Looking at Cloud Servers as the New Reality
Anyone paying attention to technology today is familiar with the term “disruptive technology” as coined by Clayton Christensen in his ground-breaking work “Innovator’s Dilemma”. A great example of this particular type of innovation can be seen by simply taking a look at your desktop and the desktop software you use on a weekly basis. When you compare that to the services your company uses from the cloud, you can begin to see how much this has changed in a short amount of time. With the introduction of cloud servers, business could move away from the clumsy and burdensome applications that took up time and money, often more time and money in maintenance then was originally invested in the product. Business has begun the move to the cloud, and this disruptive technology is the new reality being born in every enterprise.
Cloud Hosting Costs
As an alternative to the legacy models, cloud hosting technology is more inexpensive to run. It is easier to implement and often offers a broader application when it comes to enterprise computing. Customers are drawn to the advantages of performance and low expense on products that in the past were often over-serviced as well as over-priced. As with many disruptive technologies, the cloud have begun to solve additional problems as the solutions spread through an organization, often due to the ease of adaption and low price for introduction.
But just as Christensen pointed out, it is the smaller more adept businesses that are the initial ones who embrace the changes a disruptive alteration brings, like cloud hosting and cloud servers. With only a small fraction of the $270 billion spent on enterprise software currently going towards cloud vendors, it is obvious that many don’t feel the need for change or yet see the writing on the wall. Some traditional enterprise leaders can see the need to make the leap, but often don’t have the business models to allow the change. They are like a huge cumbersome ship trying to turn in the wind. Some don’t see the need for change; others just don’t have the support within the organization to make the changes needed to accommodate the new dynamic.
The comfortable positions that these enterprises hold make them unable to initiate the aggressive changes needed to accommodate a new cloud directive. Fear of confused customers, disrupted channels and unfamiliarity leading to problems in product execution hold them at bay. Their predicament is obvious, the solution not quite so.
Cloud Server as Business Model
There are some, however, that see this as an opportunity for change and growth. Mike McCarthy is the VP of Cloud Computing with IBM and he recently spoke at the INTEROP technology conference in India about these very changes. In his keynote talk he spoke of the importance of businesses to reinvent themselves in regards to changes and the cloud, or they would soon find themselves being left behind.
An interesting statistic he gave at the talk was how of the ten top companies listed a decade ago, only two could be found in that list today. The others were left behind when changes to the way business is being done found them caught in their own stagnation. To stay on top you have to constantly reinvent yourself, and that includes your business model. With the coming changes created by cloud servers and cloud hosting, we are not only going to be working faster with fewer expenses attached to that work, but thinking differently. And that means looking at cloud computing not as a technology but as an important concept that will give us a smarter planet.
Tracking Cloud Adoption Growth
With an expected 80 percent of the traffic moving to server-to-server by 2014, according to a recent report by Mike Nielsen, Director of Vertical and Solution Marketing for HP Networking, we will see unbelievable growth in new ways. “We anticipate 1,000 percent growth in the next four years in the enterprise network because of video,” says Nielson. “Data center on the cloud, fragmented networks and new services are the new realities of today. And the entire ecosystem has to be prepared with solutions around these.”
However, McCarthy does caution that although he sees cloud computing as an important player in the roles that are affecting the IT landscape, it is not the only solution. IT organizations today face some big problems and part of the solution is to understand where cloud hosting or cloud servers fit as part of the answers.
“The percentage of CIOs who see cloud computing as IT and business model is growing,” says McCarthy. “Cloud helps a business and IT to create and deliver value in fundamentally new ways. Businesses are choosing a variety of cloud models (private, public and hybrid) to meet their unique needs and priorities.”
But he stresses that IT will need to re-invent itself several times over as enterprises look to sustain growth. There are cycles of sprawling IT complicated by incomplete data and an inflexible IT that must change.
Innovation vs. Disruption
But not all innovation needs to be disruptive. When technology reinforces current leaders, it can then be seen as sustaining rather than disruptive. But is that so with the cloud? Are the go-to-market strategies unchanged or the technological advances linear ones? In these instances the current market players can maintain the status quo. But when a totally new technology is brought to market, such as the introduction of the web, new players can move more quickly to capitalize and commercialize the new reality.
A good example is Dell versus The Yellow Pages. The web simply meant that Dell could put its catalog on the web, and it did so quite quickly. The difference between the catalog and a web page was a linear move. With the Yellow Pages, they lost their opportunity when Yelp came along and recognized the power of the community on the web. The web was a disruptive change in this instance. It had the ability to access local information and from it creates a community. This was an element that the Yellow Pages lacked.
We see this once again with the move of many of the core business applications to the web. Almost every aspect of business has changed from sales, marketing and distribution to the actual utility of cloud powered software. End-user adaptation drives sales and marketing, not the top-down mandates of old. Startups can access the same distribution networks (i.e. the Internet) as current market leaders, diminishing their high-value partnerships and vendor relationships. And in the final analysis, the products themselves are defined by their openness, ability to be mobile and their flexibility that makes them perfect tools for collaboration. And so, with this new disruption, startups have the ability to compete successfully with the traditional leaders in their field, changing the rules of the game for many.
Salesforce is a good example of a business that initially competed by slipping in as a “just good enough” competitor that with time and more complex product roadmaps became an indispensible tool for its clients. What began as a small 2% share of the market in 2002 that had analysts dismissing it as an also-ran lacking the functionality side of the equation became a $2 billion enterprise with 100,000 customers by 2011. They were able to serve their customers in more meaningful ways and knew how to capitalize on that fact.
This kind of change is happening across the globe as IT is liberated from solving the day to day functions of putting together servers and plugging cables into boxes. Instead it can move on to help build value of interest on the software and systems of the enterprise. Reaching beyond the necessary but more utilitarian tasks, IT can add value to the core business process of a company.
We see this beginning to happen at companies like Pandora where the integration of applications creates greater value, speed and flexibility for their clients and employees. Dole has seen their IT create systems that allow individuals to work from anywhere drawing critical information through their iPads from any part of the company to any other. And at Proctor and Gamble they have an innovative IT team that works to deliver the cloud to teams and groups in just about any corner of the globe. They work securely and with greater productivity than ever.
Customer experiences are more dynamic, solutions are updated more frequently, projects are completed more quickly, and this all contributes to better business results. The entire system can grow with greater breadth, wider diversity and a farther reach of technology for all. The change is here already, it is up to us to decide if we are part of that change or if we will cling stubbornly to the old truths while the new realities emerge.
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