Cloud computing gets strategic: Reducing technology costs is just the starting point

 

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By Phil Garland, Rob Gittings, and Mike Pearl

What a difference a year makes. Last fall, View introduced readers to what we called the latest technology trend to capture the attention of businesses, consumers, and investors alike. That description of cloud computing was apt: Momentum—along with considerable hype—for the new approach and its supporting technologies has been considerable. But the real impact is only now beginning to be felt. A year ago, cloud was squarely in the IT domain; now, it’s making its way to the boardroom. Phil Garland, Rob Gittings, and Mike Pearl— leaders in PwC’s Advisory, Technology, and Cloud Computing practices—explain why the real story is less about technology and more about business strategy.

Most organizations today are no longer deciding whether they’ll use cloud computing. Rather, they’re asking how? Will we use software-as-a-service to provide CRM for our sales team instead of managing the application in-house? Should we take advantage of inexpensive, virtualized storage to meet our mushrooming data needs? Will a private cloud enable us to better leverage our technology investments among our different business units?

Good questions—but all too often, the discussion ends there. And even more important, certain crucial stakeholders are missing from the dialogue.

Yes, cloud is absolutely about facilitating better IT. But, as leading companies are discovering, it can also be much more than that. Those companies are taking a broader view: cloud as a new engine for business growth.

The cloud you don’t know

Cloud computing can play a strategic role for all companies, not just those in the technology or services industries. The vision is simple: By doing away with typical IT constraints—limited resources, consuming maintenance, and incompatible systems—cloud computing frees the business to pursue growth and innovation.

In essence, cloud lets you say yes more often. Imagine that you could green-light as many as a half dozen new research and development (R&D) projects instead of betting on just one or two. With cloud’s on-demand approach, it’s possible to quickly—and at a fraction of the current cost—equip teams with the resources they need. Rather than weeks or months, the supporting infrastructure for a project could be set up in just a few days. That kind of rapid start-up means companies could try many new ideas, quickly rejecting ones that weren’t viable in favor of ones that are most promising.

Cloud computing finally brings businesses closer to a world in which technology can truly be an enabler, not an obstacle.

Having more options is a compelling proposition. That was the case for Zagat Survey, the company behind the eponymous dining, travel, and leisure guides and website. When Zagat Survey began rebuilding the Web platform for its Zagat.com subscription service—one of its most strategic and fastest-growing businesses—it determined that using Amazon Elastic Compute Cloud (Amazon EC2) infrastructure was a better choice than managing the hardware in-house. With Amazon EC2, Zagat could easily test different hardware configurations to determine the best setup for the core service.

Companies not held back by IT are free to capitalize on opportunities as they arise. For example, a company unexpectedly overwhelmed by a consumer response to a pop-culture phenomenon might want to quickly launch a Web promotion. Instead of scrambling to set up the required infrastructure, this short-term need could be met quickly with cloud-based resources.

Or consider another way cloud can smooth out IT roadblocks to top-line growth. In, say, a merger or acquisition, system integration is often a complex and synergy-draining proposition.

But think about how much more efficiently the two entities’ data and business processes could be merged if supporting systems resided in the cloud instead of being managed internally.

Admittedly, it sounds too good to be true—as if you could merely snap your fingers and the supporting infrastructure needed for any initiative would magically appear. Of course, that will never quite happen. Cloud computing is no magic bullet. In fact, as a disruptive force, it raises a number of issues that companies need to carefully consider: strategy, finance, risk and governance, data security and privacy, technology, and its impact on other business functions.

Yet cloud computing finally brings businesses closer to a world in which technology can truly be an enabler, not an obstacle. To deliver on that promise, companies find they need to formulate a comprehensive business strategy for cloud computing. Created by the executive team—not solely the CIO—such a strategy takes into account how cloud can best support the business, and it considers the changes the strategy would cause to the ways people work and make decisions.


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