Assuming the growing technology trend continues for cloud computing and mobility, one can conclude an increasing level of change on how business is conducted between enterprises as well as how business is operated within an organization’s firewalls. Here are seven of the top changes and how they will impact enterprise and IT as end users as well as high-tech companies as the providers.
Trend #1
For small to medium businesses (SMBs) sales force automation, core financials, employee performance management and collaboration (email, chat, conferencing), the majority of business functions will be enabled through cloud-based services versus internally supported IT systems. One might envision as much as 80-90 percent of IT applications will be delivered through cloud services.
Impact. This will change the business of IT from a requirement-capture-design-build-support function to focus on how business functions use cloud-based services to maximize value and to integrate multiple cloud-based service platforms to enable end-to-end business use.
IT significance will increase through becoming more business aligned on “change initiatives” versus “run-the-business” functions. Special competencies to support advanced analytics through Big Data, mobile enablement and user/persona-based access and security will emerge. However, the size of the internal IT function will reduce as it will rely heavily on partners to execute and orchestrate services to support the business through cloud platforms.
Trend #2
For larger enterprises, cloud-based services will enable 30-40 percent of business functionality while still relying on homegrown IT delivered solutions for the remaining 70-60 percent of functionality. As this change occurs internal solutions will be supported through newer private/hybrid cloud platforms.
Impact. The internal IT function will develop the art of operating in the hybrid environment where, on one hand, it will challenge and influence ISVs (independent software vendors) and cloud service providers to incorporate specific functions/features to support unique requirements; on the other hand, internally with business functions, it will drive the mandate of simplification and standardization.
Unlike in the past where out-of-the-box functionality was customized due to free access to modify an on-premises solution, the new cloud-enabled environment will serve as a deterrent to drive only unique requirement support where competitive advantage is to be gained.
Trend #3
As a result of the intersection of mobility and cloud computing, larger enterprises are creating “enterprise app stores” where by function, role or location users have a choice to download a specific set of mobile applications. These mobile applications will be centrally certified but may be delivered straight from an ISV or built internally by IT on its private cloud platform.
Impact. In order for such vision to be realized, IT will need to not just establish a stronger practice around security and access, but it will also need to develop a new coordinated approach for building enterprise-use mobile applications targeting a specific user base, taking into account factors like age group, function, nature of work and application use. This also means that IT will need to influence ISVs to drive enhancement of their service catalog to include business use cases for mobile enablement.
Trend #4
From the ISV and cloud service providers’ perspective, the value-add will take a newer form beyond offering basic computing, storage capacity or application services like email to forms supporting advanced industry-specific or function-specific services. An example is targeted cloud-based services for insurance-specific incentive compensation modeling.
Impact. The focus on value-add will also lead to a potential convergence or strong joint go-to-market approach between ISVs and cloud service providers. An example: an ISV and a cloud service provider could jointly provide a geographic-specific service level agreement (SLA) for performance, availability and application use based on needs of the local geography. There might also emerge a joint risk-reward or revenue-sharing model where a cloud service provider and an ISV can overcome the finger-pointing game.
A recent example of a large online media company losing business due to its cloud service provider issues on Christmas Eve serves as a good learning point for future evolution of such models.
Trend #5
For cloud service provider and high-tech companies (OEMs), cloud computing will create new opportunities to mine large volumes of data based on usage patterns of their services by end customers to understand how customers leverage different types of services based on patterns of use, seasonality and specific business use cases to increase efficiency and use of resources.
For example: The retail sector demands higher performance of computing and storage during a holiday season, summer seasons drive increased usage of resources for the travel and hospitality industry, and the public sector increases use of resources during the calendar year-end.
Impact. Instead of platform and services being built only for peak use for a single segment/customer, they are now allocated for different business situations across multiple customer and customer segments. Qualitatively, peer usage of data will start to show how businesses of similar profiles behave, which will help high-tech companies understand how to create further repeatability and appeal for broader services.
Trend #6
For high-tech companies, trend #5 could also mean that the number of customers that they would be dealing with will reduce over time with the increasing level of cloud service provider layer between them and the ultimate end customer. On the flip side, ISVs that migrate to the Software-as-a-Service business model will become interesting targets for high-tech companies.
Impact. This will affect the sales team from the perspective of size, structure and skills to manage different types of relationships versus traditional enterprise sales teams. The sales team will need to build and deliver on skills that offer the best value proposition to the large enterprise customers not just to maintain a direct buying relationship but also influence them to leverage their technologies through certain cloud service providers that operate platforms based on their technologies.
Similar to the pharmaceutical industry, one needs to influence doctors and hospitals to buy medicines that ultimately would be prescribed to the patients. High-tech sales team members need to develop skills to ensure a cloud service provider buy the organization’s technologies while also influencing the ultimate end customer to leverage through a cloud service provider that has incorporated those technology components.
Trend #7
Finally, the other aspect that would play strongly is standardization versus customization. To operate a large-scale cloud platform, obviously a standards-based approach makes a lot of sense. However, as more customers get on-boarded as users of a cloud platform, needs for customization may emerge based on regions/industry/specific business use.
This will create a unique pressure on cloud service providers and ISVs to figure out an approach that will work in harmony to drive standardization while still accommodating unique customer requirements.
These are just a few changes and impacts from the perspective of enterprises adopting cloud versus high-tech companies aligning their offerings and operating model to become part of the cloud provider network. The cloud computing and mobility convergence trend creates significant opportunities to both parties, but forethought is required to make the most from these changes; otherwise, one could be at a significant business disadvantage.
Sanjay Shitole is a founding member and senior vice president at Trianz, a global management consulting and technology services firm. He leads the high-tech vertical and management consulting practice with a strong focus on helping high-tech clients deliver business impact in the areas of sales, channels, service and support operations through executing on business and technology initiatives. For more information, contact sanjay.shitole@trianz.com.