Cloud and the reshaping of business

It's not the technology, stupid. The most important innovations on cloud platforms are going to happen at a business level - reshaping business to fight new competitive threats and grab new opportunities.

Even though much of the discussion of cloud computing is focused on technology, I believe that the most important innovations on cloud platforms are going to happen at a business level. So here at the SIIA All About the Cloud conference today in San Francisco, one of the sessions I'd been especially looking forward to was a presentation by Bill McNee, CEO of analyst group Saugatuck Technology, about 'The Rise of Cloud IT and Cloud Business'. As McNee put it as he opened the presentation:

"The issue about cloud is not just at the technology level, it's about the reshaping of business and new business opportunities."

There are two facets to this, he points out. On the one hand, for those prepared to innovate, there's the power of the cloud to increase competitiveness and realize new opportunities. On the other hand, there's the threat posed by the cloud to those established businesses that are unable to innovate fast enough.

"Many established franchises are feeling threatened — and in some cases they are threatened," he told me as we chatted after the session had finished. "You've got all these nimble little guys providing a lower price product and they have to get out ahead of this."

He cited examples including financial services giant Fidelity, which is using the cloud to provide employee portals to its clients that combine customer HR data and benefit plans with relevant information about 401k investment planning. Xerox is cloud-enabling its high-volume printing systems to serve its customers better and open up opportunities to provide turnkey marketing services to smaller companies. Postage meterage provider Pitney Bowes faces falling spending on stamps and so is building a secure mailbox in the cloud. You can read more on that in an interview published today with John Schloff, VP Global Strategy at Pitney Bowes.

Other sessions at the conference provide ample evidence that forward-looking enterprises are thinking carefully about these threats and opportunities. They're changing the way they organise IT and its relationship with the business. In the opening keynote, delegates heard from Ginny Lee, CIO of financial software vendor Intuit, which generates more than half its $4+ billion revenues from connected services. She explained how to support this growth in on-demand capabilities, she "had to turn the IT organization from a service provider into a change agent ... I had to change the mindsets of people within IT to make sure they know that their mission is to enable growth and a great customer experience."

This means shifting the emphasis from building out technology to focussing more on operational delivery. "Having a limited set of features that's always on, highly available, secure and scalable is much more important than having a wider range of features that's often not available," she explained. IT has to change its perspective to think less about the plumbing and instead to be aware of the wider business context and focus on delivering end-to-end systems, she said.

This afternoon, I'll be moderating a session on the Next Generation of Cloud Computing with a cross-section of forward-looking cloud vendors — CloudPassage, GoodData, GroupFlier, Kaavo, RightScale — and we'll be picking up this theme again of how cloud is radically changing the way businesses operate and succeed in the modern world. You can watch the live video stream on the All About the Cloud website starting from 1:55pm Pacific time.

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