by May 2, 2011 0 comments



Each decade, since the 1970s, has seen the evolution of IT into a whole new ‘avatar’. Mainframes (1970s), Rise of the Personal Computer (1980s), Client Server Architecture (1990s), are a few well known avatars. Meanwhile, what helped the adoption of these advances in IT was that each new avatar was preceded by a recessionary phase. Recessions brought about a greater need for businesses to improve efficiency levels and increase profitability. As a result, businesses and individual users rapidly adopted the modern avatars of IT with the objective of realizing their benefits. The double dip recession, in the early part of the 1980s, was almost immediately followed by the Rise of the Personal Computer (PC). The number of PCs installed grew from less than 1 million in 1980 to over 100 million by the end of the decade. Similarly, the recession due to debt, rising inflation, etc. in the first half of the 1990s was followed by the growth of the Client Server Architecture and the internet.

Snapshot
Applies to: CIOs
USP: A complete lowdown on the Cloud computing models and how they make economic sense for SMEs
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There were only a few thousand users of the internet at the start of the decade which ended with over 300 million users. Recently the world has gone through an economic downturn and there is an even stronger need for organizations to improve efficiencies by using collaborative solutions and real time information exchange. The Cloud could therefore be the next big thing with it gaining prominence during the recent credit crisis. The promise of the Cloud possibly lies in the flexibility, scalability and cost benefits made available through the ‘as-a-service’ paradigm.

Impact of IT evolution

The increasing use of IT brought with it overheads in the implementation and maintenance of computing systems. The amount of time and finances invested in managing IT, which has become complex over a period, has increased exponentially. This also resulted in the growth of IT companies and the outsourcing of IT management. The last century saw IT becoming a key business enabler. The dot com bust followed by the recession and financial crisis, saw an increasing demand from IT to do more with less. Technology and connectivity meanwhile evolved quickly with the introduction and adoption of technologies like XML, SOA, Web 2.0 and high speed internet connectivity. However, the impact of the computing evolution cannot be seen from the narrow lens of IT impacts only. IT has been one of the key disruptive technologies for the last many decades. It has changed how individuals and businesses function. The constant evolution of computing has helped businesses to automate and innovate providing them a competitive advantage in the global marketplace. A study of business history would reveal that the rapid rise of US-based organizations was due to their ability to quickly leverage IT for their business needs. On the other hand, organizations from other parts of the world were relatively slow in leveraging IT. However, over time IT has become a hygiene factor and large scale adoption has led to leveling of the playing field.




Nevertheless, with the coming of the Cloud, organizations are once again at the crossroad of technology. Early adoption of the Cloud can provide organizations with an opportunity to transform their business models and gain a competitive edge. While cost reduction is one of the benefits, several other benefits accrue to organizations. Organizations would be able to concentrate on their core competencies while leaving the task of running IT infrastructure to the Cloud service providers. Further, through the adoption of the Cloud, organizations are expected to become more nimble. The Cloud would help them quickly provision resources for business opportunities, which could otherwise be lost. The Cloud also enables organizations to build virtual and “open” business processes, enabling its various stakeholders including customers, business partners, suppliers, etc. to connect and do business more seamlessly.

While the impact of computing evolution on businesses is well chronicled, its impact on people and society has received much lesser coverage. In the early stages of the computing evolution, IT was mainly restricted to business use. However, the coming of PCs helped individuals automate and enhance their own lifestyle. From being able to store personal information, to automating their finances, IT has emerged as a ‘personal’ priority for individuals. The convergence of business and Internet, IT has, in fact, changed the lifestyle of people. Today it is impossible to imagine a life without a search engine, which delivers information at a click of a button! Moreover, through social networking, virtual communities have become an indispensible part of our lives. Facebook, Twitter, LinkedIn and other virtual platforms have enabled millions to connect, share and leverage technology to enhance their life experiences. These platforms are different shapes of the Cloud which enables rapid development and scalability. The coming together of technology, business needs and economic factors was the ‘perfect storm’ which led to the birth of the Cloud.

Drivers and challenges of the Cloud

There are several drivers and challenges of Cloud adoption today. The Cloud makes a compelling business case on both technical and commercial aspects. It seeks to replace the CAPEX component of the current IT infrastructure with a ‘Pay-as-you-go’ or OPEX model. This model needs to be carefully studied by organizations to ascertain its impact on the cash flow and profitability. Further, tax-related issues also need to be taken into account in order to arrive at the real implications of the adoption of the Cloud from a bottom line perspective. At the same time, organizations must take into account non-commercial benefits such as scalability and ease of implementation. These benefits of the Cloud help organizations quickly source computing resources On-Demand. While there is a strong case for the adoption of the Cloud, there are several challenges that need to be overcome. Security continues to be the key challenge for Cloud adoption. Organizations are yet to get comfortable with the idea that their data would be secure and would not be misused once ported onto the Cloud. Other major challenges are availability, regulatory and tax-related issues.

Changing IT ecosystem

The Cloud is the emergence of a new way of delivering computing services and as such it will impact nearly all facets of the IT ecosystem. Most importantly, IT solutions and services vendors will now need to adapt their infrastructure, people and processes.




People: The Chief Information Officers (CIOs) role has undergone a few changes since the beginning of the 21st century. With the advent of the Cloud, CIOs would now be expected to play the part of a Strategic Executive who would work towards bringing about business transformation through innovation in the way modern technology is adopted by the organization. The CIO would also be expected to aptly guide the leadership on the development and the execution of a Cloud strategy. The in-house IT team would need to focus more on using the Cloud to quickly meet the business needs rather than configuration and implementation of application on in-house hardware. A deeper understanding of the Cloud paradigm would indicate that business leaders have a major role in the adoption of the Cloud. This is primarily because implementing the Cloud is largely a strategic business decision rather than a purely technology decision. Business leaders have a much larger role to play in the adoption of Cloud services as it is a decision that would be driven by business needs and financial considerations.

Processes: The ability to quickly provision computing resources would enable organizations to leverage the Cloud to quickly meet business needs. Businesses could easily scale up and down, responding to market needs in a nimble manner. This could lead to the development of new business models and enable organizations to serve their clients more effectively. SaaS offerings would also have significant impact on business processes and would lead to large scale standardization.

Infrastructure: On-Premise / Co-located data centers could be substituted through the use of IaaS service model of the Cloud. Similarly, developing and hosting applications through the PaaS service model would be a cost-effective and time saving approach to application development. Delivery and the use of software over the internet based on the Cloud service model of SaaS makes it easier for users to source and manage software in a dynamic environment. This would necessitate use of a high capacity and reliable network connectivity to access the Cloud.

Impact of the Cloud on the industry

While the Cloud could benefit all sectors in one way or the other, the impact will be fairly emphatic in certain sectors. We believe that the Cloud would be most advantageous to the Government, Healthcare, and Education sectors, as the stakeholders include large sections of society.

Government: Governments can leverage the Cloud to bridge the communication divide, especially with those citizens that reside in remote parts of the country. The Cloud could also be used to increase interoperability between various government agencies, reduce redundancy, track/monitor the effectiveness of government schemes. Computing resources shared between Central and State governments would result in reducing costs by leveraging existing infrastructure. Transparency in Government can be achieved at a faster pace through the adoption of Cloud. The Cloud has the potential of transforming this sector, to benefit not only the Government itself, but also millions of people.

Healthcare: The Cloud is a paradigm shift in the use of Healthcare Information Technology (HIT), which enables stakeholders to focus more on their core competencies. In the case of the Healthcare industry it would provide for the seamless management and access to Electronic Health Records (EHRs) of patients. This would facilitate the provisioning of healthcare products and services to patients located in remote areas and those that have limited access to quality medical services. The use of the Cloud could possibly result in a change in business models, automation of processes, streamlining of workflows, and a consolidation of IT assets for Healthcare service providers. The creation of an integrated Healthcare ecosystem would help the providers of healthcare services make available the best of services to patients.




Education: Though the Education sector has seen significant transformation in the last decade, the challenges of high cost, limited reach and quality are still matters of grave concern. The Cloud might just prove to be the catalyst that will enable the sector overcome these barriers. The Education sector which has already embraced the use of the Cloud for email services could now consider moving critical applications such as Virtual Learning Environment (VLE), Learning Management Systems (LMS) and Student Information System (SIS) into the Cloud. The Cloud promises to make the Education system more collaborative and innovative with unique resources readily available to all students. This could change the way in which education is delivered and financed.

SMEs have been unable to take advantage of IT systems and solutions due to the high up front costs of sourcing and deploying the same. Consequently, they are known to face issues in the management of their supply chains, financials, inventories, customer relationships, and human resources. The Cloud reduces the cost burden of using IT for SMEs, especially because Cloud services provided access to on a usage based pricing model.

Other benefits like scalability, flexibility, and On-Demand service are highly attractive proposition to this user group. Thus the adoption of the Cloud, amongst the SMEs could be the highest in comparison to the rest of the business community.

Embracing the Cloud

Before venturing to embrace the Cloud, organizations would need to evaluate a number of concerns. These concerns can be grouped into two parts namely Business Factors and Technical Factors. To attain the maximum benefit from migration to the Cloud it is essential that organizations develop a Cloud Strategy, which takes into consideration commercial and technical concerns. This strategy should not only define how a move to the Cloud would be made but also identify various factors, which include the type / combination of Cloud service and deployment models to be used, how services of the Cloud would be governed, the process of identifying the requirement for, and deployment of new Cloud services, the level of interoperability between Cloud services, etc. In a gist, to get the maximum out of the Cloud, it is important that organizations should carefully plan their move taking into consideration commercial and technical concerns.

Conclusion

The Cloud is a game changing phase of Information technology that is not only impacting the way computing services are and will be delivered but also the way in which users will use IT. The Cloud promises several benefits in commercial and technical terms but the challenges too need to be considered when planning for Cloud adoption.

Businesses will also need to redefine their business models to better reflect changing trends in the use of IT i.e. Cloud services. As such, the roles of the leadership will also change to better reflect the realities of the Cloud.

Amongst industry sectors, the Government, Healthcare, and Education sectors would benefit the most as the Cloud provides them ith the socio-economic reach that they lacked for decades. Similarly, the Cloud promises to deliver affordable, reliable, and flexible computing solutions to SMEs, enabling them to compete more effectively with larger organizations.

A move to the Cloud, however, requires a well planned strategy as there are many business and technical constraints that need to be mitigated. Regulations are needed to clear doubts with regards to transfer of data across borders and the ownership / security of data stored on the Cloud.

On the whole, the IT solutions and services industry may significantly change in order to accommodate this new service offering. Businesses have and would continue to adopt the Cloud in order to stay ahead of the curve. The Cloud is not just a passing phenomenon but a reality that has just begun to realize its potential.

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