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Tuesday, May 17, 2011

Cloud Business : Some Perspectives

Cloud may mean different things to different people – It would be better to focus less on technology but devote more energy to cloud business in terms of how, where, and why these could be used to get unique value was the key message in the Cloud Business Summit, which I attended last week at NYC, courtesy of invitation by Bill Mcnee and his team at Saugatuck Technology. In a very intensive set of sessions, significant insights were brought out by impressive set of presenters followed by good amount of discussions. Let’s examine the context.

It’s now clear that in almost all forward looking business organizations, cloud journey is definitely happening/about to happen in most part of their business/technology operations. The reach is going to be ever expanding and the effect is definitely going to be significantly felt – though this can be an open ended journey in terms of learning and accruable benefits . These force enterprises to plan and manage cloud journey as more and more knowledge on realizable benefits begin to accumulate. Let’s examine the context in a little more detail: As there is a widespread interest in adopting cloud for business, varied approaches grounded on different schools of thought begin to sprout. What we see across the board in the context of cloud and business is that cloud can enable new business application architectures, transform business and create new revenue channel opportunities aside from improving process efficiencies while supporting existing business models. New business services can fundamentally redesign the ecosystem across the extended enterprise creating a new measure of performance across the value chain. These sort of heightened impact calls for a very studied and measured approach to embrace the cloud and that’s where the insights and discussions add immense value.

For example, Saugatuck emphasizes on leveraging cloud for creating new business value and enabling new business opportunities – this is where differentiated and lasting value comes out and as such is very important dimension for business to explore. The CIO panel brought out the fact how business and IT working together can be enabled and why this becomes necessary to create value. More importantly, the ability to take the right set of use cases and deliver business value comes only by working together and it becomes imperative for CIO organizations to steer their organizations in such directions.

Xerox brought out details of their cloud journey in areas of SaaS, Expense Management to see significant improvement in business efficiencies and improved business agility. The more significant theme came out on cloud centered approach towards firmware/software updates for their traditional copiers/scanners/printers – this is an illustration of opening up new business opportunities – something only a cloud based solution coud have enabled. Such successful initatitives spur them to do more, makes their ecosystem partners more excited setting the stage for more such things to happen with Xerox and I would think across the industry as well.

Another important message is to have a pull centered view – from the customer to inside the enterprise. Remember taking the customer to the boardroom discussions in the past – here’s a demonstrated way to make this happen with the emergence of cloud. The key is systems thinking – looking at linkages and relationships across the board and identify opportunities for better orchestration across the ecosystem to create larger value.

SAP’s Nicholas Cumins provided his view of the changing business software / application landscape, the need to effectively leverage Cloud with traditional suites, and how these are being addressed in the next generation of enterprise version and SAP’s strategies in offering varied solutions. I think we need to think through the right pattern of fits: what type of differentiated capabilities could be mapped to applications, devices and delivery methods. Fidelity further elaborated on their cloud journey in the summit.

An important aspect of cloud business either gets overemphasized inside enterprises to the point of avoidance or gets completely overlooked : Am referring to risk management, Important discussions around was an eye opener of sorts. Risk here transcends the traditional boundaries of functions like IT, Finance. The right approach would include identifying, characterizing/ classifying, prioritizing, and then governing Cloud Business changes and implementations. This needs to tie in to the sourcing process of the cloud solution – a very involved engagement but one that can deliver very high value to enterprises.

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. The economics of IT and opportunity to add business value was never this pronounced in the IT world. Let’s examine this: The need to invest now and wait for results ages later don’t necessarily apply here. Cloud enables companies to gain some of the efficiencies of scale without having to scale themselves. The result is freeing up money previously locked into the 70% of IT committed spend for innovation and new solutions. Typically these are the type of value propositions that interests business and this helps business to take more direct role in making such solutions happen – its more just IT baby and business being an uninterested partner. The relationship fundamentally changes and will demand CIOs react and reform IT.

Around the world and across the board, business is desperately looking for ways and means of creating new solutions, particularly for addressing adjacent markets and new geographies. Cloud fits in very well here: in extending the reach of IT and to provide value added services and in creating new solutions leveraging the ecosystem partners. Integrating in the process, growth and innovation with benefits of economics inside enterprises. We have reached a stage where running business with IT help is normal and the differentiation comes only by creating differentiated and sustainable business value and cloud is a nice fit here. Examining cloud from the standpoint of operations would under leverage its true potential but true opportunities manifest themselves in the business context of growth, innovation and strategic pursuits. CIO’s need to find solutions that aligns with their work culture, their appetite for risk, ability to absorb change, governance and their technology maturity. Irrespective of what these may indicate, increasingly in the cloud world, new ways to make things happen always exist. This doesn’t mean that old models of operation give way to something entirely new right from the word “GO”. A neat blend can exist.

The beauty of this cloud business journey is the fact while cloud can make many things happen at different levels, the realization is that this is still evolving, but for those early adopters it is clearly delivering substantial value Cloud IT and Cloud Business can’t be and needn’t be separated - scalable services and sustainable value can happen only when these two work hand in hand. Saugatuck should be complimented to bringing together business leaders, vendors and analysts to look at cloud as business opportunity and not just just as technical solutions.Clearly with cloud, we are seeing the pioneers and business leaders unshackling the traditional bonds and aiming high and reaching there as well. We will actually see more business taking this path.

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