Cloud computing hype has been “deafening” lately, as the Economist puts it plainly. But, is it really hype or is it an accurate vision of the future of enterprise?
Given the straitened times, you would have thought that cash-strapped companies would be jumping at the chance to outsource their computing operations to the Amazons, Googles, Salesforces and Microsofts of the world. Along with others, such providers have been vying to offer their customers access to data-processing and storage capacity, plus all the usual business software running on their own servers, via the internet or more private connections… Yet there have been few takers. What is holding IT managers back is fear about security. // via Tech.view: Cloudy with a chance of rain | The Economist.
I value the opinion of the author of this article, as he brings up valid objections to the technology, but ultimately, I believe that cloud is the future of IT; notwithstanding the security threat belabored above.
Why?
Because history has proven many times that firms that focus on their core competencies survive and thrive. Yes, security is a valid concern for in-house control, but I can envision a world where cloud companies will have more than adequate levels of protection, given the nature of their core competency–the cloud.
Companies that are not enterprise software or consulting firms should let the heavy lifting take place by the pros. It’s as simple as that. Companies should focus on what they do and let the business service firms come in and do what they do: cut costs, optimize, and deliver high performance results.
Beyond that simple business logic, it just makes sense that firms will start putting assets in the cloud. Why maintain systems, clients, software, and enterprise applications when another company can incur those costs and just charge you for what you use? Scalability is key here, and will continue into the future.
Fear
Clearly, firms are scared about security. Rightfully so. They are also scared about up-time and stability. Microsoft and Google have recently dealt with very public issues regarding cloud technology (think Sidekick and Gmail outages). BUT–flexible computing is the future, and you will see, as the technology is slowly adopted, more firms will jump on board. The future is in outsourced computing and the cloud.
In the cloud, a company can contract for redundancy, and why not let the people who specialize in these technologies be in charge of maintaining your data. After all, if you are a baker, you wouldn’t expect to install the ovens and supply your own gas to fire them, would you? You would get a specialist: an oven installer, and contract with a utility to supply the store. Here, the cloud is the utility. They manage the processes that supply your bakery’s pipeline.
The analogy is scalable. If you are in enterprise, you wouldn’t expect to be an expert in implementations of databases and customer relationship management software, so why not let an expert deal with that, so you can focus on what you do best, interacting with your customers. Technology is a partner, and helps facilitate business, it is not the core of your business. And for that reason, the cloud is a perfect solution.
Risk and Rewards
Yes, there is risk. There is risk in everything we do in business. Calculated and managed risk can involve great reward and with technology improving at such breakneck speeds, these risks can be minimized. Redundancy and security solutions can be customized to alleviate any concerns a company may have regarding outsourcing technology and processing information. So, why not let a professional that has expertise in assuming those levels of risk, and manages global security on a holistic scale do that, rather than go it alone when it’s not your forte?
I’m a bit surprised that this is just beginning to be a trend… but nevertheless…
A recent survey of business leaders, conducted by the Economist Intelligence Unit and commissioned by Accenture, revealed what those IT and business leaders are discussing in their closed-door budget meetings. The results hint at one thing when it comes to IT: strategy.
via BlueLock - IT to go “strategic” in 2010.
In fact, when discussing technology and the role of IT in an organization, strategic partnerships with the other functional areas should be a primary goal, as technology can directly influence behavior in the organization and more importantly revenue streams.
For example, technical oversight via systems processes can ensure proper and legal behaviors of the staff, integration between business models can influence collaboration and timeliness, and an IS&T strategy can ensure that the functional roles and tactical behaviors of employees are focused on clear value added jobs and responsibilities.
IS&T can also affect customer behavior and employee attitudes towards customers when they have a clear view into each interaction between the firm and those respective customers through proper CRM implementation and how the customer has responded through business intelligence and analytics.
Proper implementation and strategy of information technology and systems is one of the primary strategic goals that any global Fortune 100/500 firm can implement in order to ensure sustained competitive advantage, even if they are focused in other areas for profit.
One reason why this may not have been a trend until recently, is I that it can be incredibly difficult to identify the causal relationship of IT to behavior in an organization and most if not all will be anecdotal. That can cause problems for many ‘quants’ out there.
I would guess — while I believe these systems can and do impact tangible returns like an increase in revenue and a decrease in expenses — there is really no way that you can eliminate (at least in a real business climate) the variables that affect behavior. But with enough anecdotal evidence, you can piece together a proper idea of the effects of information technology on said business climate.
If we look at a case in which an industry that is primarily driven by other means, such as the Banking sector, one can’t imagine an environment where technology wasn’t a strategic asset. Banks certainly can’t focus on their trading and asset management without a proper IT strategy, and it needs to go to the heart of the organization so that it influences individual behaviors and roles. Otherwise, focusing on any other opportunity or strength is in vain, and the firm is destined to fail regardless. This can be related to any number of industries including the energy sector.
And when they fail at IS&T it can be disastrous for the firm, and should be noted when determining any future strategy.
It should be noted that unemployment “stabilized” in November and if the trend continues, we should see the rebound starting to take place.
Lawrence H. Summers, President Obama’s top economic advisor, predicted on Sunday that by the spring the ranks of working Americans will start to grow once again.
via Summers Predicts Job Growth by Spring - NYTimes.com.
Jobs should continue to be lost, but at fewer rates, and at some point, the “leaner” firms will have to refill the spots that they lost due to the shrinking economy. When that happens, as simple logic tells us, job growth will hit the “zero point” and be positive thereafter.
It may not be much consolation for those who have lost their jobs, or those that have not been able to find work after graduation or being unemployed, but the economic situation has forced forward thinking firms to focus on sustained competitive advantage and ensuring costs are in line with their offerings. Peter Drucker would have recommended firms focus on innovation and investment in the future within these “uncertain times,” and those that have, will be poised for growth and ultimately the creation of jobs.
I would expect, as might seem like common sense, to see larger more innovative firms already starting to hire, and more staid industry leaders to follow suit when economic indicators are more favorable.
And this should come as welcome news to many.
In a survey released in September 2008 by KPMG, the audit, tax and advisory firm, two-thirds of those polled said that green technology investment is sustainable. Almost all said they expected venture capital for start-ups producing these technologies to continue to increase in 2009. Half predicted an increase of 20 percent or more over 2008 levels. [via NYTimes]
I wonder what the current statistics look like for the first half of 2009? I have a feeling they were very close. Green is not only trendy right now, but it’s the way of the future. Green is sustainable, and makes good business sense. Message to firms out there: get in before you’re toast.
