In today’s increasingly global business climate, companies are expanding operations to many parts of the world in order to secure and optimize talent where it lives. This trend is leading to an explosion of geographically distributed virtual teams.
Global teams face distinct obstacles to collaborating and working together productively. Employees can’t simply walk down to the next meeting room to plan projects, discuss goals, or troubleshoot an IT problem if they are physically located in Palo Alto, Bangalore and Shanghai. Without critical communication skills and supportive tools, virtual teams will fail to collaborate effectively and end up being classified as “low performance” teams. Companies have turned to technology to improve collaborative efforts.
While traditional, pre-Internet technologies were cumbersome, expensive and complex, today’s cloud computing technologies, on-demand applications, ubiquitous broadband access, and mobile technologies have revolutionized the inter-connected workforce. Cloud solutions have proven convenient, powerful, and cost-effective in bringing diverse and distributed teams together.
This article excerpts findings from Sand Hill Group’s “Leaders in the Cloud” study to explore the market drivers of cloud computing and on-demand Software-as-a-Service technologies and better understand the benefits of deploying these technologies to solve the complex challenges of a globalized markets, virtual teams, and ever-changing business climate.
Market drivers: global business and the cloud collide
The trend towards virtual offices has been accelerating for the past several years as companies seek new ways to reduce costs of facilities, travel and other overhead expenses. Small and midsize companies are driving this trend as they propel the economic growth and recovery of the economy overall.
“It is a jarring contrast – today’s office is very likely to involve mobile technology in a car, or a VoIP call from a home office, but with the continued popularity of Dilbert comics and the TV hit “The Office,” the old world of cubicles, monitors, fax machines, and water coolers seems to be frozen in time. ” – Oliver Marks, Collaboration 2.0 blog on ZDNet
On the global economic front, emerging markets have recovered faster and emerged stronger from recent economic woes and they continue to drive new growth for established and new companies alike. As these markets mature, they bring more experienced and skilled people to the global workforce causing an increase in outsourcing. Organizations will not only outsource routine management and maintenance work but will also increasingly outsource strategic R&D and other high-value projects that required highly skilled workers.
As the world shrinks and global markets expand, businesses need new ways of connecting and collaborating with each other. Cloud computing promises to enable this future in ways that would have been unimaginable just a few years ago. With cloud-based applications today, companies conduct inexpensive high-definition video conferences with multiple people from around the globe. It’s therefore no exaggeration to call cloud computing the biggest IT transformational wave since the client-server and PC revolution.
Over the past 10 years, massively parallel computing and high-bandwidth Internet were commoditized to such a degree that computing resources and applications are today ubiquitously accessible in a variety of ways to everyone on the street – with near instantaneous scalability.
Experts have noted the similarities to the “old” days of centralized time-sharing computing. However, that era never boasted today’s level of democratization and commoditization of massive-scale computing resources and high-speed Internet access at any time in the history of computing.
A perfect storm is forming to push cloud computing forward, as evidenced by:
- Enabling technologies such as virtualization, open-source, massive-scale automation, and multi-tenancy have matured to the point of widespread adoption.
- Successful vendors and their offerings are filling the market with positive customer experiences.
- The global recession continues to wring funds from IT budgets and prompt CIOs to look for more ways to save money.
- Pioneering cloud companies such as Google, Amazon, Citrix, and Salesforce.com have taken massive scale and automation to unprecedented levels, accelerating the trend towards the industrialization of IT and the utility consumption model.
Many early adopter companies and their IT leaders — particularly in the small and medium enterprise space — have experienced some ground-breaking business value from their investment in cloud solutions. A 2010 Sand Hill Group study conducted 40 in-depth interviews with enterprise and vendor executives and surveyed 511 technology decision makers. The resulting ”Leaders in the Cloud” report describes cloud computing’s ability to increase ROI, decrease TCO, speed development, improve reliability and renovate the perception of IT in their companies. The result? A more agile, competitive business.
“… Realizing multi-fold decreases in cost compared to traditional solutions… Developing applications on cloud platforms in 15 minutes .… Creating applications over a weekend … Consolidating server investments from 13 machines to one … Reallocating IT budgets from 80 percent maintenance to 80 percent innovation …”
These are but a few of the real-world examples of bottom-line business benefits already being realized by cloud leaders. The study also found that a whopping 60 percent of the participants in the survey have implemented cloud solutions. A small portion of small and midsize enterprises (SMEs) surveyed have more than 80 percent of their businesses running in the cloud.
“Leaders in the Cloud” also found that SMEs are twice as likely to move their core business-critical services to the cloud as large enterprises (25 percent versus 12 percent). The following chart illustrates the differences between large and small companies. Also, note the very small percentage (four percent to six percent) of companies that have no plans for implementing cloud solutions.
“We have very little software running on in-house infrastructure today. We had 55 physical servers and I have a roadmap to get that down to six servers. I have got it down to the 20′s. Overall, I would say, we have 80 percent of our processes running in the cloud.” - CIO, SME Electrical Engineering company
Business challenges: the obstacles to distributed collaboration
There are three primary challenges associated with a workforce distributed around the world:
1. Poor meeting management and collaboration
2. Lost productivity due to downtime
3. Lack of timely access to information
Kamesh Pemmaraju heads cloud research at Sand Hill Group and helps companies — enterprises and technology vendors — accelerate their transition to the cloud. Follow him on Twitter: @kpemmaraju.