Confused about the cloud? You're not alone.
Adoption is projected to grow at double digits despite plentiful guidance on why we should fear the cloud. Pundits tell us, “If your organization is not implementing the cloud, you’re already behind.” Yet it is easy to feel the cloud is just beyond our grasp. To quote Jason Segel, as Jay in the comedy Sex Tape -- “Nobody understands the cloud. It’s a [expletive deleted] mystery.”
So let's kick off 2015 with a look at some real-life use cases from sectors that are leading the way in enterprise adoption of the cloud.
Ask a few CIOs about the cloud and you are likely to hear a wide range of responses, from concern that the cloud endangers security and privacy to elation that the cloud can be the ultimate platform for change. While much of this reflects well-reasoned advice and counsel, some is pure hype. When even The Onion takes on “that cloud thing that everyone is talking about,” we should realize that we are at hype and jargon saturation.
With all the noise around cloud computing, cloud storage and cloud apps and debate about the pros and cons of public, private and hybrid clouds, we need to consider what is real and what is merely illusion, and moreover why we should ultimately care.
These beautiful lyrics from the 60s seem to foretell our current state of confusion over the cloud:
I've looked at clouds from both sides now,
from up and down, and still somehow
it's cloud illusions I recall.
I really don't know clouds at all.” -- Joni Mitchell, Both Sides Now from the album Clouds
The cloud is a growing reality. CIOs and IT teams need to clearly understand how it can best be applied to advance their strategic interests.
IDC research forecasts public cloud will grow at double digits and spending on private cloud will top $24 billion by 2016. CompTIA predicts that the next decade will see cloud computing becoming even more accepted as a foundational building block. We are seeing the cloud go mainstream in the public sector, and Gartner predicts the cloud is moving into digital business, advising CIOs and other IT leaders to continually adapt to leverage increasing cloud capabilities.
The Open Group Cloud project analyzed 24 business use-cases driving adoption. In general, the rationale can be classified in five areas: agility, productivity, QoS, cost and the ability to take advantage of new business opportunities -- all of which have been guiding principles for applying technology in the past.
So how well are our past years of enterprise hardware and software know-how translating to the cloud for large-scale applications? Here are three sectors that are forging the way with successful cloud implementations in order to drive efficiency, improve time to market, and effect business transformation.
The Cloud Drives Cost Efficiency
World Economic Forum research reveals that governments are adopting cloud services at higher than expected rates. The growing adoption of cloud technology is happening at all levels of government around the globe. We are already seeing cloud play a role in changing how government agencies fundamentally spend money and allocate their IT resources.
We came out with a cloud-first policy because… it offers a faster time to market, a reduction to risk, and hopefully a reduction in cost.” CIO Carlos Ramos, California
While adoption is being driven in part by cloud-first mandates, the cloud is clearly aligned with government mission objectives. The public sector has embraced a data-driven approach -- including open data and big data initiatives -- to be responsive to citizens. Cloud implementations are seen as a means of moving beyond data transparency to achieve a cost-effective state of operational excellence.
Four Trends to Watch in 2015 highlights the cloud as a means to be responsive to citizens’ wants, needs and ideas. For municipalities, the cloud provides equal, on-demand cost-effective access to a shared pool of computing resources. The City of Barcelona hosts 1.5 million guests for the La Merce festival using the cloud to help manage the surging foot, bike, auto and public transportation traffic. The state of Delaware has implemented a cloud-based CRM application for constituent tracking in two months, adopting a cloud-first policy that piggybacks on federal policy. The state set up a private cloud and virtualized 85 percent of the state’s physical servers, saving $4 million per year. Delaware now has 70 applications in the cloud --from event notification to cybersecurity training.
For central government organizations, including the US Department of the Interior, shared services are eclipsing “cloud-first” mandates as the driver behind cloud adoption. DOI’s groundbreaking cloud initiative consolidates all the records information programs under one IT governance system, and this shared service is expected to save an estimated $59 million in taxpayer dollars by 2020.
The Cloud Supports Business Transformation
Gartner Research identified financial services banking and insurance segments as two of the top cloud adopters. These segments are driven by the need for more innovation and the value they get from that innovation. Financial services firms are rewarded for systems that can process transactions faster and more securely and are providing new services, such as mobile banking and claims, that are ready-built for cloud-based systems. There is also growing competition with startups that are shifting the playing field.
Way back in 2013 (a decade in cloud years), my article The Art of Banking: How Financial Services Approach Great Customer Experiences talked about how bankers would increasingly take innovation cues from consumer tech and smart retailers as they practice the art of banking. Over the past year, the cloud has proven to be both a major disrupter and an enabler for innovation. Like the other big research firms, IDC sees digital transformation as key for businesses and a bridge that CIOs must learn to cross, and that bridge includes the disruptive influence of cloud computing.
A recent article from Banking Technology, "Why I’m backing the banks," declares that traditional banks are now in a race to remain relevant as they face a slew of non-bank competitors with offer models that consumers increasingly value. Accenture found that one in five consumers would be happy to bank with PayPal -- a cloud firm born in Silicon Valley. Though often a cost-saving measure, CIOs are seeing the potential in the cloud to create a flexible platform for future innovation. A poll of financial services sector decision makers revealed the top two benefits of adopting cloud platforms as cost savings (voiced by 62 percent of respondents) and a simplified IT environment (52 percent). It is this simplification of the IT environment that will enable banks to level the playing field with the upstarts:
The newer entrants owe much of their success to their extreme agility with ICT: they have got where they are because they use technology better than anyone else. Yet, it would be premature to lament the passing of banks as we know them. They are increasingly taking the tech start-ups’ own medicine… [and the] search for innovation is rapidly pushing the cloud up banks’ technology agendas.”
While banking has definitely upped its cloud game in the last few years, insurance is perhaps the granddad of cloud adoption.
In How Cloud Computing will Transform Insurance, Accenture highlighted Insurance as being in the forefront of cloud growth and predicted that the cloud would transform the industry. On their list of reasons to adopt cloud, the “ability to respond to market change and reshape operating model[s] to address new and emerging opportunities and challenges.”
An SMA study of cloud adoption trends in insurance found that 35 percent of participants said the cloud "provides companies with the flexibility needed to respond quickly to changing needs." In retrospect, while cost savings has been a driver for insurers to adopt the cloud, there are already a number of insurance cloud success stories that illustrate the cloud's real potential as a means of innovation and competitive advantage in a changing market with a changing customer demographic. Andre Nieuwendam, director of IT for United Property & Casualty describes their cloud success in customer-centric terms:
From an insured perspective, there are many initiatives on the table that we want to be able to provide them, file a claim electronically, check billing, and interact with customer service people in a real-time environment. Being in the cloud has enabled us to meet all of these objectives in a very, very short period of time."
The Cloud Enables Speed to Market
In a recent Forbes article, "Cloud Is the Foundation for Digital Transformation," Ray Wang (@rwang0) highlights cloud as the single most disruptive of all the new technologies. ”Cloud not only provides a source of unlimited and dynamic capacity, but also helps users consume innovation faster.”
The idea of leveraging the cloud as a platform for speed in a changing market is appealing and especially resonates in the communications, media and entertainment sector, one that Gartner has identified as second only to banking in cloud adoption. In Breaking Bad: How Technology is Changing Media & Entertainment, I wrote about the digital media supply chain and how entertainment and broadcast companies are experiencing no less than an industry revolution:
Motion pictures used to be cut, approved, and canned for distribution and released in a series of ‘windows’ for consumption. With digital distribution this model stops working -- all the traditional ‘windows’ of distribution are collapsing. This has a ripple effect all the way down the chain of production and accounting and requires new IT systems and applications to address the new paradigm.”
According to Accenture’s Content in the Cloud in the Broadcast and Entertainment Industry, the cloud can be the platform on which the digital media supply chain operates to better serve changing markets and consumption models. Cloud technology is
poised to make an impact by supporting the next round of breakthroughs…from proliferating devices that demand a more flexible business model to new levels of IT capacity requirements that dictate highly scalable IT solutions to competitive pressures for speed and innovation that call for better workflow, business analytics, and customer insight.”
How Cloud Computing Will Save Hollywood tells the story of how Lionsgate is using cloud to run their studio and compete with the “big guys” in the industry. Cloud has been helping them deal with their dispersed global environments during film production: media complexity, an unprecedented influx of massive amounts of data, and unique data and workflow requirements.
Perhaps the cloud is not so mysterious after all. In a Gathering Clouds interview, David Linthicum (@DavidLinthicum) shared his perspective that businesses that adopt cloud gain a strategic advantage:
… the companies who [adopt cloud] can turn on a dime…. These companies will be able to leverage their information in much more innovative ways.”
As industries increasingly digitize, the cloud is proving to be a useful partner to the CIO in an increasingly digital-first world. It is not surprising that KPMG’s recent survey, Elevating Business in the Cloud, found the top uses for cloud are to drive cost efficiencies and enact large-scale change including enabling a flexible and mobile workforce, improving alignment and interaction with customers, suppliers and business partners, and better leveraging data to provide insightful business decisions.
The key to success, as with any new bright shiny technology, is to apply the cloud to achieve critical business and mission objectives. As Jim Buczkowski of Ford Motor says,
The cloud is about delivering services, features, and information…to make the driving experience a better one.”
So here’s to accomplishing great things with the cloud in 2015! Just keep these tips from KPMG in mind as New Year resolutions:
- Make cloud transformation a continuous process.
- Drive cloud transformation from the top.
- Focus on strong leadership and engagement.
- Avoid silos.
- Measure success.
Plus one bonus resolution from me: Avoid the trap of “cloud for cloud’s sake,” lest we discover the biggest truth in Joni Mitchell’s lyric is “So many things I would have done but clouds got in my way.”