Due to its reputation as a game-changing technology set, Cloud Computing is a hot topic when discussing emerging technology trends. Cloud Computing is defined by the National Institute of Standards and Technology (NIST) “as a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.”
IT optimization has largely been the reason for the early adoption of Cloud Computing in “Global 2000” enterprises, with the early drivers being cost savings and faster infrastructure provisioning. A December 2009 Forrester Report indicated that over 70% of IT budget is spent on maintaining current IT infrastructure rather than adding new capabilities. Because of this, organizations are seeking to adopt a Cloud Computing model for their enterprise applications in order to better utilize the infrastructure investments.
Several such organizations currently have data center consolidation and virtualization initiatives underway and look to Cloud Computing as a natural progression of those initiatives. Enterprise private cloud solutions add capabilities such as self-service, automation and charge back over the virtualized infrastructure and thus make infrastructure provisioning quicker, helping to improve the over-all utilizations. Additionally, some of these organizations have been beginning to try public cloud solutions as a new infrastructure sourcing option.
IT spending of “Global 2000” enterprises makes up less than 5% of their revenues, thus optimizing IT isn’t going to impact their top or bottom line. In the current economic state, IT optimization is a good reason for these large enterprises to begin looking at Cloud Computing. So what is the true “disruptive” potential of Cloud Computing? It lies in the way it is going to aid these large enterprises in reinventing themselves and their business models in order to rise to the challenge of an evolving business landscape.
Social Networking Clouds and e-Commerce
Worldwide e-Commerce transactions will be worth over $16 trillion by 2013, and by 2012 over 50% of all adult Internet users in the U.S. will be using social networks. Currently, 49% of web users make a purchase based on a recommendation gleaned from social media. This increased adoption of social media makes it easier for consumers to remain connected and get options on products and services. Basically, the consumer has already made up their mind about a produce before even getting to the website or store. This is causing major changes in consumer marketing and the B2C business models. The relationship used to be between the enterprise and the consumer, but it is now changed to a deeper relationship that encompasses the consumer’s community.
Large enterprises can’t afford to have “websites” or “brick-and-mortar stores” any longer if they want to remain relevant and ensure customer loyalty—they need to provide online cloud hosted platforms that engage the consumers constantly along with their social community. That way, they incorporate the enterprise business services in their day-to-day life. When the Gen Y consumers reach the market, for example, “community driven” social commerce just may replace traditional “website based” e-commerce. Enterprises need to begin building such next-generation industry specific service platforms for the domain they operate it in anticipation of this.
One half of the world population—roughly 3.3 billion—have active mobile devices, and the increased use of these hand held devices is altering the expectations of consumers when it comes to the availability of services. Consumers expect that the products and services should be available to them whenever they need the service, wherever they are, through innovative applications, the kinds of applications that can be better delivered through the cloud model.
The number of smart devices is expected to reach one trillion by 2011, due to increasing adoption of technologies like wireless sensors, wearable computing, RFIDs and more. This will lead to significant changes in the way consumers use technology, as future consumers will be used to (and be expecting) more intelligent products and services such as intelligent buildings that conserve energy and intelligent transportation systems that can make decisions based on real-time traffic information. An entirely new set of innovative products and services based on such pervasive computing will need to be created for the future generation.
Service providers will look to increase customer loyalty by providing more offerings, better services and maintaining deeper relationships as products and services become commoditized. Several industry leaders are increasingly adopting open innovation models, there by creating business clouds supported by an ecosystem of partners, in order to increase the portfolio of offerings and innovate faster. A new generation of applications must be created as Cloud Computing becomes more pervasive with the increased adoption of smart devices.
To gain a competitive edge, reduce CAPEX on infrastructure and maintenance, and take advantage of powerful SaaS technologies offered in the Cloud, Companies need to build their next generation business cloud platforms in order to better manage the scale of information.
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