How cloud can affect you
You may read this and think how great it all sounds and see how it important cloud is to the future of business. But if you’re on the opposite side, the experts would caution you to rethink your approach.
“At the end of the day, there is no choice,” Fatehi says. “If a business needs to succeed and compete for the future, they have to do this. They better enjoy it and do it with a positive attitude if they want to stay in business. The cost of doing business the old way is so costly that the business, if they don’t move to the new cloud computing model, they cannot compete. The cost of doing business would be so high, it would not be competitive.”
For example, if somebody’s IT cost is 30 percent of cost of goods sold versus another’s is 10 percent, that’s a 20 percent margin for profit — the one operating at 30 percent simply cannot compete with that.
And if you think that cloud isn’t really affecting you, Hitz says to think again.
“I’ve had the opportunity to ask a lot of CIOs, ‘How is cloud computing affecting your business? How much cloud computing are you using?’” he says. “The most common answer I get is, ‘It doesn’t affect our business at all yet, and we’re not using it at all yet.’ I will tell you that almost all those CIOs are wrong. They’re already using it but not thinking right.”
He say that CIOs need to think differently and compares it to the early days of the transition from the mainframe to the PC. In those days, if you asked a CIO if they had a PC strategy, many said, “Oh no, that’s not part of what we’re doing,” but half the employees had PCs.
“When data started leaking out the door because somebody lost their PC, who do you think the CEO went to beat up?” Hitz says. “The CIO, and the CIO said, ‘Well, PCs aren’t really IT.’ Those are the CIOs that are gone. I predict the exact same thing is going to happen to the CIOs who think that cloud computing isn’t happening in their business.
“… It’s affecting a lot more than people are realizing because they’re not defining it broadly enough. If they look at that broader definition, the stuff they’re already sort of doing or in denial about, that stuff is a pretty good road map to where the future is headed, just more.”
Bergeron couldn’t agree more. Ingram has seen its cloud services grow 88 percent year over year. She also says how we live our private lives should be a huge indicator of where business is heading.
“It’s going to radically change how business is done — cloud service is not a fad,” she says. “It’s here to stay. It’s already had an impact. Look at what impact it has on us as consumers. If you look at us as consumers, we embrace the cloud every single day. We have our e-mail on maybe Google or G-mail, which is in the cloud. We store and distribute and post pictures through Kodak Gallery or Snapfish, and that’s in a cloud. … It’s been pervasive in our lives as consumers, and it’s starting to do the same for business.”
Not only is it affecting how your business will run, but it’s also going to change the game for how new companies enter the market. Brian Jacobs is founder and general partner of Emergence Capital Partners, a Silicon Valley-based venture capital company.
“Silicon Valley is very much a startup culture — there’s always something starting up here, and it’s important to note that cloud computing also changes the economics of a startup,” Jacobs says. “A startup today doesn’t need as much capital to get going because of cloud computing. A developer, who could be an independent contractor, an engineer who’s working at a day job and at night has a new product he wants to develop — he can log in to a platform as a service like Engine Yard, and they can start developing their product without a single dollar of investment. They can work for free developing the product until they’re at the point they can introduce it to the market.”
As a result, the venture capital industry is much different than it was 20 years ago. In fact, Jacobs’ company started in 2003 with the idea that more and more technology would be delivered as a service as opposed to built by companies within their four walls.
“Cloud computing and software service has really hit technology like a giant wave and all of these business models are service providers — companies that are building technologies and not selling to their customers but operating it on behalf of their customers and charging their customers a monthly fee in exchange for that service,” he says. “That’s a different kind of venture capital and that’s the focus of Emergence Capital.”
Aside from all the ways that cloud computing will change business, it’s also changing how employees approach their jobs. While people can work from home in their pajamas, it’s often difficult, and in many cases, employees don’t have access to everything that they could if they were on their PC actually in the office. But cloud gives you everything from the convenience of your home, and you get to work in your pajamas on your couch, so employees tend to be willing to do a little more because they have the luxury of being in the comfort of their home.
To give you a real example, Hilton Hotels decided to close its physical reservation centers and send all of its reservationists home with these devices that connected them securely to the Hilton system, which saved Hilton big money on real estate costs and not having to call IT people as often.
“Cloud computing allowed Hilton to save money in so many ways that satisfaction increased, and they found that people working at home would take a lower pay,” McNaught says. “They saved on all sorts of fronts. Cloud computing has a transformative effect on all kinds of business.”
How to reach: NetApp, www.netapp.com; Engine Yard Inc., www.engineyard.com; Wyse Technology, www.wyse.com; Emergence Capital Partners, www.emergencecap.com; Ingram Micro Inc., (714) 566-1000 or www.ingrammicro.com; Corent Technology Inc., (949) 614-0634 or www.corenttech.com
