Big business: ignore the cloud or go the way of the dinosaur


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Uptake of cloud computing services is soaring

Last year, market share for Amazon Web Services (AWS) reached a five-year high, while worldwide revenue for AWS increased by 51% year-on-year. At the same time, revenue for Microsoft and Google’s cloud infrastructure services increased by 96% and 81% respectively.

For the most part, this growth is thanks to small and medium-sized businesses, as many large organisations still question the value they can get out of cloud services.

The benefits of cloud services for small organisations are clear. They get access to the latest technology and “corporate-grade” features on a flexible, subscription basis without significant capital outlays or the need to hire IT staff to manage and maintain their systems.

They can then focus on growing their business while keeping costs down and keeping cash for reinvestment without losing their competitive advantage against larger rivals with bigger technology budgets.

The general feeling among larger businesses on the other hand is that most cloud services are more suited to smaller organisations.

While many large organisations have adopted some cloud computing, they have not embraced it as much as smaller businesses. Their use of cloud services tends to be limited to non-critical applications and software-as-a-service or, to a lesser extent, platform-as-a-service offerings.

And few have yet explored the benefits of moving to a telecommunications-as-a-service model.

The reasons a lot of large organisations remain reluctant to move to the cloud are multiple and complex.

Insecurity about security

Generally though, it stems from a need for control, security, and compliance. Big businesses find it hard not to have control over their own systems, as they feel it gives them security and ensures they can comply with regulations.

Therefore they prefer private or hybrid cloud environments, because, as New Zealand tech writer Bill Bennett explains, the thought of public clouds “scares the pants of corporate boards”.

But as Bennett points out, the irony is that that public clouds are often far safer than internal IT. This is because cloud providers are able to devote a far greater number of experts to keep the data they are responsible for secure.

Sweating assets

Another reason large businesses shy away from platform-as-a-service or infrastructure-as-a-service is that they already have a lot of capital tied up in their technology systems.

They would still be trying to “sweat” these assets as much as possible to get the maximum return from their investment, as they try to keep the total cost of ownership down.

Of course, this could mean they are throwing good money after bad, since as their infrastructure and platforms age, they become more expensive to maintain.

In addition, big businesses tend to spend a lot more time analysing different supply options, issuing RFQs or RFPs. They then make purchasing decisions based on often outdated comparison tools such as total cost of ownership (TCO) of the technology they are buying.

However, this approach is intrinsically flawed when it comes to assessing the value of cloud services. Trying to measure the value of using a service is a lot harder than it is for a piece of hardware because it is impossible to apply the concept of ownership to a variable-cost service or utility. Therefore cloud services often don’t appear competitive compared to the asset-based options.

Slow moving dinosaurs

One of the greatest advantages of the cloud is that it enables services to be scaled up or down easily. However, some larger businesses don’t place a lot of importance on such flexibility, preferring stability and staying the course.

But this thinking can be counter-productive. As this article points out, the cloud frees up time and resources, allowing a company to shift its focus and strategy. This makes it easier for businesses to try out new ideas with less risk.

Large organisations in particular can benefit greatly from anything that allows them to be more nimble and respond to change or opportunities in their market faster.

With their existing size and scale, imagine what they could do if they could move faster?

Those who don’t, risk becoming slow moving dinosaurs – and going the same way.