What does it mean to have a cloud mindset?
Over the years, we have heard many individuals with unique definitions of what “cloud” is and what it means to have a “cloud-mindset”. I’d like to debunk the rather abstract cloud world and explain it in less technical terms. Read on to learn more!
A large percentage of organizations today are looking to move their enterprise software solutions to the cloud. Why? There are as many reasons for organizations to become a cloud-based company as there are unique industries, locations, and fields of expertise. Let’s look at some of these reasons.
What does it mean to run in the cloud?
In the past, companies hosted their data servers at their facilities and hired staff to maintain these servers. This proved costly for non-value-added tasks, as discussed by Gartner in the following article about cost optimization. To be ready for the cloud means, you are ready to let another organization maintain your servers which contain your data and applications for you. Hence, the “cloud” means you are no longer hosting your servers in your facility; rather, you are leveraging the expertise of organizations that specializes in hosting and maintaining servers for you, thereby freeing up your time, money, and people for other value-added tasks that will be more profitable and aligned with your organizations’ values, aspirations, and ultimate mission.
Why is cloud the way to go?
Focus on your core competencies
Cloud allows you to focus on the fundamental operations of your organization while letting other technical experts maintain your servers for a fee. Customers need to focus on their expertise, creating competitive differentiation, increasing their market share, and thus profitability, and let go of non-value-added tasks like maintaining servers 365 days a year. Maintaining your own private infrastructure is costly and time-consuming; from the initial purchase of the servers to hiring the skilled staff, to performing ongoing maintenance and upgrades. These costs can be slashed drastically, by moving to a cloud-based service, where the cost is reduced to a recurring fee that includes the use of the hardware, the support of maintenance staff, and all ongoing upgrades and continued monitoring.
The latest and the greatest
To “run cloud” essentially means you are running the latest and greatest in technology because of the automated system upgrades to the newest version. Forbes provides more insight into this benefit. In the cloud, the intent is for you to keep the software at the most current version, keeping up with the software’s quarterly, bi-annually, or monthly upgrades & maintenance schedule without waiting years for innovations to become available in your applications. Whether you are on a public cloud, where the upgrades occur at set dates and everyone on the shared server is upgraded at the same time, or you are on a private cloud where you select your preferred upgrade dates, the intent is the same: you intend on staying on top of the BEST technology available to YOU!
The days of falling far behind on your software maintenance and upgrades are long gone which means that it’s less for you to worry about / less to go wrong / less to keep you awake at night. The intent NOW is for your enterprise software to operate like your iPhone or Android does automatic upgrades for your phone or enterprise-wide operating systems, based automatically on a pre-determined and pre-agreed upgrade schedule.
An everyday example of a cloud-mindset in the non-computing world is car leasing, as opposed to purchasing your car. You’re moving away from making a large payment upfront for an asset, to a recurring fee for the term of the lease; this is very similar to the server on the cloud concept. Additionally, with car leasing, many manufacturers are now offering servicing included in the lease, hence the “maintenance” is no longer your concern. Also, when the terms of the lease are over, you simply return the keys of the leased car and get a brand-new car with the latest and greatest in-car technology. See the resemblance?
Are you fit to standard?
This should be on the list of questions organizations ask each other before going into business with one another. Why? Because we know that organizations that leverage best practices, adopting standard as much as possible for non-differentiating functions and processes, leverage their enterprise software the way it was designed to operate; which means running with best business practices. When running with best business practices, the risk of a breakdown in a process is greatly reduced because you’re no longer relying on modifications of the enterprise software’s logic, which greatly increases the risk of process failure.
But doesn’t ‘fit to standard’ lose me my competitive advantage?
Many customers find that it’s the complete opposite – they run more efficiently and capture their ‘secret sauce’ in how they use their analytics and look to focusing on developing predictive skills and other emerging technologies.
Pre-configuration with a cherry on top?
It’s about speed and efficiency. Cloud software offers an easier and faster implementation because the intent of the cloud is not only to run standard but to also offer options that are pre-configured for the customer. The question is, how fast do you want to be live and running in your new enterprise software? If the answer is ASAP, then you’re looking to adopt the vanilla configuration which refers to using the software without modifying it specifically for your needs. However, there are some minimal setups usually available to personalize your software for your organization. Vanilla software doesn’t have to be flavorless! In Cloud computing, the vanilla software is anything but vanilla! In 2020, cloud software has become more flexible which allows you to choose all sorts of toppings to make your enterprise software run how you like it, all-the-while keeping the foundation as vanilla (or standard) as possible.
Cloud software goes well beyond just handling your operational needs. It can provide a full suite of capabilities that tie your operations to the experience of your customers, employees, suppliers, etc. using the best in software analytics, artificial intelligence, machine learning, and more, depending on your selected software provider.
Would You Like some OpEx or CapEx?
Why does it matter? It matters a lot because of the financial impact it has on the bottom line. OpEx means Operating expenses, whereas CapEx means Capital expense. These terms are explained further in this article. This consideration matters because technology is always changing, so investing a large sum of money upfront for a server (in other words, making a capital expenditure) is not the best use of your money in the forever-changing world of software. When an asset is changing at a rapid pace and requires skilled labor to maintain it, it is most often less costly to simply outsource to the experts. By outsourcing, you are making an operational expenditure by paying a recurring subscription fee for a service that you are receiving, month to month, rather than making a large up-front purchase for something that will depreciate very quickly.
What are those huge cloud benefits?
It comes down to Costs:
- The subscription model is where cost is spread equally across the term of the contract, therefore no huge upfront investment(s)
- Freedom means if you’re unsatisfied, you can walk away if it doesn’t meet your needs
- Focus and invest in your core competence(s) rather than wasting efforts and costs associated with infrastructure-related upkeep
- Your VIP status is important! All cloud customers become VIPs because, in a subscription model, the customer’s satisfaction is of the utmost importance for recurring contracts. Be a VIP!
COVID-19 impact on organizations
As the world changed over the past months due to the COVID-19 outbreak, organizations are now seeing the benefit of running in the cloud, keeping their employees at home. This is the way of the future, it’s just a matter of time before the world to be fully cloud-ready.
Want to know more? I’m sharing this link to an excellent article that provides additional insight, and as always, I’d love to chat and debate this topic with my readers!
About the author
Chantal Rivard is a business architect for SAP’s North America Executive Advisory and Architecture Unit