Cloud and the reshaping of business

Cloud and the reshaping of business

Summary: 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.

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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.

Topics: Cloud, CXO, Data Centers, Data Management, Enterprise Software, Legal, Software, IT Employment

Phil Wainewright

About Phil Wainewright

Since 1998, Phil Wainewright has been a thought leader in cloud computing as a blogger, analyst and consultant.

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57 comments
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  • RE: Cloud and the reshaping of business

    very interesting article, its a shame no one has commented as such.

    It's refreshing to see a perspective other than "if we build it they will come" ideal of how the cloud will work.

    That of course, as you pointed out does not fly with business, business will embrace any technology that will assist their bottom line.

    After all that is why they are there in the first place, if the cloud can be truly relied upon and trusted, then it will be employed by companies.

    Just as the WEB is being employed, just as they employ TV, Radio, telephones, or whatever is available that people are willing to use.

    But I do not believe it is a 'game changer' for most industries or for business, but an expansion of opportunity.
    Aussie_Troll
    • RE: Cloud and the reshaping of business

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  • RE: Cloud and the reshaping of business

    As long as the business is in control of the cloud I can see it happening. Buying cloud space and tools is putting someone else in control, I don't see major corporation or even a lot of medium sized corporations doing that, even if it might help the bottom line. The only way it would happen is the cost saving were so much that they would no longer be competitive. Although there are cost savings, the centralization is inherently more dangerous for catastrophic failure. Which is better, a system with lots of little easily fixed decentralize failures, or a centralized system where failure is unlikely but when it happens is catastrophic. I go for the decentralized every time.
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  • Yes it is about reshaping business

    I worked in IT as a developer and consultant for over 15 years, but I strong interest in economics and business, it is thru this prism I look at technology. Most techies and businesses don't get what cloud platforms can enable them to achieve, because their focus is delivering services, or being a secure mote around their 20th century IT infrastructure. <br><br>The only way some businesses will understand the opportunity or threat is when an unknown low cost competitor is at their gate. It will be too late at that point, because they will be reacting instead of being proactive before that occurs. <br><br>The responsibility for creating a proactive IT organization rests squarely on the shoulders of the CIO. If the CEO doesn't get it, the CIO better explain the existential threat or opportunity for their business.
    TJGodel
  • RE: Cloud and the reshaping of business

    Great piece Phil - I think this definitely a perspective which isn't picked enough. Most talk of "enterprise" and "cloud" is focused on defensive measures and "having" to do things, but enterprises are beginning to see that they can also make bold moves with cloud infrastructure. The barbarians don't need to be at the gate.

    We're starting to see a lot of larger companies push some data or services to the cloud and expose them by API so that third parties can innovate and embed these products/services into new applications. A good example is Best Buy exposing inventory and ordering capabilities by API so that many 3rd parties could integrate them. The flip side is also true - and example is the company Pingar (http://www.pingar.com) which does advanced document search and analysis which runs in the cloud but can be bound into internal workflows by API.
    stevenwillmott
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  • RE: Cloud and the reshaping of business

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  • RE: Cloud and the reshaping of business

    This blog is crucial for its contemporary relevance. Cloud computing has definitely changed the way companies do business. The ultimate goal of adopting the Cloud is to enhance the efficiency of operations in the unit. Indeed, companies that don?t adopt quickly to this change will lose out on developing a competitive edge. In the ultimate analysis, the company?s business goals, both long term and short term, will determine whether it adopts the Cloud at all and also how they will adopt it. 57% of survey respondents of a recent Wipro-Outsourcing center research on cloud feel that better alignment between IT & business is very critical for businesses to be future ready http://www.wipro.com/datadocs/insights/Cloud-Computing.pdf
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  • RE: Cloud and the reshaping of business

    More and more use of the cloud is inevitable with mobility becoming a bigger issue, the need to be able to access information and apps on the fly is just going to get greater and greater, even politicians with <a href="http://www.keywordbacklinks.com" style="text-decoration:none;color:#000000" title="high pr backlinks">high pr backlinks</a> in Washington are using their own data on a cloud as a lot of them now work just with a smart phone and no laptop, so yes business is definitely going to have to adapt to the changing environment for storing data and the use of applications both commerce and social.
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