This entry was originally posted on the CloudSource blog on December 2011
Often I receive questions about why a larger enterprise, having its own IT department, should seriously look at cloud as a way to complement and transform its operations. So, I decided to write a blog on the subject, but it appeared quickly that I would go beyond the usual size of a blog entry. So, I decided to make it a multi-part blog, not yet knowing how many parts there will be. So, keep checking to see if the next part is published.
It’s a misnomer to point out the world is changing. It’s changing in many different aspects, which I usually group into five arbitrary themes. These are demographics, globalization, social networks, mobility and sustainability. Let’s look at each of those in more details.
If my information is correct, for the first time worldwide, more people live in cities than in the countryside. City inhabitants have different needs and rely on merchants and supply chains for the provision of their goods. The middleclass is rising, whether this is a result of urbanization or vice versa, remains to be seen. But 300 million Chinese and hundreds of millions of Asians, Latin Americans and Africans should be joining the middleclass by 2020 and bringing with them a sizable buying power. This provides enterprises with a unique opportunity to increase their business if they can deliver the goods expected by those new customers in a timely manner.
The other big demographic trend is related to health and age. People have become more health conscious worldwide. Look at the healthy food trends and the increase in consumption of nutritional supplements. The North American and European population is growing older, bringing with it many new opportunities for products and services alike. There is actually a specific effect that will have a direct implication to the IT department, and that is what I call the “papy-boom.” I’ll address that one in the next blog post.
The world is shrinking by the day. Information travels across the globe in matter of milliseconds. The world is becoming a village. Leading brands have become global. Who in the world does not know Coca-Cola, Nike, The Gap and many others? But competition is also becoming global, making it more difficult to spot. New technologies, which appear in the market at an increasing pace, lead to new types of innovation. Let me give you an example. Today, the largest telco in the world by number of phone calls is Skype. No telco saw them appearing on the horizon. Actually a number of them are still in denial mode. But Skype is competition. Every call I place on Skype, I do not place with my local telco provider. Partners, competition, suppliers, they all have become global, and so companies increasingly have to manage a global environment to run their business. That leaves them the choice to either become global themselves or to team up with partners that can handle specific geographies. This global nature forces enterprises to react more quickly and imposes on them the need of a global data gathering and analysis capability to address the needs of this global market.
For a number of CIO’s, social media is still an unknown. They see it as an infantile way for youngsters to communicate and share information. Actually, it has become the new “agora” as the ancient Greeks would call it. The market square where information is exchanged, decisions are made and democracy is performed. In the old days, if you had a bad experience with a product or service, you would moan about it at the bar, the café or the pub, depending on where in the world you were. Today you do that on Twitter, Facebook or in a forum. So, these tools provide companies interested in taking the time to analyze what is being said, invaluable information about their products, their brand and the expectations of their customers. Why do not more companies benefit from such analysis? Because analysis is not easy as most information is unstructured. New technologies, such as the ones announced by HP a while ago, provide the tools to take full advantage of what is being said. Understanding it, taking the information into account when improving a product or service, when creating the next product/service, pays for itself. Actually companies such as Fiat Brazil have taken full advantage of social media in the design of their new concept car, the Fiat Mio, transforming the way they are perceived by their customers.
We all use mobile phones and an increasing amount of us have moved to smart phones. Whether they are iOS, Android, RIM or Windows based they become an important tool in the hand of the road warrior many of us are. We want access to information from anywhere, any time and any way. We increasingly rely on the IT department to provide us such access on all the devices we take with us on the road. And those keep increasing. Who does not carry his mobile phone, tablet and notebook with him these days?
You know the headache for the CIO these days? It’s how to ensure security and compliance across all these devices.
I know, some are still in denial, and I will not argue here about global warming. But there is a trend towards greener energies. And that trend is worldwide. It provides tremendous opportunities to deliver new technologies and services. The world is increasingly moving from the centralized generation of energy to a decentralized model, pushing to the creation of small generators (solar, wind, biomass, co-generation etc.) IT is affected in multiple ways. On the one hand, reducing energy consumption of the IT infrastructure reduces cost. On the other, using IT to deliver greener products and services allows the enterprise to go after new opportunities.
One interesting trend is that sustainability pushes socially responsible enterprises to review their supply chains and increase local sourcing, which reverts some of the globalization trends. This demonstrates the fluidity of the situation, and the need for constant review of opportunities and operations.
What is the business looking for?
With the above five megatrends in mind, the business is looking to become more responsive and more agile. This implies a better understanding of the marketplace, competition, partners, suppliers, customers etc. Having the appropriate information at their fingertips and being able to use powerful analytics tools across structured and unstructured data is critical to allow fast decision making. They expect IT to provide that. At the same time they press for cost reduction. Particularly companies that have not yet internalized the fact IT can be a vehicle for growth, urge the CIO to do more with less. And last but not least, in the current financial climate, where money is expensive, freeing capital is of the essence. Free cash flow is the next KPI CFO’s and CEO’s are measured with.
What does this mean for IT?
IT needs to be able to respond faster and address variable demands from the business. In the first place it requires an increasingly flexible and agile infrastructure, used to deliver the services needed by the business. A cloud platform managed and operated by the IT department can deliver the services that are “core” for the business, while the “context” ones may be sourced from public clouds. It’s the role of IT to manage the integration across those platforms while maintaining the legacy environments operational.
Secondly, the business requires easy access to the appropriate information provided by internal systems or available on the internet. Establishing a set of analytics tools to slice and dice the data will allow the business teams to make their decisions quickly.
And obviously, this needs to be done at lower cost and with as little capex as possible. Cloud and its consumption models lend itself ideally to those challenges. In the next parts of this blog, we will look at that in more detail.
Did I miss a megatrend? Let me know what you think about these and how they will impact IT.