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Cloud computing feeds competitiveness among consumers and vendors

Move over, cost savings. Competitive advantage steals top slot for reasons why enterprises will adopt cloud services in 2013, shows IDC survey.

When evaluating cloud computing, corporations are thinking more strategically and less tactically, according to...

an IDC survey of U.K.-based cloud managers.  

"Just about all corporations are now searching for ways to leverage cloud computing," said Juergen Urbanski, vice president of cloud architectures at Deutsche Telekom. In fact, the survey found that three quarters of corporations that responded view the cloud as a way to solve key business issues.

But the reasons why companies opt for cloud services are changing.

Reducing IT costs is still a main driver, mentioned by about 40% of businesses. A few years ago, almost all respondents cited lower costs as the cloud's No. 1 benefit. However, the focus is moving away from simply cost.

In fact, two out of three IT managers believe the cloud gives them a competitive edge in their marketplaces. Deploying cloud services enables companies to streamline work processes and respond to competitive challenges more quickly. Additionally, once organizations gain needed agility, they can introduce new products and services faster. Because of these business benefits, most companies plan to introduce new cloud deployments during 2013, the IDC survey noted.

Cloud application choices: From low-profile to key business apps

The types of applications companies are moving to the cloud is also changing. Historically, the most popular apps to cloudsource were those for low-profile productivity tools, such as email, collaboration and office/productivity. But a significant shift is occurring. Companies are now migrating key business applications, such as enterprise resource planning (ERP), to the cloud. 

The willingness to work with new suppliers gives enterprises a better chance of finding innovative ways of solving their IT needs and getting the optimal solution.

Mette Ahorlu, IDC analyst

This change is occurring because vendors have cleared a few hurdles, IDC noted. Scale is no longer a barrier. In the past year, cloud suppliers have signed agreements with large, blue chip companies that serve well over 100,000 users.

Security has historically also been a bugaboo; however, IDC said the availability of more secure clouds is why 27% of companies decided to move ERP apps to the cloud. Corporations believe cloud vendors can deliver the necessary security levels and service-level agreements while meeting compliance requirements.

Looking beyond traditional IT vendors for the cloud-savvy

The movement to cloud computing is also changing the competitive landscape among vendors. When selecting a supplier, companies are more willing than ever to look beyond their normal service providers. More than half of respondents to the IDC survey stated they're ready to work with new vendors.

"The willingness to work with new suppliers gives enterprises a better chance of finding innovative ways of solving their IT needs and getting the optimal solution -- not only from a cost perspective but also from a business development perspective," said IDC analyst Mette Ahorlu.

The end result is that cloud computing has a dramatic effect on IT departments and IT vendors. Businesses view the cloud as a key strategic enabler and are moving important applications to the cloud. This paradigm shift has opened the door to fledgling vendors, whose success or failure will be marked by their products rather than by size or brand recognition.

Note: T-Systems, which is Deutsche Telekom’s corporate customer arm, commissioned the IDC survey.

Paul Korzeniowski is a freelance writer who specializes in cloud computing issues. He is based in Sudbury, Mass., and can be reached at paulkorzen@aol.com.

This was last published in December 2012

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While IT organizations might be thinking more strategically about the cloud than they were 18-24 months ago, in practice, we see that the strategy often still gets lost in the execution, which becomes too tactical in nature. We’ve seen far too many organizations break a cloud project into smaller pieces only to discover down the road that the pieces don’t support the original strategy. Having talked to several companies in this position who are now looking for a new solution to support their cloud (and business) goals, we recommend that IT consider the strategic endgame throughout the process. From RFPs to technology selection, it all must support application lifecycle acceleration and other strategic cloud goals. For one company that took this strategic approach: http://www.forrester.com/pimages/rws/reprints/document/83521/oid/1-L5XLC6

-- Shawn Douglass, CTO, ServiceMesh