This is the second of a three-part post on how cloud computing can be leveraged by businesses. In the first post, we defined cloud computing and discussed the ongoing shift to the cloud by many sectors and industries, including the US Federal Government. I think cloud computing is in its early stages but there are strong signs that the tipping point might be just around the corner.
IT organizations are increasingly seen as service providers rather than developers of business solutions and keepers of infrastructure. The relationship between the CIO and business leaders is becoming more collaborative and there is more natural focus on improving the “business of IT”. This relationship, coupled with capital-constrained times, is fueling changes to IT funding models. One of the reasons firms turn towards using cloud computing is that it gives them a simpler and more straightforward way of funding IT. If you have been involved in pushing for the IT projects budget or are familiar with how your company is controlling IT costs, you know what I am talking about.
Simple Pay-As-You-Go Approach
Is cloud computing cheaper than what traditional IT provides? Some would argue that over the long haul, software-as-a-service or platform-as-a-service will cost you more than running the applications in-house. I think it will be a long time before really reliable measures of the costs and benefits of cloud computing for corporations are available. What is driving business to the cloud is not about overall total cost comparison. Businesses want a cash flow friendly approach to IT funding. Cloud computing solutions offer that with its simple pay-as-you-go approach. You pay only for what you use; costs are directly proportional to your requirements. The ability to perform charge-backs to business owners based on their utilization of IT services is greatly simplified with the cloud model. This is difficult to imagine in enterprise software models where multimillion dollar, up-front capital expenditures for IT infrastructure is required.
Consumer IT and Business IT Convergence
Another major reason for the business move to the cloud has something to do with consumer IT. Information technology for the consumer world means eBay, Facebook, iPad, etc. IT was once the exclusive realm of the IT professional, but today, consumers have taken on many of the same roles. Vaughan Merlyn calls this “The Convergence of Consumer IT and Business IT” and he discussed this extensively in his blog. True, there is a big difference between consumers and IT organizations on the use of technology and the challenges that brings. However, technology today has brought IT literacy to many people and changed the way consumers communicate and work. Consumer familiarity with new technology that comes out everyday makes them more knowledgeable with technical tasks. This is the new reality for IT managers — having to pay attention to what users (IT consumers) want. This is where cloud computing becomes a tempting choice for IT. At this time of capital constraints, cloud computing provides an on-demand solution with more options and less implementation time. Perhaps, like me you are also wondering: when is the best time to venture to cloud computing and where do you start? I think the answer to the first question is NOW. As to the second question, let me quote Vaughan’s suggestion on this that came as a comment on my previous post:
“Don’t look to the cloud to do things you are already doing, but do them cheaper. Rather, look to do the things your business wants, but you haven’t had the time to do! That’s where the big wins are to be found!”
Has you IT organization or company ventured to using cloud computing for some of your IT and business needs? What has driven your business’ turn to the cloud? Share us your comments, questions and experiences here.
Photo by Hinnamsaisuy
“You know a major shift is coming when even software giant Microsoft is putting its old, reliable and profitable Microsoft Office in the cloud with the Microsoft Office 365.”
Let’s say you are in-charge of your IT business office. Your main responsibilities include making sure that all employees have the right hardware and software needed for their job. Before even talking about enterprise applications that enable business processes, you start with the basics— computers and office tools. You need to buy computers and software licenses to give employees the tools they need to do their job. Whenever your company brings new employees on board, you have to buy more software or make sure your existing software license agreements allow another user. Not only is it difficult to get the budget to pay for software but it is also difficult to administer, install and support it. If you have more than 5,000 users in your area of responsibility, imagine the amount of investment, money and time you need just to give employees their computers and basic software. What if someone told you that you could provide your users with the software they need without the usual hassle? What if someone told you that on top of having to do less work, you will require less capital expenditures from the business? If you figured out where I am heading, then you will understand why there is so much buzz about cloud computing. “It’s become the phrase du jour,” says Gartner senior analyst Ben Pring.
What is Cloud Computing?
Cloud denotes the “Internet” and when combined with “computing”, the definition becomes even more complicated. There are a lot of definitions out there, but I like this one because it attempts to cover the 3 forms of cloud computing.
“Cloud computing is a general term for anything that involves delivering hosted services over the Internet. These services are broadly divided into three categories: Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS). The name cloud computing was inspired by the cloud symbol that’s often used to represent the Internet in flowcharts and diagrams.” [Definition from techtarget.com]
The areas where organizations are increasing focus on virtualization are in applications that include web, database, email, calendar and office tools. Critics of cloud computing are concerned about security, disaster recovery, and encryption. The loss of physical control of data and fear of hijacked accounts are giving IT executives some reasons not to move enterprise solutions to the cloud.
I think cloud computing is in its early stages but the tipping point might be just around the corner. There are obvious signs that the shift that is underway. Former United States CIO Vivek Kundra set a target of 25% of the federal government’s $80 billion dollar yearly budget to the cloud. This data is from the “2011 Federal Cloud Computing Strategy Report”. The cloud may represent a bigger transformation for IT organizations—even larger than “e-business” in the 90s and “social media” today. Is your business ready for this transformation?
The next questions are: What is driving the turn toward the cloud? What are the underlying business issues? Find out the answers on my next post.
Photo courtesy of Idea Go.