There has been a rapid acceleration in the adoption of cloud over the last few years, highlighted mostly by the growth of XaaS services and the decline in traditional IT spending.
A recent report by Forrester forecasts a 6.2 per cent market growth and more than 20 per cent growth in SaaS applications per year. Digital native companies are at the forefront of this growth, as they need to constantly innovate and optimise capital allocation towards growing the top line turnover. Meanwhile, larger enterprises are perhaps more interested in using the cloud to optimise their business with requirements around security, process management and privacy. In recent years, there has been increased collaboration between large enterprises and the cloud providers with enterprises learning how to transform their IT environment into a cloud model and the cloud providers building products that meet the their advanced requirements. Now its 2014, and we will start to see many large enterprises adopt the cloud as a more efficient business model.
In this article, we will analyse the ways in which cloud can drive top line revenue and innovation and optimise a range of businesses with improvements in speed to market, cost and quality of service. We will also explore how taking a centralised view of services and infrastructure can be used to track and control services and dispel shadow IT, bringing about economies of scale and improved speed to market.
Speed of innovation
In a traditional process-driven world, lengthy activities, such as gaining approval, issuing a PO, engaging in a contract signing hustle, and working with a number of vendors all takes time, and it could take several weeks or months for a new idea to even be tested. This increases company risk, management overhead and ultimately grinds innovation to a near standstill. As more parts of the enterprise are placed under pressure to drive revenue and innovate, many IT departments are now asking for cloud and virtualisation solutions to facilitate this. To speed up development and innovation, they will quite often bypass lengthy PO requests, instead procuring their own clouds rather than channelling requests through an IT manager. Obviously, this use of shadow IT causes a number of issues for internal compliance and IT departments as they battle against the flagrant disregard for existing security policies.
However, as with scalability, cloud has the capacity and ability to increase the speed of innovation as it enables development environments to be both created and abandoned with equal simplicity, it can assist the evolution of an idea into a prototype in the same day. Advances in cloud technology and the emergence of enterprise ready clouds in particular, now offer ways for the CIO to equip business units with scalable solutions that meet their demands without compromising control over corporate policies.
One misconception about the cloud is that the CTO and IT organisation can lose control of content and security. This is no longer accurate because, as is the case with private clouds, an IT department can manage their own VM farm and set up the right level of security, billing and approval. This affords organisations the speed and flexibility of cloud without sacrificing security and control.
Scalability to meet demand
Cloud infrastructure adds both speed and flexibility into the enterprise. Traditionally, if a technology company signed up a new client, it could take weeks to get infrastructure up and running and this would naturally eat into profits. Thanks to the speed and flexibility of cloud, now a customer can deploy a complex global infrastructure in a matter of hours.
Struq is one company that was able to optimise its business with cloud. The company specialises in monitoring user behaviour on websites and tailoring adverts accordingly to generate more click-through traffic for its customers. Given that it is dealing with large amounts of data, it benefits from the scalability of SoftLayer's global cloud infrastructure, which provisions physical servers within hours and virtual instances within minutes of a request. This is a huge improvement on the length of time (usually days or weeks) it would previously take other providers with different technologies.
Despite being able to accurately predict the volume of traffic for a given customer campaign, the company may acquire a new customer or launch a new campaign instantaneously, so the ability to provision new infrastructure as quickly as the idea evolves is necessary. By handling variable traffic and seasonality in the business cycle more easily, Struq now optimises its business by scaling up or down in a cost-effective manner to meet the demands of its customers more efficiently.
Financial benefits of cloud
Traditional IT generally exercises two main purchasing scenarios; overestimating IT demand, which results in wasted capital from over-purchasing infrastructure; or underestimating IT demand, resulting in a loss of revenue and/or credibility with both internal and external stakeholders.
Cloud, on the other hand, enables companies to deploy the right-sized infrastructure based on demands, eliminating wasted capital without sacrificing quality or customer satisfaction. Struq's business requires a high-speed solution to run their technology effectively. Advert display activity, for example, requires about two terabytes of raw event data every day. Therefore, it needs to ensure the hardware and network capacities can support large and variable volumes of transactional data.
A further cost benefit of cloud is the ability to optimise cash flow by moving from a CAPEX model to an OPEX or PAYG model. Unless considered core to the business, companies generally don't want to invest their limited capital in hardware, network and property. Switching to a more flexible billing model allows companies to use their capital to invest in other areas that will drive business value such as development and User experience. On a PAYG model in particular, there are no upfront contracts to sign, thereby avoiding costly and inefficient financial commitments and better equipping companies to forecast expenditure without sacrificing the scalability necessary to maintain a quality user experience.
Quality of service
So far, we've discussed the time and cost benefits of cloud; but how does cloud benefit the quality of a product or service?
For online game developers such as KUULUU, the quality of their cloud-hosted celebrity gaming business is paramount to healthy revenue. As with Struq, KUULUU also relies on a scalable cloud solution, enabling it to react quickly to fluctuations in gaming traffic and focus its financing into more useful business needs.
Working with US rock band Linkin Park, KUULUU recently released a game on Facebook using SoftLayer's cloud as its core infrastructure. Because the Linkin Park brand is global, it is important that this infrastructure is both flexible and robust enough to manage surges in traffic from multiple locations. The company is able to optimise its business with cloud because it can decide to move, add or remove architecture in multiple locations across the world at short notice.
To ensure the quality of its service, SoftLayer provides KUULUU with dedicated machines, creating a solid base for testing the environment before releasing a game and the cloud model enables the straightforward creation and removal of testing and development environments as well as protecting the company from downtimes, which can be fatal to an online game's success. To ensure this, the company is given full control over the environment, including critical tools such as load balancer and firewalls, ensuring a secure and perfectly optimised traffic delivery.
Looking to the future
Many have predicted 2014 to be the year cloud truly takes off, as it becomes increasingly recognised as a low risk business model to accelerate business growth and optimise capital investment.
A cloud implementation essentially improves the three most important motivators to an IT or project manager; time, cost and quality of service. The scalability, speed and reliability offered by cloud alongside improvements in security and enterprise ready architecture mean companies of all shapes and sizes can now effectively optimise their business with cloud.
Jonathan Wisler is the general manager of EMEA at SoftLayer.
Image credit: Flickr (akakumo)