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The Effects of Cloud Computing on Business Transformation

15th December 2015

SimonWithers_2014Despite being a relatively recent phenomenon, cloud computing has rapidly entered mainstream consciousness. Like many new technologies, the cloud has brought with it a number of disruptions to traditional work practices – disruptions that threaten to derail some businesses and empower others. Cloud computing is now firmly entrenched within a wide variety of industries, not merely those that would be considered part of the technology sector. Healthcare, finance, retailers and many other industries have all been disrupted by cloud computing, but many advantages have emerged in the wake of this disruption.

It is worth keeping in mind that the term “cloud computing” encompasses many different types of computer resources. The on-demand, pay-as-you-go model may be relatively uniform but the types of service that businesses use will differ. Software as a Service (SaaS) is the most common cloud solution and includes tools like Salesforce, Microsoft Office 365 and Google Apps. Other approaches to cloud computing see varying levels of IT resources accessed over a network connection, ranging from entire infrastructures to bespoke communication apps. According to a recent IDG survey, 67% of respondents use SaaS products, 47% are adopting Infrastructure as a Service (SaaS) and 46% are using desktop as a service (DaaS). Each cloud service will come with its own challenges, whether regulatory or technical, but for many the added flexibility and cost savings make this disruption worthwhile.

The cloud’s benefits, however, may not necessarily be readily apparent to businesses and there is evidence that some confusion still exists around this technology. While 94% of employees feel that cloud computing has helped their organisation move closer to its needs, they are less clear on how exactly it has done so. The most commonly given answer was that it had enabled resource-savings for ongoing infrastructure management, but this still scored just 27%. Clearly there are other factors at work alongside cloud computing that are enabling organisations to achieve business transformation.

Some of the most prominent alternatives to cloud migration currently being discussed by businesses include extending their existing outsourcing arrangements (48%), and expanding staff training programmes (47%) to improve employee knowledge of possible IT delivery options. The least popular alternative to cloud services was recruiting assistance from specialist consultants, which was only chosen by 27% of respondents. The reticence to employ specialist consultants is likely to stem from the fact that although helpful during the planning and installation stages, they would be less useful throughout the entirety of the cloud service lifecycle.

If businesses do opt for cloud service migration they are likely to find their traditional in-house IT processes disrupted. Some of the most important impacts include increasing employee flexibility and business scalability. 72% rated remote or mobile working as extremely or very important when it comes to the disruption caused by cloud migration. Moving to the cloud also enables businesses to embrace innovative new approaches to software, with 67% recognising the important changes that the cloud makes to testing and development projects.

Even though cloud migration has been embraced by many firms and many new businesses have been founded to capitalise on the disruption caused to traditional industries, many still have reservations about cloud computing. High-profile security breaches have left businesses wondering whether data is more secure being kept on-premise or with a third-party vendor. Security was listed as a key area of concern by 58% of respondents when discussing cloud computing, with data protection also highly ranked at 41%. Other concerns included a reticence to change existing infrastructure and long-term costs. Cloud security worries are likely to have been exacerbated by Edward Snowden’s revelations regarding government surveillance back in 2013. 42% said that their organisation’s confidence in cloud computing had been disrupted following the affair. Although it is positive that the revelations have prompted further debate surrounding data protection, many cloud suppliers now provide the most stringent security protocols possible. By delaying business transformation due to these concerns, organisations may find that the benefits that they would have reaped are reduced.

Predicting the future of disruptive technologies is inherently difficult. They often appear without warning and quickly achieve mainstream adoption. However, there are tentative forecasts that can be made. Big data analytics, BYOD policies and social media integration are all likely to have a disruptive influence on business IT over the next five years. Machine to machine communications (M2M) and the Internet of Things (IoT) also promise major impacts. The exact disruptions heading our way are impossible to know, but the most successful businesses are likely to be those that view them as an opportunity rather than a disadvantage.

By Simon Withers, VP of Infrastructure as a Service.

*All stats and figures in this article are from the whitepaper “CIO Perspectives on digital disruption” produced by Sungard Availability Services.

This article first appeared in Digital Marketing Magazine on 4th November 2015.