The Ascendance Of Cloud In The Enterprise

Trent Weier

Cloud computing has long been common in the consumer space with companies like Apple driving rapid cloud user adoption around the globe. More recently it’s become a serious consideration in the enterprise; a Cloud Sherpas survey reported that 82% of C-level executives say a cloud strategy is essential to delivering business success. While some still see it as yet another marketing gimmick, for most, it is a powerful set of technologies that can deliver business advantage and genuine cost savings. In fact, where once small and midsized organizations were unable to compete due to the high cost of self-managed IT infrastructure, cloud holds enormous potential.

Why consider the cloud?

In working daily with business leaders in organizations both small and large, I see their underlying pressure to remove cost, and I’m often asked “help me do more for less.” Cloud is a very attractive proposition given the current economic environment. It offers the promise of accelerating time to value, driving higher adoption rates for new technologies, and even connecting value chains in real-time. Other immediate gains include significant operational cost savings, enhanced business agility and scalability, and the ability to move capital expenditure “capex” to operational expenditure “opex” in order to give a more stable and more predictable view of ongoing costs.

A more fundamental strategic advantage of moving to cloud is enabling an organization to focus on its core competencies by outsourcing IT and application services that can be better and more cost-effectively delivered by a specialist cloud provider. This reallocation of funds and business focus is a key factor in ensuring the appropriate “share of wallet” is attributed to business innovation and market-making activities. Additionally, removing these challenges faced by the internal IT function can strengthen the relationship between IT and the business, as IT now becomes the interface between the technology and the business delivering on its promises.

What cloud computing services are available?

With more and more services, collaboration, and applications moving to the cloud, organizations will need to evaluate exactly which delivery model will help them continue to innovate faster.

  • Software as a Service (SaaS) is a subscription-based software license delivery model in which the software is hosted on a remote server.
  • Platform as a Service (PaaS) provides an entire computing platform for customers to develop, run, and manage applications in the cloud.
  • Infrastructure as a Service (IaaS) hosts hardware, software, servers, storage, and other infrastructure components on behalf of its users without spending significant capital expense. This is possible through IaaS like SAP Hana Enterprise Cloud and Amazon Web Services.

Advantages of cloud over on-premises

The value to enterprise of cloud computing continues to evolve, with the reasons for moving to cloud just three years ago very different from those we see in 2016. The worldwide cloud computing market grew 28%, to $110B in revenue, in 2015. Synergy Research Group found that public IaaS/PaaS services attained the highest growth rate – 51% – followed by private & hybrid cloud infrastructure services, which grew at 45%.

A driving force behind this growth is an increasing perception by enterprise that the current cost of traditional enterprise software is disproportionate to the value it creates. Cloud analytics delivers 1.7 times the ROI than on-premises applications, reports Nucleus Research. This has in turn forced a higher degree of financial interrogation on perpetual on-premises software licenses, in light of emerging “pay as you go” cloud computing licensing models. According to Aberdeen Group research, cloud ERP delivers three times the profitability improvement of on-premise applications.

Corporate leadership wants to extract value directly from IT. Time, for many businesses, has created an environment of overly complex enterprise architectures that are costly and difficult to manage. With the value of solutions no longer determined by the available functionality, but by user experience and the way users interact with the solutions, simplicity is the key, In fact, Aberdeen Group said 59% of executives acknowledged a “lower TCO” as the main reason for moving applications to the cloud.

Making the move to cloud

As we have seen, the case for cloud is strong but there are a number of fundamental questions you need to consider in your journey:

  • What cloud adoption strategies should you consider?
  • How will you create a compelling cloud vision?
  • Which functions will you move to the cloud?
  • What use cases will drive the most impact?
  • How should you measure business value?
  • What skills and organizational structures are required to drive cloud innovation?
  • What does your roadmap look like?

Even if you’re not asking these questions of your business, your competitors are. Miss this opportunity, and it could mean your business. That’s a fact.

Learn more about SAP & the Cloud

Trent Weier

About Trent Weier

Trent brings 15 years of technology strategy, execution and digital value creation experience to SAP and its many customers. As a member of the industry value engineering team, Trent is focused on the chemicals, energy and natural resources sectors, showcasing to customers the business value of challenging traditional business models while creating disruption through industry leading innovation.