Cloud Breaks Out of Infrastructure Groups and Into Strategic Imperatives

This post is part of a series – 14 Business and Technology Trends to Look for in 2014

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A large number of companies are weaving cloud into everything they do and starting to unleash the potential of what this flexibility affords.

The cloud is not new, but a divide is forming between those that understand how to capitalize on its potential and those that don’t. In 2013, the majority of companies self-report that they are in the cloud, but few have moved beyond virtualization of applications while maintaining their non-cloud status-quo business processes. In many organizations, cloud is often locked in procurement or infrastructure groups that have a narrow view of its potential. To these groups, it is more important to save money and gain operating flexibility through virtualization of servers or software procurement.

Yes, but there is much more. Those that have tapped into the cloud’s potential are transforming their business at a strategic level. In 2014, expect to see an increasing number of companies move cloud into their strategic technology and product roadmaps.

Successfully integrating cloud-based opportunities into fundamental processes starts with an understanding of the “as a service” nature of cloud at a strategic level. Virtualization of servers and storage were the first infrastructure-related examples of cloud (known as Infrastructure as a Service, or IaaS). Software as a Service (SaaS), where applications are provided as a monthly subscription service instead of a traditional software license (Salesforce is an example), was next to become popular. Then came an explosion of other “as a service” offerings for desktops (DaaS), identity management (IDaaS), development platforms (PaaS), Back-Office (BaaS), etc. All have a few common connections in order to be considered cloud:

  1. Elasticity – whatever the resources used, they should be virtually limitless without new contracts, upgrades, migrations to new servers, etc.
  2. Connectivity – every aspect should have a service-enabled API, allowing the combination of new composite services.
  3. Affordability – the combination of resources means that each of us can rent a section of the cloud for a fraction of what we used to consider affordable.

Infrastructure groups have used cloud to add 9s to uptime and lessen disaster recovery costs; procurement groups have used cloud to move budgets increasingly into operational expenditures and lower capital spend. However, a large number of start-ups, as well as some leading companies, are weaving cloud into everything they do and starting to unleash the potential of what this flexibility affords. A few examples:

  • Netflix used a cloud-based architecture to very quickly put streaming video in the hands of millions, increasing the pressure to treat movies like any other premium content on the Internet instead of a standalone product. Blockbuster could not adapt to this change in their core product in time. 
  • MasterCard created its Simplify offering that makes it simple to accept payments online through the use of APIs.
  • Logistics companies are renting out their multi-million dollar routing algorithms on a per-route basis through API calls to small LTL carriers.
  • Enterprise Service Bus software companies are now using APIs in the cloud to integrate instead of using ESBs in network.

In 2014, expect to see more examples of companies expanding cloud outside of existing infrastructures, driven largely by the following reasons:

The economy. 2014 is poised to be a major pivot point in the macro economic outlook. As interest rates rise and cash is more difficult to procure, the CFO will be looking for ways to reduce capital spending again. This will drive more companies into the cloud, and with it breed familiarity with its potential.

Popularization of big data and mobility. Big data and mobility are really becoming the killer apps of the cloud. As corporate leadership begins to understand the ease and low relative cost to capture sensor or mobile device information, the funding of large analytics projects will take off in 2014, and with it cloud storage and analytics tools. Business intelligence and application development teams will also start to gain cloud experience and begin incorporating use in their applications.

Privacy, Risk and Identity. Some of the largest objections in the past are also the biggest 2014 pivots. More regulated industries will enter the cloud space as providers come out with compelling HIPAA compliant clouds, Identity as a Service begins to take off and more affordable cloud-based security systems give us the protection we need.

As the potential to use technology as a standards-based service opens up, a growing amount of companies will utilize strategic technology projects. Whether that be analyzing aggregated healthcare data to look for trends, offering internal pricing engines as a service or developing the next Netflix, every industry will start to take better advantage of the low barriers to entry that cloud provides. In 2014, expect a larger number of companies to unleash the potential outside of operational groups and into strategic imperatives using the cloud.

Paul Holway_edited-3Paul Holway is the Technology Leader in Centric’s St. Louis office. He is an engineer, technology consultant, lover of quantum physics, avid history reader, amateur investor and father with a passion for business enablement through the use of technology. Views expressed are entirely his own. Contact Paul to learn more

 

Other Business and Technology Trends of 2014:

  1. Beginnings of a Gigantic Innovation Cycle
  2. IT Shops Will Leverage Their Knowledge of Legos® to Build Enterprise Systems
  3. The Growth of DIY Healthcare
  4. Data is the New Currency – Mining for Gold in the Internet of Things 
  5. The Emergence of the Professional DIY Data Scientist 
  6. Marketing and IT Sitting in the Tree
  7. Financial Companies Prepare to Advise Multi-Generational Homes
  8. The Re-emerging Importance of Tech Careers
  9. Responsive Web Design Falls Victim to the Hype Cycle 
  10. Data Scientist Sightings Will (Mostly) Be Proven a Hoax
  11. Non-techies Grasp the Cloud
  12. Info Synthesis and Collaboration Create a Recipe for 2014 Breakthroughs
  13. Sensors Invade – Big Data Goes Mainstream