Some observers believe the growing impact of cloud computing is limited to locating servers remotely and asking users to pay for software over time rather upfront. From this limited perspective, cloud computing is a back office function with minor impact on either business processes or end users.
This simplistic and narrow view ignores the genuine power of cloud computing to transform and improve enterprise business processes. Measurable business improvement is the ultimate benefit of cloud computing; these positive disruptions are far more important than server locations or software payment terms.
I asked corporate IT strategist Chris Potts, author of the book FruITIon, to comment on the larger implications and benefits of cloud computing:
It's vital that CIOs provide leadership to their executive colleagues on the cloud's structural implications, rather than simply its transactional or technological impacts. Boards need to get beyond transactional conversations such as 'how will this affect our IT contracts and costs' and explore strategy scenarios for how their business models and investment projects can best take advantage of the cloud itself, and the underlying principles on which it is founded. Cloud represents a way of thinking about how to structure the delivery of services that can be exploited way beyond the specific scope of IT. As a result, experienced cloud providers have a potentially value-adding role to play in helping CIOs to provide leadership in the boardroom.
Ultimately, to help enterprise buyers realize the broader promise of cloud computing, the established software industry must rethink its approach to technology, user experience, customer relationships, support, professional services, implementation, sales force compensation, and so on. However, making these basic changes requires established (i.e.: on-premise) software vendors to innovate around important aspects of their core business model, a notoriously difficult feat to accomplish. As a result, on-premise software vendors have struggled to bring viable and interesting cloud products to market.
While established vendors attempt to adapt their business model and products to the cloud, a new breed of enterprise software company has fully embraced this challenge. Not being restricted by legacy products or operating models, the best of these companies are optimized to take advantage of cloud opportunities. These new vendors align business relationships, financial models, product design, and corporate culture with the single goal of improving enterprise business processes with cloud-based software.
A recently unveiled enterprise performance management startup, called Tidemark, is one of these new cloud companies. Tidemark's three founders are veterans of companies such as Oracle, SAP, and Hyperion so they understand both the benefits and limitations of traditional enterprise software. Tidemark offers a flexible, cloud-based system for helping enterprise buyers analyze, and then act on, corporate data. For example, United States Sugar Corporation uses straightforward Tidemark tools to analyze and present data that previously required a 700-page report. Another customer, Acosta Sales and Marketing, a 20,000-person outsourced sales force for consumer product companies, finds Tidemark helpful to create financial reports across multiple business areas; before Tidemark, the data was either too complicated to collect or simply unavailable with existing systems.
I asked co-founder and CTO, Nenshad Bardoliwalla, to explain why Tidemark emphacizes the combination of analysis and subsequent action:
In a Tidemark application, if forecasted revenue is well below target, for example, I can examine potential risks and take action to mitigate them, perhaps by pulling in revenue from other accounts. This combination of insight plus actionability makes us different from pure BI tools that focus on analysis alone.
The cloud represents an inevitable shift in the evolution of enterprise software. While not perfect for every application, the genuine benefits of cloud-based solutions are compelling in many situations.
Pure cloud companies like Tidemark rely on several principles that almost form a manifesto for cloud software in the enterprise:
Design for business users. Software, user experience, and customer relationships are all based on the question, "What is best for users?"
Simplify implementation and deployment. Since making life better for business users is the focus, implementation involves configuration rather than customizing code. This approach means that business users, rather than IT experts, can change the software as needed -- to modify reports, adjust to changing business needs, and so on. By enabling business users to control their own technology decisions, the perennial issue of alignment with IT almost evaporates. When the technology process inherently requires deep participation with lines of business, we have a prescription for IT project success.
Use commodity hardware in a multi-tenant environment. At a basic technology level, the best cloud vendors design for efficiency, low cost, resiliency, security, and speed. These attributes are meaningful and important in delivering quality cloud services at large scale.
The very concept of "IT project" drives failure rather than success. We must learn to recognize that enterprise software projects are indistinguishable from any other business initiative an organization might undertake. Because enterprise software deployments necessarily involve technology and infrastructure, many organizations forget this crucial truth. Failure arises when the technology becomes more important or prominent than the mandate to achieve defined business goals.
The best cloud computing vendors combat separation between lines of business and IT by creating software that is easy to use and deploy. By explicitly designing for business users, companies like Tidemark encourage simplicity and suitability-to-task, which makes the technology subservient to genuine business needs.
When business needs come first so-called IT projects tend toward success. Shout this from the rooftops -- it's that important.
Tidemark's challenges. Despite its impressive product and the founding team's experience, the company must overcome two significant challenges:
Although large software vendors, like SAP and Oracle, have had trouble adapting to the cloud model, eventually these companies will become serious cloud players. For this reason, Tidemark has a limited period in which to establish its market presence. Nonetheless, the company is well-funded and positioned to take advantage of that window.
Enterprise inertia is alive and well. Many companies are slow to adopt new processes and software, even if better approaches are proven to exist.
To overcome these challenges, Tidemark must innovate rapipdly and demonstrate that its value proposition is sufficiently compelling to overcome the typical corporate resistance to change.
Although we should not underestimate these potential growth inhibitors, cloud computing is a vibrant and expanding market. My friend and fellow Enterprise Irregular Sadagopan Singam, Global Vice President of Cloud Computing for outsourcing firm HCL Technologies, puts it well:
From an enterprise/CIO perspective, for the first time in this century, IT now has the chance to reposition itself and its role in the enterprise. The shackles that tied traditional IT could now be broken open with the emergence of cloud. Leading CIOs have already started to redefine their role and the value of IT resources away from a focus on provisioning and operating technologies and toward applying information and technology to create unique and sustainable business value. IT has always been waiting for the moment to reassign more funding from maintenance to innovation, to enable creating greater value. Cloud provides that window of opportunity to CIO’s and business now.
Advice for CIOs. Do not allow fear or uncertainty to deter you from considering cloud-based solutions; instead, use the cloud as a vehicle to engage business users in discussions of value. The best possible way for IT to thrive is helping lines of business do their job better -- find ways to improve the business and your stature will grow dramatically. When IT becomes the organization's business partner for innovation, then everyone wins and the CIO becomes a star.