Cloud – a way for businesses to exploit the capabilities

Cloud has already changed both business and everyday life –  from consumers who perhaps unknowingly use it to access  their favorite music to companies that purposely harness its  powerful resources. While much activity and buzz relating to  cloud involves its technological capabilities, the benefits of  cloud adoption actually extend into the business realm.DigitalRevolutionInfographic

When utilized effectively, cloud capabilities offer numerous  opportunities to drive business innovation. Recent technology  and social connectivity trends have created a perfect storm of  opportunity for companies to embrace the power of cloud to  optimize, innovate and disrupt business models.

To more clearly determine how organizations use cloud today  and how they plan to employ its power in the future, IBM surveyed, in conjunction with the Economist Intelligence Unit,  572 business and technology executives across the globe. Its  research suggests that while cloud is widely recognized as an  important technology, relatively few organizations today  actively embrace it to drive business model innovation.

However, its survey also indicates this will change dramatically in the next few years, with more and more organizations  looking to cloud to drive new business and transform industries.

Through its research, IBM also identified some game-changing  business enablers powered by cloud. Organizations are  exploiting these business enablers to drive innovation that  extends well beyond IT and into the boardroom. Its analysis  reveals that some organizations are harnessing cloud to  transform both product and service development and recast  customer relationships. Through its survey of business and technology leaders, IBM discovered that organizations – both big and small, across  geographies and in virtually every industry – are embracing  cloud as a way to reduce the complexity and costs associated  with traditional IT approaches. Almost three-fourths of the  leaders in the survey indicated their companies had piloted,  adopted or substantially implemented cloud in their organizations – and 90 percent expect to have done so in three years. And the number of respondents whose  companies have substantially implemented cloud is expected to  grow from 13 percent today to 41 percent in three years.

In IT circles, it appears cloud has almost become mainstream.  Nearly half of the respondents in a recent CIO Economic  Impact survey indicated they evaluate cloud options first –  over traditional IT approaches – before making any new IT  investments.

And this cloud adoption phenomenon is not  limited to large companies. Its survey revealed that while a  higher percentage of large organizations (those with revenues more than US$20 billion) are experimenting with cloud, small  organizations are by no means left out of the game. In fact, 67  percent of companies with revenues less than US$1 billion and  76 percent of those with revenues between US$1 and 20  billion have adopted cloud at some level. It’s not surprising  then that the global cloud computing market is forecast to  grow 22 percent annually to US$241 billion by 2020.

Organizations are not only relying on cloud to enhance  internal efficiencies, but also to target more strategic business  capabilities. In fact, the respondents’ number-one objective for  adopting cloud is an external capability – that of increased  collaboration with external partners . Only one of  the top seven objectives cited focused on internal efficiencies,  with 57 percent looking to cloud to drive competitive and cost  advantages through vertical integration. The rest, such as new  channels, delivery markets and revenue streams, all relate to  improved business capabilities.

Interestingly, while its research clearly reveals organizations intend to rely on cloud to enhance their business capabilities,

only 38 percent cite cloud as a leading priority for the entire company. Rather, cloud is still viewed by many as an IT solution, with 62 percent citing cloud as a leading priority for their IT organizations.

IBM survey results suggest that organizations are just beginning to understand the power of cloud to help drive business innovation. Only 16 percent of survey respondents currently utilize cloud for sweeping innovation, such as entering new lines of business or industries, reshaping an existing industry or transitioning into a new role in their industry value chain. However, 35 percent plan to rely on cloud for business model innovation within the next three years.

Clearly, cloud is widely recognized as an important technology, offering capabilities that positively affect IT. However, its full business potential has yet to be realized or even understood by most organizations.

The world is experiencing a digital and mobile transformation, with more information available more quickly in more mediums than ever before. As part of this, consumers have jumped on the social media bandwagon, with many relying on it as their primary collaboration format. Add to this the advent of new analytics capabilities and the results are sweeping changes in almost every aspect of daily business and consumer life.

Cloud provides a way for businesses to exploit the capabilities borne of these digital trends to better meet customers’ needs and drive future growth. In fact, IBM research illuminates six key cloud attributes being used to power business model innovation, which It has dubbed business enablers: Cost flexibility, business scalability, market adaptability, masked complexity, context-driven variability and ecosystem connectivity.

Cost flexibility

Cost flexibility is a key reason many companies consider cloud adoption in the first place. More than 31 percent of executives surveyed cited cloud’s ability to reduce fixed IT costs and shift to a more variable “pay as you go” cost structure as a top benefit.

Cloud can help an organization reduce fixed IT costs by

enabling a shift from capital expenses to operational expenses.

IT capital expenses – which typically include enterprise software licenses, servers and networking equipment – tend to be less fluid, more expensive and harder to forecast than routine IT operating expenses. With cloud applications, there is no longer a need to build hardware, install software or pay dedicated software license fees. By adopting cloud services, an organization can shift costs from capital to operational – or from fixed to variable. The organization pays for what it needs when it needs it. This pay-per-use model provides greater flexibility and eliminates the need for significant capital expenditures.

Cost flexibility is certainly an appealing cloud attribute for Etsy, an online marketplace for handmade goods. In addition to bringing buyers and sellers together, Etsy also provides recommendations for buyers. Using cloud-based capabilities, the company is able to cost-effectively analyze data from the approximately one billion monthly views of its Web site and use the information to create product recommendations. The cost flexibility afforded through cloud provides Etsy access to tools and computing power that might typically only be affordable for larger retailers.

Business scalability

IT scalability is recognized by many as a major benefit of cloud adoption. However, cloud offers more than just IT scalability – it allows an organization to easily scale its business operations as well.

By allowing for rapid provisioning of resources without scale limitations, cloud enables a company to benefit from economies of scale without achieving large volumes on its own. Recognizing cloud’s ability to facilitate efficient growth and expanded options, approximately a third in the survey view business scalability as a top cloud benefit.

For this concept in action, consider Netflix, an Internet subscription service for movies and TV shows. Because it streams many movies and shows on demand, the company faces large surges of capacity at peak times. As Netflix began to outgrow its data center capabilities, the company made a decision to migrate its Web site and streaming service from a traditional data center implementation to a cloud environment. This move allowed the company to grow and expand its customer base without having to build and support a data center footprint to meet its growth requirements.

Market adaptability

In today’s economic environment, the ability to respond to rapidly changing customer needs is a key competitive differentiator. As such, companies continuously seek ways to improve their agility to adjust to market demands. A third of the executives IBM surveyed believe cloud can assist in this respect, citing market adaptability among cloud’s top benefits.

By enabling businesses to rapidly adjust processes, products and services to meet the changing needs of the market, cloud in turn facilitates rapid prototyping and innovation and helps speed time to market.

ActiveVideo certainly recognized cloud’s power to enhance market adaptability when it created CloudTV, a cloud-based platform that unifies all forms of content – Web, television, mobile, social, video-on-demand, etc. – onto any video screen. Content and applications from Web content creators, television networks, advertisers and other media entities can be developed quickly for CloudTV using standard Web tools.

CloudTV leverages content stored and processed in the

network cloud to significantly expand the reach and availability of Web-based user experiences, as well as to allow operators to quickly deploy a consistent user interface across diverse set top boxes and connected devices. The CloudTV approach of placing the intelligence in the network, rather than the device,

enables content creators, service providers and consumer electronics manufacturers to create new television experiences for their viewers.

Masked complexity

In addition to business scalability and market adaptability, cloud also offers the advantage of masking complexity. Cloud provides a way for organizations to “hide” some of the intricacies of their operations from end users, which can help attract a broader range of consumers. Because complexity is veiled from the end user, a company can expand its product and service sophistication without also increasing the level of user knowledge necessary to utilize or maintain the product or service. For example, upgrades and maintenance can be done in the “background” without the end user having to participate.

Masked complexity is perhaps less recognized than some of the other enablers, as 20 percent of the business leaders in the survey cited it as a top benefit. Xerox definitely recognizes this cloud attribute, however, as evidenced by its Xerox Cloud Print solution. With Xerox Cloud Print, workers can get their desired content in printed form wherever they might be by using Xerox’s cloud to access printers outside their own organization.

While printing from the cloud requires quite a bit of data management – with numerous files to be stored, converted to print-ready format and distributed to printers – the complexity is hidden from users.

Context-driven variability

Because of its expanded computing power and capacity, cloud can store information about user preferences, which can enable product or service customization. The context-driven variability provided via cloud allows businesses to offer users personal experiences that adapt to subtle changes in user-defined context, allowing for a more user-centric experience.

This is a significant cloud attribute, as evidenced by the more than 50 percent of respondents who cited “addressing fragmented user preferences” as important for their organizations.

Siri, the Apple iPhone 4S cloud-based natural language “intelligent assistant,” is all about context-driven variability. It allows users to send messages, schedule meetings, place phone calls, find restaurants and more.

And while other phones have some voice recognition features, Siri “learns your voice” as Wall Street Journal columnist Walt Mossberg put it.

Siri uses artificial intelligence and a growing base of knowledge about the user, including his or her location and frequent contacts, to understand not only what is said but what is meant. In a nutshell, it leverages the computing capabilities and capacity of cloud to enable individualized, context-relevant customer experiences.

Ecosystem connectivity

Another business enabler powered by cloud is ecosystem connectivity, which is recognized by a third of the respondents as a major benefit. Cloud facilitates external collaboration with partners and customers, which can lead to improvements in productivity and increased innovation. Cloud-based platforms can bring together disparate groups of people who can collaborate and share resources, information and processes.

Health Hiway is a great example of how cloud can enable ecosystem connectivity. A cloud-based health information network, Health Hiway enables the exchange of information and transactions among healthcare providers, employers, payers, practitioners, third-party administrators and patients in India. By connecting more than 1,100 hospitals and 10,000 doctors, the company’s software-as-a-service solution facilitates better collaboration and information sharing, helping deliver improved care at a low cost, particularly important in growing markets, such as India.

Business model Innovation – A generic Perspective

Business Model Innovation (BMI) refers to the creation, or reinvention, of a business itself. Whereas innovation is more typically seen in the form of a new product or service offering, a business model innovation results in an entirely different type of company that competes not only on the value proposition of its offerings, but aligns its profit formula, resources and processes, and its value network to enhance that value proposition, capture new market segments and alienate competitors.

Business-Model-Canvas-for-Innovation4

Evolution and key principles of the theory

Adrian Slywotzky, a consultant and author of several books on economic theory and management has highlighted the importance of adjusting the Business-Design in order to adjust to value migration or drive value value migration within an industry.

Customer Value Proposition First and most important, a successful company is one that has found a way to create value for customers — that is, a way to help customers get an important job done. By job we mean a fundamental problem, in a given situation, that needs a solution. The best customer value proposition is an offering that gets that job–and only that job–done perfectly. The lower the price of the offering and the better the match between the offering and the job, the greater the overall value generated for the customer. The more important the job is to the customer, the lower the level of customer satisfaction with current options, and the better your solution is than your competitors’ at getting the job done, the greater the value for your company.

Profit Formula The profit formula is the blueprint that defines how the company creates value for itself. People often think that profit formulas and business models are interchangeable, but how you make a profit is only one piece of the model. It consists of the following:

Revenue model (price × volume)
Cost structure (assets; direct and indirect costs; and a model of how, and whether, scale affects costs)
Margin model (How much does each transaction need to net to cover the cost structure and deliver target profits?)
Resource velocity (How much revenue do we need to generate per dollar of assets and per dollar of fixed costs, and how quickly?)

Key Resources The key resources (or assets) are the people, technology, products, facilities, equipment and brand required to deliver the value proposition to the targeted customer. The focus here is on the key elements that create value for the customer and company, and the way those elements interact. Every company also has generic resources that do not create competitive differentiation.

Key Processes Successful companies have operational and managerial processes that allow them to deliver value in a way they can successfully repeat and increase in scale. These may include such recurrent tasks as training, development, manufacturing, budgeting, planning, sales and service. Key processes also include a company’s rules, metrics and norms.

Market context and circumstances fueling BMI

Bob Higgins, founder and managing general partner of Highland Capital Partners, is quoted in Johnson, Christensen and Kagermann’s Harvard Business Review article as saying, “I think historically where we [venture capitalists] fail is when we back technology. Where we succeed is when we back new business models.”

Business model innovations have reshaped entire industries and redistributed billions of dollars of value. Retail discounters such as Walmart and Target, which entered the market with innovative business models, now account for 75% of the total valuation of the retail sector. Low-cost U.S. airlines grew from a blip on the radar screen to 55% of the market value of all carriers. Over the past decade (1997-2007), 14 of the 19 entrants into the Fortune 500 owed their success to business model innovations that either transformed existing industries or created new ones.

A 2005 survey by the Economist Intelligence Unit reported more than 50% of executives believe that between now and 2010, business model innovation will be even more important for success than product or service innovation. A 2008 IBM survey of corporate CEOs echoed these results. Nearly all of the CEOs polled reported the need to adapt their business models; more than two-thirds said that extensive changes were needed.

An analysis of major innovations within existing corporations in the last decade (1998-2008), though, shows that precious few have been business-model related. And a recent American Management Association study determined that no more than 10% of innovation investment at global companies is focused on developing new business models. The authors therefore highlight five strategic circumstances companies commonly face that often require business model change:

The opportunity to address the needs of large groups of potential customers who are shut out of a market entirely because existing solutions are too expensive or complicated for them. This includes the opportunity to democratize products in emerging markets (or reach the bottom of the pyramid).

The opportunity to leverage a brand-new technology, wrapping the right business model around it or the opportunity to leverage a tested technology in a whole new market.

The opportunity to bring a job-to-be-done focus to a marketing-driven industry. Such industries tend to make offerings into commodities. But a jobs focus allows companies to redefine the industry profit formula.
The need to fend off low-end disruptors. If Tata’s 1 Lakh ($2300) Nano is successful, it will threaten other automobile makers.

The need to respond to a shifting basis of competition. Inevitably, what defines an acceptable solution in a market will change over time, leading core market segments to commoditize.

The innovation revolution spurred by venture capitalists decades ago has created the conditions in which scale enables big companies to shift from shackling innovation to unleashing it. Three trends are behind this shift:

The ease of innovation and its decreasing cost mean that start-ups now face the same short-term pressures that have constrained innovation at large companies. Taking a page from start-up strategy, large companies are embracing open innovation and integrating entrepreneurial behaviors with their existing capabilities. Innovation increasingly involves creating business models that tap big companies’ unique strengths. In this context, entrepreneurial individuals, whom the author calls “catalysts,” are working with corporations’ resources, scale, and growing agility to develop solutions to global challenges.

Here are the stories of four corporate catalysts: Keyne Monson, at Medtronic, spurred the creation of a program called Healthy Heart for All, which seeks to bring pacemaker technology to hundreds of thousands of Indians who desperately need it. Yuri Jain, at Unilever, sought and found a scalable solution to purifying drinking water–Pureit, a portable system that provides safe water at half a cent per liter. Nick Musyoka, at Syngenta, devised a program called Uwezo (Swahili for “capability”), which uses the sachet distribution model to provide smallholding farmers with affordable packages of crop protection chemicals. Colin Harrison, at IBM, was instrumental in developing the company’s Smarter Cities program, which offers bundled technological infrastructure and related services to help cities save money and improve lives.

In the complex sport of American football, teams rely on playbooks as thick as the Manhattan phone directory. But when it comes to creating innovative growth businesses—which is at least as complicated as professional football—most companies have not developed detailed game plans. Indeed, many managers have concluded that a fog enshrouds the world of innovation, obscuring high-potential opportunities. The authors believe that companies can penetrate that fog by developing growth strategies based on disruptive innovations, as defined by Clayton Christensen. Such innovations conform to a pattern: They offer an entirely new solution; they perform adequately along traditional dimensions and much better along other dimensions that matter more to target customers; and they are not initially appealing to powerful incumbents. Companies can develop customized checklists, or playbooks, by combining this basic pattern with analysis of major innovations in their markets. The key early on is to focus not on detailed financial estimates—which will always guide companies toward the markets most hostile to disruptive innovations—but on how well the innovation fits the pattern of success. It’s also crucial to encourage flexibility: Companies must be willing to kill projects that are going nowhere, exempt innovations from standard development processes, and avoid burdening project teams with extra financing, which can keep them heading in the wrong direction. Companies can create competitive advantage by becoming champions at defining the pattern of successful innovations and executing against it. But as that pattern becomes obvious—and others emerge—building a sustainable advantage on innovation competencies will again prove elusive.

In today’s increasingly complex environment, business model innovation can be critical to organizational success.

In a follow-up to the “IBM Global CEO Study 2008, The Enterprise of the Future,” we analyzed 28 successful business model innovators to understand how and when business model innovation is most valuable. The business model consists of four components: the value delivered to customers, how revenue is generated, how a company positions itself in the industry and how value is delivered.

In the new economic environment, companies can start developing a strategy and transformation approach by answering two questions: (1) Under what conditions should companies innovate their business model? and (2) What characteristics support the design and execution of successful business model innovation?

Successful timing of business model innovation depends on the economic environment, the specific market and industry conditions, and a set of internal factors impacting the organization.

It was found that successful companies are innovating their business model in three ways: (1) Revisiting the enterprise model to reduce cost through new partnership models and by re configuring the asset mix, (2) Using strong financial resources to introduce alternative industry models and disrupt competitors and (3) Rethinking revenue model and value propositions to respond to a different set of customer behaviors and market requirements.

Not every organization needs to innovate its business model immediately, but the capabilities need to be established in order to act when the time is right.

Three capabilities – we call them the Three A’s – can improve the execution of business model innovation: organizations need to be aligned with customer value, analytical to gain insight from differentiated intelligence, and enabled by an adaptable operating model.

Cloud Computing Transforms IT

Cloud computing is rapidly rolling into the mainstream of business and IT. The technology is revolutionizing the way organizations manage infrastructure and business processes.

Cloud computing is rapidly rolling into the mainstream of business and IT. The technology is revolutionizing the way organizations manage infrastructure and business processes.

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The number of enterprises turning to cloud computing to revamp existing business models will more than double in the next three years, as business leaders move to capitalize on the rapid availability of data and the growing popularity of social media, according to a new study released by IBM (NYSE: IBM). Businesses that embrace the transformative power of cloud will have a significant advantage in the race to introduce new products and services and capture new markets and revenue streams.

To better understand the shift in how organizations use cloud today and how they plan to employ it in the future IBM, in conjunction with the Economist Intelligence Unit, surveyed more than 500 business and technology executives worldwide. The findings were compiled in a new study, titled “The Power of Cloud: Driving business model innovation.”

“Companies are starting to understand — cloud isn’t just about gaining efficiencies and cost savings; it’s about driving the kind of fundamental innovation that provides lasting marketplace advantage,” said Saul Berman, IBM global strategy consulting leader and co-author of the study.

Cloud computing in the law firm

The challenges of operating a 21st century law firm aren’t lost on Matthew Donehoo. With attorneys scattered across the country and a need to access documents and data on a 24x7x365 basis, there’s absolutely no room for glitches, problems and breakdowns—and files must be stored securely. “The demand on IT systems, particularly storage, is growing exponentially,” notes the director of information systems for Segal McCambridge Singer & Mahoney.

The Chicago-based law firm, which operates offices in seven states, views technology performance as an open-and-shut case. “Over the last 15 years, we grew from about 30 gigabytes of total data to more than 40 terabytes,” Donehoo says. What’s more, with storage demands being highly variable and new cases often requiring additional IT infrastructure and storage on short notice, Segal McCambridge recognized that it needed a more flexible architecture. “We required a whole new level of scalability that hadn’t been available in the past,” he explains.

Segal McCambridge turned to cloud computing. The firm now relies on an environment that provides primary data storage, offsite disaster recovery and global multisite access within a highly secure public cloud. No less important: The firm can dial up storage capacity on demand, rather than maintaining a massive inventory of extra storage. “We’re more agile and more efficient,” Donehoo says.

Segal McCambridge isn’t alone. Despite practical challenges and security concerns, organizations across a wide swath of industries are adopting cloud solutions to become more connected, cost-efficient and nimble. A recent Tata Consultancy Services study of more than 600 firms worldwide found that cloud computing is growing rapidly. U.S. organizations now have 19 percent of their applications in the cloud, while counterparts in Asia, Europe and Latin America now top 50 percent.

“There is a growing awareness of the benefits of a cloud infrastructure,” says Ananth Krishnan, chief technology officer at Tata Consultancy Services. “It’s allowing organizations to standardize technology and processes and achieve gains that weren’t possible in the past.”

Adds Andrew Greenway, global cloud program lead at Accenture: “Organizations of every shape and size—and across every industry—are becoming increasingly comfortable with IT as a service, rather than buying components and building their own IT services.”

Clouds Roll In

It’s safe to say that cloud computing has emerged as a molten-hot topic. The ability to tap into infrastructure, services and applications on demand is both tempting and unsettling. Yet, somewhere between all the hype and paranoia lies a basic but important reality: “The cloud is a thoroughly disruptive technology that has a significant impact on companies, IT organizations and overall business strategies,” states David Nichols, CIO Services Leader for consulting firm Ernst & Young.

Moreover, unlike most technologies that are “born, live and eventually die” within the IT organization, clouds transcend IT and the standard business model, Nichols notes. Clouds can impact an organization in a number of ways, including the ability to scale infrastructure, streamline applications and business processes, provide a higher level of connectedness and collaboration, and manage data more efficiently. In many cases, “It gives people the tools to do their jobs better,” he adds.

That’s certainly the case at Segal McCambridge. In September 2011, the law firm adopted a cloud-based storage solution from Nasuni to replace an existing storage area network (SAN) in Chicago and at a disaster recovery site. The cloud provides unlimited and on-demand scalability without requiring any change in the physical IT infrastructure; perpetual access and complete protection on-site, including encryption; and file synchronization across offices, which helps distributed teams collaborate and increase overall productivity.

What makes the cloud-based storage appliance so attractive, Donehoo says, is the install-and-forget aspect of the technology. “We don’t have to worry about adding hardware and systems,” he says. “Everything is backed up, and the performance and security meet the levels required by a law firm.” Moreover, the Nasuni storage solution works within the firm’s existing document management systems.

The cloud-based approach to storage has ushered in additional gains. In the past, attorneys sometimes copied data onto external hard drives and USB devices manually, or the firm had to physically ship drives—an inherently insecure process—in order to get reams of case-relevant information onto their computers.

At times, attorneys had to submit a request to the Chicago data center and wait for someone there to process it and send back data. Today, an attorney can conduct database queries over the WAN, and offices share documents with each other in near real-time.

“Cloud-based storage has trimmed days off the review process, while allowing attorneys and others to work in a more efficient way,” Donehoo reports. “We are now paying for the exact storage we need at any given moment, rather than building out excess capacity.” He says this approach has resulted in a 60 percent saving over the cost of operating the SAN, and the law firm plans to expand the overall use of the cloud over the next few years.

Tata’s Krishnan says that clouds frequently drive new behaviors and workflows into a business. Organizations may initially adopt a cloud to reduce costs, standardize IT or provide dynamic scaling, but, along the way, they often discover that the cloud allows them to remap business processes. Employees are able to interact and collaborate in new and more powerful ways. “It can prove transformative,” he observes.

Weathering Change

Accenture’s Greenway says that the distinctions between public, private and hybrid clouds are beginning to fade. “Business leaders don’t care what type of cloud the organization uses,” he says. “They simply want the best possible service at the best possible price. It’s the folks in IT that draw the distinctions. It’s essential to understand the organization’s strategic goals, as well as the desired service level before defining the cloud environment and the right service provider.”

One organization embracing this approach is the State of Texas. With tight funding and limited resources, a combination of private, public and hybrid clouds allows the state to obtain sophisticated IT capabilities in a less costly, more flexible and quick-to-implement manner. In turn, the state offers a more flexible approach to other agencies and organizations that rely on its services. “Users can ‘pay by the drink’ rather than buying more than they need,” explains Karen Robinson, State of Texas CIO and executive director of the Texas Department of Information Resources (DIR).

The state is relying on cloud-based software through Salesforce.com and Microsoft Office 365 to create a more “robust” application environment, Robinson says. In addition, DIR, using cloud services from Xerox, is moving to a platform-as-a-service model to manage its infrastructure—including shared hardware, virtualized servers, networks and storage. This approach delivers capacity on demand within a public cloud, while boosting security and disaster recovery. It is allowing DIR to consolidate 28 facilities into two centralized data centers.

Robinson says that the public, private, hybrid approach allows the state to maximize “flexibility for the range of use-case needs in the State of Texas computing environment.” This leads to faster deployments, maximum system utilization and optimal use of tax dollars by deploying “just the right amount of service based on the requirements of the solution.”

She says that Texas will continue to embrace cloud solutions in the months and years ahead. “Given the options cloud services make available to State of Texas computing customers today, there are relatively few types of systems that couldn’t find a home in the cloud,” Robinson concludes.

Accenture’s Greenway believes that barriers to cloud adoption are now more psychological than practical. “People are concerned about where their data is going, who is looking after it and who else might be able to access it,” he says, but adds that many of these fears are based more on perception than reality. “Service providers are investing heavily in security technology, including better use of encryption, and it is becoming far more difficult to hack into these systems.” In many cases, Greenway adds, the level of protection is now better than within the company contracting for the cloud services.

Sky’s the Limit

The rapid growth of clouds isn’t likely to slow anytime soon. Tata Consultancy reports that customer-facing applications and business processes are currently the major drivers for cloud adoption, but the reasons for using clouds are growing.

The company reports that 78 percent of U.S. organizations rely on clouds to standardize applications and business processes. Other drivers include reducing IT costs (71 percent), increasing application flexibility (71 percent), improving data and trend analysis (65 percent), making faster application enhancements (65 percent) and reducing application downtime (54 percent).

At Metabolon, a Durham, N.C., company that provides diagnostics services and biochemical profiling in the medical and pharmaceutical fields, cloud computing is significantly redefining processes and workflows. The company, which crunches data for companies like Merck and Novartis, generates between 300 gigabytes and 400 gigabytes of data each week.

“The data is analyzed in real time,” reports Corey DeHaven, senior director of information systems, who says that much of the computational analysis takes place at data facilities located overseas. “We are really protective about our software and data, and we require a high level of security.”

As a result, Metabolon uses a cloud-hosted unified monitoring solution from Nimsoft to help manage and monitor local assets, including servers, databases, applications, environmental controls and scientific instrumentation. The same system monitors remote assets, including smaller overseas data centers with servers, applications, scientific instruments and networks. It also has turned to cloud-based email to aid in data management and governance.

The cloud has made it much easier to identify IT hotspots and reconfigure IT infrastructure on the fly, DeHaven says. This has led to improvements in performance and availability, as well as in disaster recovery and business continuity.

“It allows us to operate in a more strategic way,” he adds. Another benefit: The firm requires one less full-time-equivalent IT employee (Metablon has a staff of 12). “We are still using all the software we developed in-house, but it is connecting to the cloud infrastructure in a seamless way,” DeHaven explains.

Tata’s Krishnan says that, in the end, cloud technology is maturing rapidly, and enterprises are maturing with it. “Business and IT leaders are now looking for reasons to move into the cloud rather than reasons why they shouldn’t do so,” he explains. “They are beginning to understand that the cloud can create strategic and competitive advantages. Cloud computing provides the enterprise with a way to deliver a standardized IT infrastructure in an agile, quick and cost-effective way.”

Five Keys to Making Clouds Fly

1. Understand your business objectives and desired service levels. The cloud encompasses many things and disparate capabilities. Tata Consultancy CTO Ananth Krishnan says that the starting point is to clearly define the business case for a cloud and understand how it affects the organization.

2. Create a road map and clearly defined plan. “It’s easy for cloud initiatives to pop up across an enterprise and for the organization to lose control over everything,” Accenture consultant Andrew Greenway says. “It’s possible to buy many services with a credit card.” When that happens, he adds, “Data may wind up going places where it shouldn’t go.” Greenway recommends developing a plan and building a governance system to manage clouds.

3. Address high-value tactical problems first. It’s unwise to toss a mission-critical application or process into the cloud. Start with a discreet database or storage challenge, gain experience and then build on success. Consider using a public cloud, which delivers results with no formal investment.

4. Contract with a trusted provider and negotiate a sound SLA. Not all service providers are created equal. Engage in the necessary due-diligence and hammer out an acceptable service-level agreement.

5. Focus on security. Protection is critical–and heavily regulated industries must pay particular attention to security and compliance issues, Tata’s Krishnan says. But well-designed clouds aren’t necessarily riskier than internally operated systems, and, in many cases, they are actually more secure.

Moving to the cloud may seem simple on the front end, but it’s a lot more complicated if you are re-architecting your software to become an as-a-service offering.  Corent Technology has announced a software platform to assist with transforming software applications to software as a service (SaaS).

SurPaaS transforms applications to SaaS and can be deployed on any data center or cloud platform, the company said in its announcement. The solution’s capabilities include: self-service on-boarding capabilities and management of tenants, subscription management, SaaS lifecycle management, monitoring, metering, billing integration, business reporting, key performance metrics and dashboards.

“Transforming software applications into SaaS rapidly, efficiently, and cost effectively, SurPaaS saves software vendors years of development time and millions of dollars in R&D costs it takes to achieve scalable, cloud-ready and sustainable SaaS,” said Corent’s CEO Feyzi Fatehi in a statement.

The solution can transform applications into SaaS solutions in single or multi-tenancy models, and can support multiple tenancy models, providing a range of subscription offerings. It also enables Internet service providers (ISVs) to choose application development platform, application technology stack, and the cloud of their choice.

In the Keynote presentation delivered by Richard Quine, Product Director, Voice & Unified Communications, and Stefan Haase, Product Director – Data Cloud Services, InTechnology outlined the way in which Cloud Computing will transform the way the world does business, echoing Gartner’s prediction that by 2012, 20% of businesses will own no IT assets as IT infrastructure moves into the cloud. Here are the highlights of the presentation.

InTechnology explained that Cloud Computing has the potential to free up valuable IT resources to focus on what’s important to the business. Outsourcing important IT maintenance such as server backups, storage management, and patching leaves your IT resource free to focus on the areas that make real tangible benefits.

Cloud Computing is very much of the moment because of the general shortage of credit and capital funds. Unlike DIY IT systems, a cloud service should require minimal CAPEX, and is being considered by many organisations as a way out of their budget problems.

Drivers for cloud computing: cost and green issues
As Gartner states, IT has expanded beyond the confines of business to become intrinsic to every aspect of society. We’ve experienced a true democratisation of IT, and a market awash with mobile and context-aware computing devices. There is also the increasing importance of green IT which is now recognised as a global imperative with penalties for CO2 emissions and carbon analysis becoming the norm.

Cloud Computing has a major role to play here, because all functionality is delivered from within the network. Demand for cloud services has been driven by business requirements. The accelerated pace of server and storage virtualisation, and the exponential growth of voice services have served as two further areas of traction for cloud services. Add to this a severe lack of funding and a move towards working in smaller teams and the scene is set for Cloud Computing to radically change the way every IT service is delivered.

Enabling cloud services
Access to the cloud needs to be enabled from all locations across Ethernet and Broadband. As a result of InTechnology’s investment in BT’s 21CN, they now boast 97% UK coverage via 1,100 points of presence POPs. This means that cloud based communication, applications or telephony solutions can be delivered to virtually any business location with a guaranteed quality of service.

Managed solution to solve budget constraints
The driver behind the move “into the cloud” is a shift in infrastructure ownership, and changing enterprise budgets, and the emphasis is shifting to turn-key solutions. The landscape has changed in favour of managed service solutions hosted at either the customer’s site or the managed service provider’s data centre.

The benefits to business cannot be overstated. There is no longer any hardware or software to purchase, there are no ongoing upgrade or maintenance charges and it’s a straightforward monthly service which results in dramatic cost savings.