How the Cloud is Reshaping the Enterprise

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In terms of adopting cloud technologies, the time has come to take off the training wheels.

Cloud computing is no longer the mysterious and volatile IT discipline that threatened to upend IT departments. It’s a proven way of aligning IT with rapidly-shifting business goals and market conditions, according to SAP Cloud CMO Tim Minahan.

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“The experiment of the cloud is over,” said Minahan during a talk at today’s Cloud Business Summit in New York City. “Just like any technology, it always has an adoption curve.”

Now beyond the early steps in its evolution, such as establishing delivery models, driving IT efficiency and improving total cost of ownership (TCO), cloud computing is currently resonating with CIOs and CFOs in more profound, business-oriented ways.

Arguing that the mindset has changed among businesses technology leaders, CIOs and other high-level executives “are beginning to look at the cloud as a platform for innovation,” said Minahan. The conversation is increasingly turning to establishing new engagement models with customers, employees and partners, he added. “We’re moving from those systems of record to systems of engagement, absolutely,” he said.

Informed by SAP’s own move to the cloud, Minahan said that enterprises and prospective cloud software providers go through three phases during the transformation process.

Naturally, change begins with the technology, “where you re-architect to a cloud environment, make it an accessible and multi-tenant environment,” he said. The next step involves a financial transformation, in which old financial models based on periodic milestones give way to utility-like service models “that arguably better aligns your objectives with those of the customer.”

Finally, businesses must contend with the “operational and cultural challenge” of enabling cloud services.

Businesses are being rocked by customers and stakeholders that are “more informed than ever before,” he said. They are guiding the buying process and expect self-service capabilities.

Moreover, the market is unforgiving to cloud software and service providers that drag their feet and don’t deliver solutions that keep up with their customers’ needs. “There is no shelfware in the cloud,” said Minahan. “Either someone uses it or their no longer a customer.”

Cloud computing fundamentally changes how businesses operate, at practically every level. In fact, Minahan recommends that executives mulling a move to the cloud are better off not taking the leap if their only priorities are rooted in IT efficiency, lowering TCO or “to move from a CAPEX to an OPEX model.” If this is the case then they shouldn’t even consider it. The cloud now serves as a platform to improve engagement with employees and customers, create new business models and new insights, he said.

Amid these changes, the “I” in CIO is taking on a new meaning. In the cloud computing era, CIOs have the opportunity to shift their focus from IT systems and software to “being the chief innovation officer,” said Minahan. He recommended digging deep into a company’s business processes and the objectives. “Be experts on evaluating the cloud opportunities that are there,” he said.

Pedro Hernandez is a contributing editor at Datamation. Follow him on Twitter @ecoINSITE.

Photo courtesy of Shutterstock.