that any CIO would do in his or her company—by helping people understand the footprint, what kinds of workloads belong where, how we distribute costs, and how we know that we're optimized. I try to tell the same story that we tell our customers so that we can be a good reference source.

Cost transparency plays a huge part in that because that's where a couple of things can happen. We can talk about our unit cost of services or traditional things that we supply, and how we might be able to take savings in those areas and reapply them in new places in the business. That way we don't always have to have a growth trajectory in IT spend but instead can almost stay flat, and just use efficiencies gained in one place to fund new innovations. That's not always the case but it's the intent.

We have lots of people consuming public cloud services across the company. However, we funnel it all through IT. By encouraging good hygiene around this whole process, we've been able to go back to the line of business and people in leadership positions to help them understand how they're being charged and how they can reduce their costs.

There are always areas where things can go unmanaged. But when you’re able to get in there and take a look at cloud usage, you can help lower costs based on people's understanding of how to use it.


Mike, what are the technologies you’re starting to wrestle with? Is anything keeping you up at night?

Nothing really keeps me up at night, thankfully. But we are looking at new ways to use data, analytics, and artificial intelligence. We’re a software company, and like any software company, we're looking to leverage technology solutions to gain efficiencies in our operation, and help our company grow and scale as efficiently as possible. So, we are looking at use cases around machine learning and AI and how we can automate routine tasks.

The ability to really leverage these new technologies to drive further business value is what makes this a really fun time to be a CIO.


Where will you apply AI first?

Probably in our sales and our services functions. We're looking for tasks and things that use patterns and how we might leverage some of the things the partner ecosystem is developing. Every software vendor has an AI and machine learning spin. So, we're evaluating use cases for particular opportunities that will help us make the customer and employee experience even better.

We're really very focused on automation, which is reflected in our Ansible engine. As a result, we are finding places within our IT operation where we can automate as much as possible to free up human capital to work on other exciting things as they come down the pike.


You remarked a moment ago that it’s a great time to be a CIO. How do you view the role and what's the biggest impact you feel you and your peers can make in the business today?

I've been in IT long enough now to have witnessed one cyclone after another. When I first entered the workforce, companies were in a “shed anything that isn’t our core competency” mode. Many companies looked at IT as something that wasn't their core skill because technology wasn’t really part of their differentiated offering. If you were a car manufacturer, a steelmaker, a healthcare company, a distribution business, or an airline, you didn’t view yourself as an IT company.

Because IT wasn’t what you were using to differentiate yourself, companies were taking all of the bespoke applications that had been written by “systems” people on mainframes, AS/400, or (you name the technology) and replacing them with systems that were written by experts. They embraced those concepts of re-engineering the corporation-standardizing process and gaining efficiencies for non-core competencies.

That led a wave of large-scale, ERP, CRM, and other package-based software implementations, and we went through a phase of outsourcing. IT was all about buying stuff and optimizing it to be run internally. We've run that for a while, and everybody's got the battle scars to prove how well they did in that endeavor.

But today, trends in computing and the consumerization of technology have driven this phenomenon where now every company is a technology company. And technology is, all of a sudden, the thing that will differentiate you. The cloud plays a huge role in fulfilling that, but CIO's also need to understand that they're now in the business of doing the thing they were prohibited from doing for so long, which is creating software.

twitter logoIf you want it, it's yours for the taking. It’s your time to step up, and lead, and demonstrate all the things we've been complaining about not being able to do for so long.Mike Kelly CIO, Red Hat 

Executives who have been through these cycles are looking around the table and asking, “Who’s going to lead this?" This is the opportunity that every CIO has right now. If you want it, it's yours for the taking. It’s your time to step up, and lead, and demonstrate all the things we've been complaining about not being able to do for so long: to have a seat at the table, to have our voices heard, and to garner the respect of the organization.

I'm personally really motivated by this new opportunity. It’s a great time for business-minded CIOs to demonstrate how companies can compete in this digital world.