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Defining the business value of cloud computing

Written by  Larry Beck
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Larry BeckIssue:Europe II 2010
Article no.:13
Topic:Defining the business value of cloud computing
Author:Larry Beck
Title:Senior Director, Cloud Strategy
Organisation:Avanade
PDF size:219KB

About author

Larry Beck is a Senior Director of Cloud Computing Strategy at Avanade. He also serves as the Technology Director for the Accenture and Avanade Solutions Showcase at Microsoft. Larry Beck has more than 25 years of IT consulting and leadership experience and has authored several papers on enterprise integration, service-oriented architectures and cloud computing.

 

Article abstract

Cloud computing is widely recognized as a viable way to reduce capital expenditures and operational costs. But the hype around cloud computing has created often unrealistic expectations about what cloud computing can deliver; promising that return on investment will rise, costs will contract and revenues will improve. Companies should approach the cloud through considerations of business value, starting with a clear plan, sound analysis and proven methodologies and practices.

 

Full Article

The emergence of cloud computing makes it seem like the sky’s the limit when it comes to using new technologies to improve how business is done. Cloud computing offers creative ways for companies to address how they utilize IT, which in turn frees up resources and money to focus on what matters most - their core business objectives. According to a recent survey commissioned by Avanade, most IT decision-makers widely recognize cloud computing as a viable way to reduce capital expenditures and operational costs. Such a response shows that businesses see that the technical capabilities offered by the cloud can help lower costs and make them more nimble. Cloud-based systems immediately open options for access to new and cost-effective ways to address company goals and objectives. For example: • being able to get services up and running quickly; • lower upfront deployment costs; • ease of access; • pay for software solutions you need, when you need them; and • access to automatically updated software and security. However, the hype around cloud computing has helped create some unrealistic expectations about what cloud computing can deliver - making almost unbelievable promises that return on investment will rise, costs will contract and revenue will improve. Trying to grasp just what the cloud represents for each business can be challenging. The key is to bring clarity to the complexity around cloud computing. Companies need to know what cloud computing is, what it does, and what it offers. Cloud computing is an umbrella term that encompasses many types of services, including software-as-a-service. The definition of cloud varies depending on the company and the vendor. Organizations should consider the possible challenges and risks as part of pursuing a cloud computing strategy. Adoption considerations The cloud need not be an all or nothing proposition. Companies can find a position on the spectrum from control to economies of scale where they will feel most comfortable. Every company must decide if cloud computing will serve its needs. In order to do that, they must evaluate the potential business value it offers and the challenges it involves. What’s most important to them? Is it costs? Control? Scale? With cloud, companies need to determine which applications they must own and control, and which ones require less control, making them prime targets for moving to the cloud. For example, consider contract manufacturing. Some companies manufacture products that are commodities. They require minimal research and development and involve little proprietary knowledge. One product operates in much the same way as any other. So, outsourcing to a contract manufacturer involves low risk where there might be one or more competitors on nearby manufacturing lines. But, a pharmaceutical company, which has highly sensitive intellectual property (IP), faces tremendous risk with outsourcing. The difference here is how much control a company requires over its IP that truly differentiates itself from the competition. With cloud computing, the burden of creating, developing and sustaining the entire infrastructure unilaterally gets lifted from the company that may be shouldering it unnecessarily. However, in spite of all the potential benefits of cloud computing, risks do exist. Questions about how such services are used, who has access to those services how to protect individuals and, in certain situations, personal data, need to be addressed. There are measures that can be implemented that will mitigate those concerns, such as proper migration, effective integration and appropriate security policies. But for most companies, these processes and mandates aren’t anything new. The issues companies face when using technologies on-premise become the same issues when hosted off-premise. While there are varying opinions on cloud security, there are a growing number of voices suggesting that security in the cloud may in fact be better than the security most companies provide internally. Why? For one, top tier cloud service providers, who focus on delivering a technology capability as a service over the Internet, place a high priority on security. They know the challenges associated with handling information in the cloud. They recognize what technologies, processes and policy management requirements offer the most protection. Plus, their own reputation and business survival demands high attention to security. A roadmap for cloud computing Companies interested in adopting cloud computing need an understanding of the cloud-ready services available to them. Here are some steps to consider: 1. Have a clearly defined strategy. IT becomes a more effective partner to the organization if executives devise a clear strategy that improves the business process, relationships and services for the company. Then IT can seek out the services accessed in the cloud that will support the strategy. 2. Investigate costs. Evaluate costs associated with internal IT versus the cost of cloud services to help determine what should be owned and managed internally, and what could be cloud ready. 3. Build a roadmap. With a clear strategy in place and an end goal determined, identify the direction your company needs to take to get there. Assess the products and platforms you need to support and build upon your IT vision. 4. Prepare a migration path. Migration and integration of legacy systems may require additional resources. If outside support is required, consider partnering with a firm experienced in technology migration. Find repeatable best practices, methodologies, highly developed assessment and deployment resources, plus dedicated specialists. All this will help speed and simplify implementation at a lower cost. 5. Choose credible partners or vendors. They should have proven processes to support an organization’s needs. It’s equally important to identify companies with a track record of on-premise solutions. Those companies should also have a clear cloud vision, strategy and offerings that demonstrate stability and long-term viability. If personal data is put into the cloud, legal requirements for transferring, storing and using data must be addressed carefully in advance. These requirements vary from jurisdiction to jurisdiction. 6. Pursue a pilot. Start with a custom application that leverages the instant scale, high compute or bandwidth intensive capabilities of cloud computing. Any decision to begin using cloud computing requires forethought, planning and preparation. The more a business knows what it wants to do, the more likely it will be able to make the changes necessary to accomplish its goals. There are clear business benefits that can be derived from cloud computing. But, getting to the cloud and realizing the benefits of cloud computing is not a given. The journey to cloud is an evolution that will occur over time. Companies should start today with a clear plan, sound analysis and proven methodologies and practices. Companies that effectively use cloud computing services will find themselves accomplishing certain goals more quickly. They will also be able to adapt to business opportunities more effectively. Using cloud-based systems can also lower costs, especially compared to buying, installing, configuring, upgrading and maintaining these tools and services on premises by themselves.

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