Business in balance

Cloud computing's enormous business value is convincing a rapidly growing number of CEOs and CIOs to join the cloud revolution. Executives are viewing the cloud as a way to begin shifting the IT-budget spending ratio-from the traditional 80% on infrastructure and 20% on innovation to something much closer to 50-50, which would liberate capital to fund market-facing growth initiatives.

It's a fantastic opportunity-in theory. However in practice many IT professionals-and even some vendors-appear to be at considerable risk of replicating the same insatiable jumble of technology that has challenged CIOs for decades. I am talking about complex systems built from hundreds of disparate components that chew through huge chunks of IT budgets and leave very little for innovation.

In an ideal world, enterprises would avoid the problem by implementing a complete end-to-end suite of cloud products and services at every level of the stack. This approach would require little or no integration and free up precious IT dollars for customer-oriented initiatives aimed at growth, deeper engagement, and better decision-making driven by real-time analytics.

So, where can businesses find such an end-to-end solution? There is no shortage of companies offering Software-as-a-Service (SaaS) products. A smaller number offer Platform-as-a-Service (PaaS) products. And only a few offer integrated Infrastructure-as-a-Service (IaaS) products.

Redrawing the Boundaries

This is important, because whatever boundaries exist today for the cloud, one thing is certain-they will be redrawn, reframed, redefined, and recast to match the relentless expansion of this technological inflection point. It is not only remaking the tech industry; it is also changing the way businesses view the potential of IT and how they should invest in it.

The central issues are simple. What can customers do with cloud solutions? How can they free up more funding for growth and innovation?

Imagine if a 3-year business-transformation plan forged through some bold collaboration between the CFO and the CIO used cloud computing to enable a big corporation to liberate $100 mn in IT spending to fund growth-oriented and customer-facing innovation.

Instead of spending, year after year, 78% of the IT budget on low-value infrastructure, the CFO-CIO cloud plan would see that ratio moves from its current level of 78% for keeping the lights on and 22% for innovation, to 74%/26% after 1 year; 70%/30% after 2 years; and 65%/35% after 3 years.

That liberation happens when companies turn to the cloud to reduce overdependence on big up-front capital investments and overall IT spending, and are thereby able to invest more in initiatives such as Customer Experience (CX) rather than another round of infrastructure sprawl whose value is increasingly hard to pin down.

That's the real magic of the cloud: It lets businesses rethink where and how they deploy their precious IT dollars, and allows those businesses to focus more of their IT budgets on projects that truly matter.

Competitive Advantage

Different strategies are emerging as some tech companies decide to be specialized niche players while a smaller number of vendors choose to play at one or more levels of the 3-tier cloud stack: Applications (SaaS), platforms (PaaS), and infrastructure (IaaS).

This is for a simple reason-that's what customers want! When customers buy a cloud, they get applications; they get a platform-database and middleware, and Java; and they get the underlying infrastructure-the operating system, virtual machine, and the hardware.

A Sweeping Vision

It's a sweeping vision, and one that competitors will undoubtedly try to shoot down with heavy barrages of FUD-fear, uncertainty of doubt-including old stand-bys like ‘vendor lock-in'. But, they will have to be quick.

Customers are showing that they're looking beyond yesterday's approaches and yesterday's thinking, and that they are taking an increasingly dim view of endless mountains of integration work that's not just expensive but doesn't drive business value.

Organizations aren't turning to the cloud to be technologically hip but rather to help themselves begin to strategically transform the ways in which they do business. That's because, after years of being overhyped and underperforming, cloud computing has become an ideal platform for driving those transformations in ways that are effective, affordable, and sustainable.

They want to:

• Get better products to market faster
• Deliver better and more-engaging service to customers
• Optimize mobile-powered sales teams with right-time information and insights
• Align talent all across the company with business priorities
• Reduce risk for compliance and reporting

All of those imperatives are being driven by a set of global forces that are stressing and reshaping every kind of industry and every type of business. Taken together, these forces make cloud computing a powerful alternative for businesses scrambling to keep up with an information explosion, a stunningly fast move to mobile commerce and lifestyle, and the parallel rise of social as one of the most powerful shapers of corporate image and success today.

And many businesses are also quickly embracing the idea that there are 2 very distinct categories of cloud-services providers: The half-steppers that want to keep the old-fashioned burden of component-level buying and building on the shoulders of customers, and the new generation of full-service cloud providers who deliver complete and optimized cloud stacks.

So far, that second group includes only Oracle. But, the integrated, end-to-end approach is proving to be very persuasive