Cloud Computing: A Business Perspective

Cloud has become a buzzword. From on-demand music, to mobile applications, to emails, to enterprise solutions like ERP, CRM, a number of services are now available on cloud. To quote Gartner, Cloud computing is a style of computing in which scalable and elastic IT-enabled capabilities are provided as a service to consumers using internet technologies.

Key Business Drivers for Cloud:

• Pay Per Use: In a conventional model for any IT usage, one needs to invest in hardware, software licenses, manpower, etc, whereas for cloud based services the organization need not make this capital investment. The organization needs to pay only for the amount of services used, on the basis of number of transactions, number of users, etc. The flexibility of the cloud based services goes to the extent that the organization will be paying maximum only during 20% peak usage period of the services as compared to 80% other period
• De-risking: IT projects require substantial upfront investment and if the initiative does not succeed then it is a sunk cost for the organization. As against this, in cloud the management can have suitable exit clause where the organization can decide to walk out of the arrangement if it does not get suitable results.

Another risk in IT implementations is that of obsolescence of the software (and the team obsolescence). With cloud based services the onus of managing solution upgrades lies with the cloud service provider, thus addressing the

issue of obsolescence management

• Outsourcing the IT Operations: As per management guru CK Prahalads concept of core competency, businesses should focus on their core competency and seek to outsource other activities which are non-core to their businesses. For businesses for which IT is a non-core activity to the business, cloud based services provide an opportunity to outsource the IT operations. In todays competitive market scenario, recruiting an IT team, productive utilization of the team, and team retention are major challenges faced by the management. Cloud based services provide a window to take care of these challenges to a reasonable extent.
• Ability to Pilot Solution: Organizations are on the verge of taking decision to go for world-class solutions and are not sure how the solution works can use cloud based services to test the waters. Cloud can act as pilot before the actual implementation and if the initiative is successful, the organizations can decide to go for it.
• Level Playing Field for SMEs Segment: Many SMEs wish to use world-class IT solutions but do not have the resources for the initial investments which need to be made. With cloud based services, these organizations are getting access to world-class IT solutions and industry best practices thus providing them a level playing field vis--vis the big organizations.
• Reducing Cycle Time: The cloud offers a templatized standard solution, specific to business requirements. As these templates are prepared using the industry best practices, the time-share and mind-share of the business leadership in conceptualizing and implementing IT solution is reduced drastically. Also, the time required for making the solution operational is much less as compared to implementation of enterprise solution.

Addressing the Concerns:

We will also look at some of the common concerns about cloud computing based services and try to address them in this section.

• How Secure is the Data: Data security is a major concern for business leadership as unlike the convention IT implementations. The data lie outside the premises in the hands of third-party. With cloud service providers maturing in terms of policies and procedures for data security and technological advances in terms of IT security, the concerns regarding data security are getting addressed to reasonable extent. Moreover, with internet, the organizations are more susceptible to data theft even if it is in their own premises. We can say that, with proper security measures, the data is almost as safe in a cloud environment as in the organization premises.

To give an example, one of the leading CRM solutions, Salesforce.com, is managed on cloud. Customer data which is so sensitive for any organization is managed effectively through Salesforce.com and more and more organizations are opting for it. With more such success stories, organizations are now getting more comfortable with the concept of cloud.

• Inertia to Shift from In-house Operations to Cloud: If using cloud based services is like using a ready-made shirt, using enterprise solution is like buying a cloth, getting it stitched in a shirt, and using it. Both the options have their merits and demerits.

In the end it is a matter of changing the mindset. Similarly a decision to shift from in-house operations to cloud based services needs a change of mindset and is a transformation management issue. With the top management driving the initiative, the transformation can be made smoothly.

• Selecting the Right Solution and Partner: With time, many solution providers will now offer the right solution and capabilities to sustain the solution. With cloud partner who understands the industry, the solution can be customized to the maximum possible extent to meet the organization needs.

Summary

Cloud computing has the potential to offer significant value to business and can be a disruptive change in IT area. Organizations may not be able to ignore this development for a long time.