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Author's profile photo Sven Denecken

Finding the Cloud’s Silver Lining – Thinking beyond cost reduction towards driving innovation: SAPCloud @ SAPPHIRE NOW

Cloud computing is today still a hotly debated topic. Just recently, Apple co-founder Steve Wozniak expressed his concern about the “horrendous” problems cloud computing could cause as companies hand over control of their data to vendors. However, the facts speak for themselves – several studies show high adoption rates. The cloud has become reality. According to the Gartner hype cycle, the overall cloud computing industry is past its peak of inflated expectations, with companies heading towards a better, realistic understanding of the technology’s benefits. Indeed, businesses – whether large enterprises or SMEs – are seeing quantifiable benefits such as capital and operational savings to some cloud technologies. But as cloud-based projects are gaining maturity, businesses need to look beyond simple cost reduction and start seeing it as an enabler of growth.

To remain profitable and competitive in today’s fast-paced, volatile business environment, companies must manage their most important assets: They have to engage closely with their customers through all channels, with social media certainly becoming the primary one. Employees must be engaged and empowered to support the company’s objectives. Financial decisions must be taken within business context, their impact transparent to everyone. And businesses must be able to tap into networks of suppliers to improve efficiency, reach, and access.

To achieve all of this, companies are increasingly turning to the cloud to extend and improve the use of their existing business applications.

The Promise of Cloud

In a recent TNS Infratest online survey conducted on behalf of SAP in the key markets USA, Germany, UK and Brazil, 59 % of large enterprises indicate that cloud solutions are already used in their companies, while 21 % of respondents are planning to implement cloud solutions. 79 % of the respondents consider cloud computing to be important for their business success.

A critical factor that will continue to impact adoption is security. With an on-premise solution, security depends on two factors: the security of the application itself and how securely the company chooses to operate that application. That is, the degree of resources and money that the enterprise spends on security measures. With a cloud solution, security on the one hand also depends on the security of the cloud application itself and then on the question of how securely the cloud service provider operates that application. With cloud solutions, the burden of responsibility for security shifts from the end-user company to the cloud service provider. Since most companies however often don’t have the internal resources or funds to provide the same best-in-class security support as a cloud vendor, cloud solutions are frequently more secure than on-premise solutions. By choosing a trusted cloud vendor that guarantees the latest in security training and technologies, companies can free up resources to focus on their core tasks such as increasing customer satisfaction.

Despite some minor concerns, the promise of cloud computing remains compelling: A recent survey reveals that cloud buyers say one of the top benefits they anticipate the most is a more flexible infrastructure capacity, as well as reduced time for provisioning. Also, they like cloud as an alternative to acquiring in-house skills on their own to manage new applications. Ultimately, these advantages result in streamlining and cost savings. Additionally, cloud computing can provide the ability to do more with less, take advantage of new business opportunities in a more nimble way without being disrupted or hindered by the need for IT to play catch-up. It also encourages more fluid collaboration and decision-making.

Getting the Best of Both Worlds with the Hybrid Cloud

Analysts predict future growth will come from a broad set of customers across all industries in companies of all sizes and that these different customer segments will adopt at different levels and in different forms.

Not surprisingly then, there is no single way of adopting the cloud. For many, the first step into the cloud seems to lead via hybrid clouds. In this approach, a company provides and manages some IT resources in-house (on-premise) but uses cloud-based services for others. While the cloud is excellent for some areas of a business, on-premise continues to be the norm for others. According to a survey by Saugatuck Technology, through 2016 the hybrid cloud will become the enterprise platform of choice – a transitional platform, however, en route to a future dominated by public and private clouds.

A hybrid solution model allows customers to adopt the cloud in an incremental way, helping them to protect and leverage existing investments as well as support change without disruption, providing companies with the best of both worlds.

To support companies’ transition to the cloud via the hybrid route vendors must:

  • offer standard integration with existing on-premise solutions to support customers’ hybrid landscapes
  • design and deliver software solutions as a loosely coupled suite. This allows companies to adopt at their own pace and in their own way to meet their specific business needs. Solutions need to be easy to understand and, crucially, fun to use which helps drive adoption within a company. When used together these solutions should offer the value proposition of a suite.

Let me know your thoughts, Sven Denecken (@SDenecken)

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