The Real Value In The Cloud: Innovation And Competitive Advantage

Is cloud computing another arcane term from the technology industry? You bet. But it’s also the most revolutionary set of capabilities the industry has offered in a generation. Much like the Internet and eCommerce technologies that transformed the relationship between businesses and customers, cloud computing is poised to have a similar impact. In this case, though, that impact is on the relationship between businesses and their information technology (IT) departments.

What’s been painfully clear for years is that IT has struggled mightily to manage the vast proliferation of technologies that paralleled the rise of the Internet. In hindsight, operating a few mainframes was a relatively simple task. Managing multiple data centers, thousands of servers, complicated networks, massive data storage systems and complex applications and integrations, while keeping it all secure, has proven exponentially more challenging. Under the weight of this burden, IT has developed an unfortunate but often deserved reputation for being unable to keep pace with the business customers it supports. Add the high costs associated with acquiring and operating these technologies, and it’s no wonder that many business leaders feel disdain for IT.

The technology industry is working feverishly to solve this problem – a problem it had no small part in creating. Its solution? The Cloud. Or Cloud Computing. Or Software as a Service (SaaS). Or any other number of terms or acronyms that generally mean the massive workloads associated with managing data centers, servers, networks and other complicated technology systems are still necessary, but no longer solely IT’s burden. IT now has options. It can hand this work over to companies that specialize in these functions and can manage it better that IT could ever hope to; and, in many cases, these companies can do so for a fraction of the cost. This is where the relationship between a business and its IT department begins to change for the better.

The most informed IT leaders understand that delivering value worthy of significant technology investments requires an extraordinary level of collaboration between IT and business employees. IT employees must be freed to become de facto members of the business teams they serve, to learn about about their tools and processes and to offer expertise on how technology can be applied to drive a better experience. By leveraging the cloud, the possibility of such a collaborative model becomes much more real. The enormous time, talent and financial resources focused on acquiring and managing complex technology infrastructures can be refocused on the business and business-facing technologies, and ensuring the functionality these technologies deliver isn’t merely acceptable, but exceptional.

Gartner estimates that cloud-related spend will exceed $200 billion by 2016, an indication that cloud service offerings are resonating with customers. A startup now has the ability to avoid the cost and complexity associated with building its own IT infrastructure, and instead can focus on the aspects of its business that differentiate it from the competition. An established company can now use cloud computing to overcome chronic IT speed and scalability issues, allowing it to innovate at the pace of a startup. And any business can leverage the power of the cloud to interact with massive customer bases in ways that have previously proven too costly or even impossible. Together, the cloud allows businesses and IT to retool how they leverage technology, and in turn retool their relationships to deliver better business outcomes.

For many companies, however, the journey has just begun. With current cloud spend a small fraction of Gartner’s estimated $3.6 trillion in annual global IT outlays, the vast majority of IT dollars are still funneled into legacy models. Even cloud-based email, ubiquitous in the consumer space, is still often looked upon with suspicion by the business sector.

What does this mean? It means inertia and even fear exists within IT departments. It means that business and IT leaders still have legitimate questions about security and other aspects of the cloud. And it means that the businesses that work through these challenges first, stand to gain the competitive advantages that only a business-focused, strategic IT department can deliver.

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