The advantages the cloud offers are only limited by the imagination of the organisations that understand its potential
To see cloud computing as a way to simplify your IT, offload some tech headaches (and perhaps save some cash into the bargain) is almost to miss its potential.
Yet this is how many organisations have historically understood the chief advantages of moving to the cloud.
More recently, cloud has often been incorporated in with the other digital buzzwords - big data, the internet of things, social media, mobile - which promise to improve the world of work and commerce.
The cloud is perhaps better seen as sitting at the centre of all of these other tools and technologies, which used in concert can drive transformational change.
“The cloud acts as the central nervous system in a new machine age”
The cloud acts as the central nervous system in a new machine age connecting data streams from enterprise systems, networks of sensors, mobile sales forces, customer social media feeds, supplier systems and other data sets.
Those organisations best able to manage and derive value from this mass of data can employ every one of these tools to drive innovation and insight.
The clouds of data
By enabling data to be shared instantly, the cloud creates the possibility of reshaping an organisation to be more responsive both internally but also with suppliers and partners.
“It enables better collaboration, allowing people to interact more seamlessly anywhere in the world from any device,” says Stuart Orr, a technology partner at EY, the professional services firm. “The second big opportunity is that it allows companies to fundamentally rethink their business models and how they are serving customers.
“Look at Rolls-Royce, which has embraced cloud, big data and machine learning to transform how their field force interacts and serves the aviation industry. They are selling the availability hours of an engine as a product not a service. We will see more of that shift in manufacturing.”
Other pioneers are demonstrating some of what is possible. Cloud-based services are helping retailers to better understand customers and drive sales. They are enabling airlines to ascertain which routes are the most profitable and helping manufacturers create new data-led products. Cloud computing is even giving the engineers and scientists at CERN the big data tools they need to optimise their giant particle accelerating machine in its quest to uncover the secrets of the universe.
“Cloud services can also simply save time and money, while driving internal process improvements”
Of course, cloud services can also simply save time and money, while driving internal process improvements. Paying for a cloud application essentially means you have in a single step done away with the need for the hardware and database along with the software and services needed to run them. You have also acquired the data centre and the physical and virtual security measures that you need to protect them all.
Maximising the benefits, cutting the risks
Cloud applications deliver more than double the return on investment than on-premises projects, according to a recent study by Nucleus Research. They are cheaper to support and implement too.
Companies embracing the cloud have been found to outperform their digitally slower rivals by accelerating the speed at which they can develop the business and execute projects. According to a Harvard Business Review report sponsored by Oracle, of 376 cloud adopters, 76 per cent launched new products faster, 62 per cent expanded into new market segments and 55 per cent rapidly expanded to new geographies.
To achieve these benefits requires understanding the changes an organisation will need to make if it is to benefit from the cloud. It can be a complex process in cases where a company is run via disparate enterprise systems, across different functions and in different markets and regions.
It also poses new risk and compliance challenges. Defining what works best in the cloud and then finding the right provider is key. As the costs of data breaches and data interruptions rise, the stakes become higher for businesses that do not manage to secure their cloud deployments or make them robust.
“The chief financial officer is in a good position to help lead digital transformation”
Properly shaping the business ahead of time for cloud migration includes preparing business processes and providing the resources and training needed to manage them.
The expanding role of the CFO
This is where the chief financial officer is in a good position to help lead digital transformation. CFOs are best qualified to grasp the risk management and regulatory implications and well-placed to challenge and test assumptions, says Mr Orr.
“The role of the CFO is to challenge and agitate on the business case to make sure the promised benefits are going to be delivered. Is there a fundamental business case that will support the transformation proposed and the move to the cloud?” he says.
With a reach across the organisation and a deep view of its business processes and reporting systems, the CFO also understands both the scale of the opportunity and the efficiencies to be gained. “Cloud is the embodiment of how it is possible to change your business model and serve clients better,” he adds.
In this series we will explore how business are already profiting from cloud transformations, how to shape an organization to be cloud ready and the measures to take to minimise risks as they make the transition.
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