Executives around the globe are facing a conundrum. In the midst of widespread economic turmoil, there is a clear, collective mandate to cut the cost of doing business using technology. According to a recent survey, most IT decision-makers widely recognise cloud computing as a viable way to reduce capital expenditures and operational costs.
However, these decision-makers are turning a blind eye to the potential business benefits of cloud computing while the economy teeters on uncertain ground. Despite widespread recognition that cloud computing is real and has the potential to improve a company’s financial position and competitiveness, the majority of respondents to the survey are not using cloud computing technologies at this time.
And, more than 80 per cent of those that currently depend on internal IT systems have no plans to integrate cloud-based technologies in the next 12 months. They are unwilling to switch from internally owned and managed IT systems due to fears around security threats and losing control of company systems and data.
The results of this survey echo the adoption of many fundamental technologies that have become widely used in the workplace, including the Internet and e-mail. In each of those cases, fear of loss of control and security threatened adoption of those technologies. Cloud computing is no different.
Overcoming the fears, uncertainties and doubts is typically the biggest barrier to any new technology. Those companies that have gotten past the concerns associated with cloud computing report business benefits.
By turning to cloud computing for certain technology needs, instead of owning and managing all IT systems, companies have the ability to free up resources to focus on strategic business initiatives – helping them to better serve customers, improve business performance and win market share.
It shifts the burden of managing IT and business processes away from companies and allows them to focus on their core business. Specifically, companies that have migrated to cloud computing technologies have reported it:
- Reduces up-front and on-going costs
- Provides greater flexibility using a Pay as You Go pricing model
- Allows companies to react more quickly to market conditions
- Gives the ability to scale to meet changing business needs
- Is easy for employees to use
- Provides better access to the latest technologies
Bring clarity out of complexity
Companies need to know what cloud computing is, what it does and what it offers. Cloud computing is an umbrella term that encompasses many types of services, including Software-as-a-Service. I define cloud computing as enabling and delivering computing services – compute power, data storage, network bandwidth and application software—over a network on an as-needed basis.
However, the definition of cloud varies depending on the company and the vendor. The first step is to work with your clients to define what cloud means for them.
There is a perception that IT customers will save on infrastructure, licensing and maintenance costs. That’s true. But, companies also must consider the impact such a move will have on the organisation as a whole. For example, security and access methods may need to change. Information and data that used to be locally accessible offline may now only be available online.
Regulatory, compliance and privacy issues with remotely distributed data need to be understood and rationalised. But, these aren’t new concerns for enterprise applications – just areas that need to be addressed when considering a cloud-based computing model.
Assess the business value of cloud versus business needs
Every company must decide if cloud computing will serve its needs. In order to do that, they must evaluate the potential business value it offers and the challenges it involves. What’s most important to them? Is it costs? Control?
Companies must identify what technology investment they require to realise their business objectives for the long-term while managing through short-term down cycles. For example, consider companies that manufacture products as commodities. They require minimal research and development, and involve little proprietary knowledge. One product operates in much the same way as any other.
So, outsourcing to a contract manufacturer involves low risk. But, a pharmaceutical company, which has highly sensitive intellectual property, faces tremendous risk with outsourcing. The difference here is how much control a company requires over its information. Companies need to consider what information to share in the cloud and what needs to remain in-house based on their business needs.
Remember, the journey to cloud is an evolution. It’s not an all-or-nothing proposition. A company can vary its approach to cloud computing depending on its business needs and its comfort level when it comes to concerns around security and privacy.
Unlike on-premise technology, companies can speedily tap cloud services and rapidly change the use of those services. For example, in the case of quickly needing additional server resources, companies can procure what they need from a cloud provider. When those resources are no longer needed, steps can be taken to discontinue using them.
The best approach to addressing concerns while realising the benefits is to begin experimenting and developing proof-of-concepts using cloud solutions. This achieves many goals:
- Establishes confidence in the cloud provider
- Creates an understanding of service levels and limitations
- And, if successful, becomes a stepping stone to larger cloud based solution deployment.
It’s important to choose a user case or scenario that will address concerns like privacy and security, but also illustrate potential business value benefits. One area of the market where many quick wins can be found is in a hosted CRM or collaboration solution in the cloud today.
Establish a clear roadmap
Any decision to begin using cloud computing requires forethought, planning and preparation. The more a business knows what it wants to do, the more likely it will be able to make the changes necessary to accomplish its goals.
There are clear business benefits that can be derived from cloud computing. But, getting to the cloud and realising the benefits of cloud computing is not a given. It requires a clear plan that aligns a company’s IT strategy with your business needs.
Once clients have assessed their IT portfolio to determine which applications or services might benefit the most from cloud computing, our job as consultants is to help them define a strategy and take the first step to adapting cloud-based solutions to meet their business drivers.