3 Reasons Cloud Computing as Business Transformation is misunderstood


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The BBC recently published an article which became popular in the buzz – Getting your business cloud-ready. This was often retweeted as “cloud taking off in 2011”. The essence of the article was captured by an early paragraph header – “From zero to server in 30 seconds“.

It’s this type of common misunderstanding of cloud which pervades the media, both popular and technical, and it’s a great pity because it comforts people in the face of an oncoming tsumani.

Three reasons that the “infrastructure” myth of cloud pervades the conversation are because of vested interests, business inertia, and poor sales models.

It’s not about scaling infrastructure

The Cloud: Battle of the Tech Titans – in BusinessWeek recently, was a good overall coverage, but fell for the same line about cloud being just more “stuff” which we have all seen before, but this time massively scaled:

What’s different this time—as compared with the rise of the mainframe or the PC—is scale.

Wrong! That’s actually what’s the same as could be extrapolated from the past. Sure, scale leads to economies, but that’s only the motivation for change not the strategic benefit. It’s not the core of cloud.

The danger of “business as usual”

Let’s take another look, we find thousands of articles with this type of definition:

A cloud computing solution is essentially a move from a traditional premise-based IT infrastructure to computing services that are delivered as a utility from a remote datacenter.

Sure, if that IS your definition then cloud isn’t any different. Could reading that type of definition make you think that cloud is an enabler of business transformation, on a scale not yet seen in the history of IT?

I don’t think so. Therein lies the danger.

It’s a danger for service providers – they can go out of business. It’s a danger for IT staff, a core of those, say 20% will become redundant. It’s a danger for vendors of stuff you put in your own real estate – from software licences to hardware iron. It’s a danger to businesses, because they can rapidly become uncompetitive.

3 reasons the misunderstanding continues

So if all this is true, why is cloud misunderstood?

Here are three reasons:

  1. Vested interests. Vested interests in the current products, services and supply models, and buyers, want it to be seen as “business as usual”. The Business Week article quoted above hit the nail on the head: “Gin up a pitch that sounds good to cautious CIOs and will ensure another round of technology purchases.” Nothing wrong with that, it is the way of the world – it’s the little Dutch boy holding his finger in the hole in the dyke, except that it won’t have that happy ending. This is a very powerful force, it will prevail for years, and if history repeats those responsible will have moved on when the downside consequences manifest themselves.
  2. Business inertia. The vast majority of businesses, despite the literature and legend of management advice about forward planning and strategy and positioning etc etc, do not act until driven by fear, or competition, or cost cutting necessity (which could be thrown back into to fear basket). At the moment, in the cloud revolution, businesses do not feel any fear from cloud-enabled and cloud-agile competitors, or cloud-enabled and cloud agile customers making new demands, and they don’t feel the pain of uncompetitive cost burdens in their organisation from their current IT investments and implementation. They will continue in “business as usual” mode until fear or cost burdens force change. Cloud is all about business NOT as usual, but it will take a while to impact.
  3. Sales models. The cloud vendors, be that Amazon or Google or even “old” Microsoft, are stuggling with their sales and channel models, which results in most often the lowest common denominator of cloud services being sold, which is the simple infrastructure scale-up scale down. This is just a “virtual” replacement for owning your own stuff. All three have a problem in that they have no channel to promote and assist with the real business transformation of cloud. Microsoft has an additional problem in the hostility of thousands of current service provider partners who see cloud as a threat to their livelihood. This is a deeply unsettled distribution issue.

Opportunity for agile businesses

None of these reasons is going to fade quickly. They are all deep-seated. The period over which their influence will decline is years.

This represents a fantastic opportunity for those businesses that do get the real business transformational value of cloud to get way ahead. In fact this is a seminal point in computing history for this breakpoint to happen, it may not present itself again for another 20 years.

Those business that do assess cloud in it’s full potential and consciously align that potential with their business strategy will outpace their competitors, I have no doubt.

Clouds are ecosystems – offering business advantage

Clouds are about ecosystems, about large collections of interacting services including partners and 3rd parties, about inter-cloud communication and sharing of information through such semantic frameworks as social graphs.

A cloud ecosystem is a collective set of capabilities from multiple organizations and potentially services spanning multiple platforms and cloud environments which together form an ecosystem which feeds and build upon each other.

That’s CLEARLY business transformational, whereas “computing services that are delivered as a utility from a remote datacenter” are NOT.

By the way, to understand what cloud really is read anything of Werner Vogels (Amazon), or this from David Chou (Microsoft).

Do you think “cloud” is just another “business as usual” technology?

Do you think business which strategically adopt cloud can in fact gain competitive advantage?

What do you think will be the key force to move business to adopt innovative cloud solutions?

Walter @adamson

Republished with author's permission from original post.

Walter Adamson
I help firms create optimal customer experiences by integrating social data, teams & processes with enterprise systems. The much vaunted 360-view of the customer can be a bottomless pit without a clear data strategy. I help you deliver a greatly improved customer experience starting with a "45-degree" view of the customer, fully utilising social data analytics. I clarify your objectives and what data you need to service them, and guide you to operationalise "social at scale" to consistently deliver valuable customer experience at every social touch point.


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