Are We Ready for Cloud?

I can appreciate that anyone reading this title will ask – what do you mean are we ready for Cloud, it’s in the market already, the market has been speaking about it for years, even in your own blog Nathan you have been talking about this? No I haven’t had memory loss – yet -  but this blog will look at a broader context of Cloud Computing.

Many businesses are already experimenting with Cloud solutions either for testing, extending data storage or generally preparing for cloud migration. However are we really ready for this change and what are the impacts it will have on our way of working? I hear many businesses talking about preparing to move their ICT into the cloud, but what does this truly mean? That their IT department has validated the systems they are choosing to use in a virtual environment or does it mean that an organization has understood that moving ICT into the cloud is as serious and potentially disruptive as any business transformation?

There seems to be a growing view that Cloud Computing will deliver cost savings to a business’s ICT spend and based on many industry reviews this seems to be accurate, at least at first. From a starting position when migrating to cloud computing businesses will most likely see an improvement in their IT and Communications spend through increased scalability; however the challenges occur when businesses are seeking to leverage the benefits of virtualization across their supply chain and their internal processes which tend to take longer to materialize in any type of transformation project.

Anyone who has undergone an internal transformation will know there are three key aspects to any business change, these are – People, Process and Systems. It is interesting to note that when considering a shift to cloud computing, businesses seem increasingly comfortable and aware of the “Systems” implications. However during a cloud migration businesses are not paying the same level of attention to People and Process, these two areas are of particular importance in an era of globalization and connected business environments. Through globalization many businesses today have staff/resources distributed around the world, either through driving efficiencies, optimizing costs or to ensure close engagement with the end customer. The People aspect of change brought about by Cloud computing needs to capture not only the impact of latency tolerance for people to access systems, but also ease of use, language, local vs. central support and managing legal and regulatory changes where people are located. Equally, a business’s processes increasingly tend to include other organizations as they no longer tend to manage from design to implementation to in life support without input from other partner’s, suppliers or even customers. These developments require greater governance and adaptability to change, something which businesses may not have had to consider in a static ICT environment where changing a vendor or system had a more limited impact to the business.

This is not meant to be a warning against the benefits of virtualisation - aka Cloud Computing, but to make sure that as a business community we look at the transition to Cloud Computing as being as broad and potentially impactful as any business transformation we have undergone or are considering. Whilst many are looking at the short term gains that cloud computing can offer, it is actually the longer term benefits of cloud computing which are more exciting as these can lead to greater business agility, a shift in aligning business performance with supplier cost and creating a working environment for business led innovation.

I am sure many out there who will read this and think I am over complicating something which is simply a managed service, yet the goal for any business must be how to drive sustainable growth, in a market where the only constant is change. It is therefore important to ensure any project is providing a path to sustainable growth, there must be a longer term set of measures for success, such as identifying efficiency benefits through unit utilization (staff or resources), or being able to demonstrate increased alignment between the pull of business requirement and the push of ICT costs, resulting in reduced bench cost and greater business agility.

Are we ready for Cloud Computing, the answer remains yes - surprised right? -, although it might sound odd with what I have just outlined, but as businesses we do have the means with which to ensure a successful migration to cloud based working environments, we need only make sure we treat this as a business change not only a technology shift. All businesses have been through some form of transformation in their business, whether that is to adapt to the market, seek out new opportunities or drive business optimization we need to refresh our learning’s from these projects to ensure a path to the outcome we are looking for in the longer term with Cloud Computing. As with any Transformation we must keep in mind the three factors of people, process and system whilst maintaining a forward looking view on the benefits to a sustainable growth outlook all the while keeping in mind the age old saying – Preparation Prevents Poor Performance!

Shift from a Flat world to a Virtual world

We have always talked about globalization as enabling businesses to leverage resources whether they are material, people or systems; these three components are crucial to support our businesses in meeting the changing and expanding needs of our Customers. Globalization used to demand the expansion into new markets with offices, systems and staff, in essence globalization used to mean businesses had to be physically global. Two key trends though have led to a significant shift in what is required to meet the needs of customers in a market where they seek to maximize the benefits of Globalization. This shift has resulted in businesses being in growth markets without having to actually be on the ground something which up until a few years ago would have been considered impossible.

I have been a big fan of Thomas Friedman’s book “The World is Flat”, which reinforced the trends that I had been seeing in Asia with the growth of international business from key geographies beyond the traditional business centre’s of US, Europe and Japan. The increasingly flat world is one of the key trends which are altering globalization; one important outcome of the “world being flat” is that quality and performance of businesses have improved significantly in what were regarded historically as emerging markets which have recently evolved into growth markets. Why would I call these growth markets? Well quite simply the development of business models have become more sophisticated and as a result have provided an improving foundation for economic growth. This development has meant that the market entry approach global System Integrator’s (SI) or Service Provider’s (SP) had taken previously can either face growing local competition or challenges in other markets as SI’s and SP’s from growth markets continue to expand their own borders of service delivery – you only need to look at the SI’s and Telco’s from India expanding internationally to see how this change has accelerated.

The other key trend is the increased capability of cloud based services and a reduced requirement for premise based solutions. This trend is creating new opportunities and extending the reach of service providers without the need for resourcing to the same extent as with premise based platforms. To give you a few examples, consider Telephony, something which has historically always been a service and a platform which would be built on the premises of the customer, yet with a evolution towards IP Telephony, making a phone call becomes the same as accessing any application on the web and in so doing creates new opportunities to look at how these services can be provided to end customers.  Likewise for our personal communication, media and entertainment tools through the web and mobile phones, as I had mentioned in a previous blog the diversity of where applications are developed and can be hosted result in traffic crisscrossing the globe and our growing acceptance of the same only validates the fact that a good chunk of our consumer IT requirements coming from the cloud will only continue to grow.

With these two key trends an exciting evolution of globalization is starting to happen, globalization is no longer about being global, it is about being able to support your end customer wherever they may be and where they expand, shift or evolve to. This is an important evolution, as many businesses have always looked to truly global providers or integrators thinking that only they can meet their needs, but with the evolution of emerging markets to growth markets as well as the expanding capability of cloud based services, the landscape and solutions to address business challenges are changing, to the point that the world is no longer flat it is now virtual.

So what does working in a virtual world actually mean? It comes down to the blending of a partner ecosystem to provide an integrated network solution whilst incorporating cloud based services which provide accessibility beyond the traditional physical limitations of a network. Many people out there will read this and suggest that you cannot own something unless you can see it, I would counter that with understanding the evolution of software – do you know where your browser is pulling down data from? A Cached server engine or a mirror website? What about the applications you run on your phone have you ever checked where the data stored is hosted from? To a large degree the consumer side of communications and IT has already started the transition to a virtual environment; the question is how quickly the business market can follow.

For many businesses the benefits of virtualization (aka cloud computing) are clear however, so are the risks and as such many remain cautious as to how to progress whilst mitigating those risks. Many businesses though, are now testing the benefits of a virtual world yet remain overtly cautious as this represents a fundamental shift from their traditional supply chain management of IT and Communications Services.  Therefore the lead must come from providers who are able to extend their capabilities beyond their traditional physical limitations and demonstrate that this new virtual world doesn’t mean that quality and performance are put at risk. The misperception that businesses without global presence cannot meet the needs of the customer independent of where they are located vs. where their customer is located remains the biggest challenge but one which can be overcome through key partnerships.

The last question we must ask is why should service providers with the ambition and capability to extend globally on a “virtual” basis want to challenge the traditional global providers? Simply put because the world is changing. Okay that is a fairly obvious point however the change stems from the improvements in technology, the quality of networks in domestic or regional markets and the increasing urgency for businesses to be able to adapt to the changing market whilst balancing the need for sustainable growth. All of these changes combined represent a evolution in the market landscape creating a new opportunity which regional providers seeking to serve their customers beyond their traditional reach are well placed to serve through the creation of new partnerships and the introduction of platforms which leverage cloud computing, in so doing providing them with the business agility to ensure their own sustainable growth place. The world was flat, now we are transitioning to virtual, the next step? Perhaps an augmented reality of being instantly virtual in a flat world – but that’s a whole other blog waiting to be written!