8 Ways That Cloud Computing Will Change Business!

Cloud computing holds the potential to dramatically change the businesses that adopt it, even if the technologies are only used internally. While these possibilities are only now starting to become clear, we can get a decent sense of these now:

8 ways that cloud computing will change business

1. The creation of a new generation of products and services. The economics of cloud computing lets innovative companies create products that either weren’t possible before or are significantly less expensive than the competition (or just more profitable.) This part of cloud computing is an arms race and there are short windows of opportunity since competitors can often put the economic advantages of cloud computing into their product formulations fairly quickly once they see that it works for you. Where it gets interesting is that many business ideas that required prohibitive amounts of computing power, scale, or radically new business models (the aforementioned open supply chains and Global SOA) but couldn’t be implemented due to existing technical limitations or cost-effectiveness, can now be realized. Every improvement in storage, processing power, or technology enables innovations that weren’t possible before (high speed Internet, for instance, made products like YouTube possible) and cloud computing makes these opportunities unusually accessible. Smart companies will take notice.
2. A new lightweight form of real-time partnerships and outsourcing with IT suppliers. Companies that did traditional outsourcing of their IT services a few years ago already know what this feels like; a large part of what used to be in-house is now being done somewhere else and changing anything is hard. But unlike traditional outsourcing of IT, cloud computing will provide agility and control that traditional outsource cannot match for the most part. Don’t like your cloud vendor? Unless you negotiated a long-term contract, you can often switch far easier than changing IT outsourcers. In fact, many cloud computing relationships consist of nothing more than a cancel-at-the-end-of-the-month commitment and corporate invoice. For many companies, this will actually be improvement over what they have now and give them choices they perhaps never had when everything required internal execution or to go through the outsourcing supplier relationship.
3. A new awareness and leverage of the greater Internet and Web 2.0 in particular. Most companies are still notoriously critical of Web technologies as “not serious” computing. But the Web has grown up considerably in the Web 2.0 era and the challenges in scale, performance, and satisfying fickle audiences of millions has created technologies, solutions, and architectures that can address them in powerful yet economic ways that many enterprise systems are finding hard to match. When cloud computing is adopted by an organization, they will find themselves thrown into the pool with the rest of the online world in many ways, whether this is the employment of social tools, SaaS, non-relational databases or a host of other technologies in their new cloud. And in the end, this will serve them very well and allow many companies to acquire the skills and perspectives required to compete effectively in the 21st century.
4. A reconciliation of traditional SOA with the cloud and other emerging IT models. A great post this week from our very own Joe McKendrick illustrates how SOA is evolving because of the cloud. The advent of cloud technologies will have to be dealt with and somehow encompassed by SOA initiatives that are already looking at their current toolset of heavyweight approaches and technologies with an eye towards seeking an onramp to change and improvement. Web-Oriented Architecture fits very well with cloud technologies which are heavily Web-based and it’s a natural, lightweight way of building SOA at virtually every level of the organization. For many organizations, the cloud will likely be the straw that broke the back of traditional SOA and move it to a place where it will meet new business and technical requirements, faster rates of changes, and new business conditions.
5. The rise of new industry leaders and IT vendors. While we’re seeing many of the top players in computing use their existing strengths to create successful cloud computing offerings, there were also be a new generation of companies that businesses generally aren’t used to dealing with as suppliers. Amazon and Google are two firms that generally aren’t regarded as deeply experienced in the enterprise, and there are many others. While it doesn’t seem that we’ll see many entirely new players compete with the big firms, it’s certainly not out of the question (and given the opportunity, likely from an investment standpoint) that we’ll see some very well-funded new cloud startups that lack the baggage of existing leaders (thereby moving very quickly) and bring a new sensibility (radical openness and transparency, new technologies, and Web-focus) that’s often needed with cloud computing. We may see perhaps even before the downturn ends. Either way, the industry landscape will be remade by cloud computing as it is one of the very few new IT developments that will be very broadly adopted in the next several years.
6. More self-service IT from the business-side. Many cloud solutions, particularly as they relate to SaaS, will require increasingly less and less involvement from the IT department. Business users will be able to adopt many future cloud computing solutions entirely using self-service. This also heralds, as McKendrick indicates, that many of these scenarios will be much smaller and more numerous, tapping into the The Long Tail of IT demand.
7. More tolerance for innovation and experimentation from businesses. With fewer technical and economic barriers to creating new ways to improve the business (LOB, marketing, sales, customer service, IT, horizontal services), cloud computing will enable prototyping and market validation of new approaches much faster and less expensively that before. While legal, branding, and compliance will often struggle to keep up the pace with the rest of the organization, there will be gradual thawing of the glacial pace of change as business possibilities become, well, more possible in the cloud computing world. This won’t fix the often broken innovation mechanisms in businesses, but then again, cloud computing is so accessible that many new internal entrepreneurs (see previous point) will use the tools to create new solutions anyway.
8. The slow-moving, dinosaur firms will have trouble keeping up more nimble adopters and fast-followers. Not adopting cloud computing doesn’t spell the immediate demise of traditional companies that aren’t good at making technology and cultural transitions (and make no mistake, cloud computing is a big cultural change), but it will pile onto other recent advancements and make it even harder to compete in the modern business environment. In the end, those too slow to adopt the benefits while managing the risk are likely going to face serious and growing economic and business disadvantage.

For many organizations in the short term the apparent potential of the individual changes above will often not be sufficient to them to make the transition to cloud computing, particularly as the cloud market is so new and major players such as IBM and HP have yet to arrive in full force. But gaining competency in cloud computing today by conducting pilots and building skills will server companies well and begin to position them for the future IT landscape. Longer term, cloud computing is increasingly appearing to be a transformative change in the business landscape.

Cloud Computing In EHR

Posted on Thu, Aug 06, 2009 - Jeff Marion

With the recent announcement of Salesforce.com's multi-million dollar investment in Practice Fusion, which offers a free, ad-supported physician EHR, "cloud computing" has again taken center stage. More and more health care providers are choosing cloud-based EHR models, opting to let hardware installation, data storage, and application hosting be someone else's headache.

The term "cloud computing" describes the practice of storing all data, software, and hardware off-site, with the system accessible to hospitals and providers via a web browser-based login. No need to install expensive infrastructure, and secure data storage is part of the package. The EHR system is immediately available to any Internet-connected computer in the world. With cloud computing, everything you do is now web-based instead of desktop-based.

The health care industry has long been uncertain as to whether confidential patient records should be stored centrally or in the "cloud". Opponents challenge cloud computing as a new and unproven technology, warning that rapid adoption could result in disaster.

What happens when the servers go down, or you lose your Internet connection? Who  "owns" the patient records, and where are they physically located? Who is responsible for breaches in the cloud computing environment?

Cloud developers also face challenges. They cannot rely on homogenous computing environments. Their web-based software must account for different operating systems and hardware. The strength in cloud computing is it's scalability, which means it must function under enormous bandwidth loads and millions of simultaneous users.

As hospitals make more use of cloud resources, expenses can rise exponentially. One desired capability is to link ultra-secure private clouds with cheaper public offerings. For example, an EHR system that could pipe into a data transfer alternative during peak usage hours.

The success of Amazon's Simple Storage Service (S3) suggests that cloud computing is here to stay. At only 15 cents per gigabyte of data storage, and 10 cents per gigabyte transferred, it is becoming economically feasible for anyone to get into the cloud game.

Cloud computing could be seen as a HIT blessing: hospitals could share infrastructure and reduce costs with vast numbers of systems linked together. Vendors could introduce new pay-as-you-go models based on use of CPU hours, or gigabits consumed and transferred.

Should You Outsource Your IT Services?

Posted on November 10, 2008 by Sam Conforti

Due to the current economic conditions, IT departments are coming under increasing pressure to do more with less.  However, over the last few years upper level management has become leery of divesting themselves of the servers and network to a service provider.  In prior postings to this Blog I have provided reasons why outsourcing can benefit the enterprise, 10 Reasons to Outsource, and also a comprehensive checklist to consider prior to making the decision, Checklist Before Outsourcing Your IT.  In an effort to continually update this topic as events evolve, this posting is another in this series and concentrates on the concerns one might have regarding the Service Provider.  To get the full detail underlying the following points to consider when evaluating which Service Provider is best for your enterprise read Outsourcing Your Infrastructure: Ten Points to Consider When Making the Move.  Here is a brief summary of those ten points:

·         Uptime:  Greater reliance on the internet makes “On” the only option.  The global marketplace makes this a necessity.  The options could be straight hosting, managed service, or SaaS.

·         Redundancy and Business Continuity:    loss of customer call center could result in lost orders.

·         Data Restoration:  eDiscovery Laws require a significant and competent back-up plan.

·         Response Time and Site Performance: providers have high-performance servers and high-speed access, but do they have only one location.

·         Scalability to meet growth: Can the Service Provider add capacity quickly to meet the rapid increase in demand, in other words, does the Service Provider have the financial capital available to rapidly add more servers.

·         Customer Support:  This is the “value-add” dimension that differentiates one Service Provider from the other.

·         Security:  Must be able to adhere to the Data Privacy laws such as Sarbanes-Oxley, and Gramm-Leach-Bliley.

·         Cost Reduction and One-Stop Billing:  Abandon the ala carte approach to IT infrastructure.  Bundled services are discounted.

·         Optimized IT resources i.e. dedicated servers:  Allows IT staff to redirect their efforts to delivering their own services.  Plus services on demand priced on usage is better offered from a service provider’s business model.

·         Financial improvements:  Eliminates the need for cash oulay for hardware and turn the cost into an operational expense as the enterprise pays for a service.

How To Market SAAS

Posted on December 8, 2008 by Sam Conforti

The SaaS story remains the same, but now the approach must shift.  SaaS is cheaper to implement and the enterprise can avoid the upfront capital expenditures for hardware.  Since it is a service, the pricing is based on per seat use and so there is no initial cash outlay for the software suite.  You pay for what you use.  In this current economic crisis enterprises are ripe for a way to lower costs and so the approach the SaaS vendor should take needs to adjust to the times and the SaaS vendor must highlight the advantages in their marketing approach.  Demian Entrekin, founder and Chief Technology Officer of Innotas, has written an Op Ed piece for SandHill entitled 10 Predictions for Software as a Service.  In his article Entrekin discusses the 10 key trends that the SaaS vendor should consider in order to expand their market share by encouraging acceptance of their application.  I will provide a brief synopsis of these trends below, but I strongly suggest his article to my readers for the full story.

10 Key Trends to Growth and Acceptance:

1.     Sell the product features:  Abandon the traditional approach of selling the whole product and emphasis the individual product features that address the individual business processes desired.

2.     The application is seamless:  SaaS is not restricted to the enterprise and more directed toward user networks.  This should lead to easier adoption.

3.     Have an Elevator Speech:  Just when marketing yourself for a job, one needs to be able to sell oneself in the first few moments of the interview, Entrekin suggests the SaaS Vendor be able to demonstrate added value in the first minutes of meeting the prospect.

4.     A Deming Approach:  W. Edwards Deming would emphasis “the ability to support a reliable, scale-able service at a low cost.”

5.     Emphasis Tier 1 Support:  Stress the capability of your Tier 1 Support and suggest the enterprise eschew the need for high priced consultants to answer what become high priced questions.

6.     Product Alliances are key to growth:  Make alliances with other SaaS vendors as a means to growing market share.

7.     Video rules the day:  Use video for training and support.  It is cheaper and much more interesting than the traditional text tools.

8.     Consider a full service Hosting Provider:  This is the point of most interest to me.  Entrekin points out that the SaaS Vendor obtains the same leverage from an outsourcer that they provide to their own customers.  This has the added benefit of leading to aggregation of applications and partnerships.

9.     Grid Computing:  SaaS vendors should build their applications so they are “cloud compatible”.  It remains to be seen if grid computing becomes cost efficient, but the SaaS vendor should be ready to take advantage if such is the case.

10.  Your approach can shift from the technology hurdles to a marketing strategy: Entrekin believes the hurdles getting the application to market are slowly but surely being overcome and now is the time to shift to a viable marketing strategy.

Software Execs Move To The Cloud

The Paradigm Shift: Software Execs Move to the Cloud

Posted on April 2, 2011 by Sam Conforti

Kamesh Pemmaraju heads cloud computing research for Sand Hill Group. He writes a weekly blog, Leaders in the Cloud for weekly updates on developments in the cloud market. In an opinion piece for Sand Hill entitled Cloud Leaders Face a Changing Tide he reports to us on the latest Sand Hill survey of 100 software CEOs and senior executives and their responses regarding their firms expected revenues from Cloud Computing for the next few years, their customer’s attitudes and readiness to adopt Cloud Computing, and which products and services seem to be catching hold.  

What appears to be obvious to Pemmaraju from the results of the survey is that these vendor’s customers want to be in the Cloud and the execs recognize this demand and no longer expect their customers to accept the existing products for sale. The survey respondents seem to feel that the global recession is ending and they expect considerable growth in the Cloud Computing market space.85% of the respondents already had cloud products and service offerings ready for sale to their customers and 43% expect that Cloud Computing sales will make up the majority of their sales in the next 5 years:

The survey showed an interesting dichotomy between small firms (i.e. revenues of $250M or less) and large firms. The larger firms will grow their revenue from Cloud Computing but at a much slower pace in the next 5 years:

Pemmaraju identifies the key to success for these software vendors are to recognize the value their customers see in the applications and the platforms on which these applications are developed. Hence these software vendors “also need to create platforms to attract developers to extend and build new applications.” The concerns from all parties are very real and consist of:

·         PaaS (Platform as a Service) is still relatively new and unproven

·         Enterprise customers are stocked with on-premises development tools

·         Customers want to avoid being locked into one vendor

Although SaaS is the primary model today, Pemmaraju reports that the surveys show that PaaS is the choice for most respondents in the next 3 years:

The paradigm is shifting once again and as the software vendors learn and adapt there will be many missteps along the way. Pemmaraju sums it up nicely in his opinion piece:

“But as customers move away from traditional licensing models, software vendors—particularly the incumbents—face challenges in adjusting their products, go-to-market strategies and pricing models. How can they move towards cloud computing without cannibalizing their existing product revenues? Even the metrics or methods that software firms use to track their business are evolving rapidly. Moreover, nearly 50 percent of the executives surveyed said the cloud offerings today are not yet ready for enterprise use, and the current lack of standards is a growth inhibitor.”