IDG Cloud Computing Survey: Security, Integration Challenge Growth You are using an outdated browser. Share Tweet Email More Author: Louis ColumbusI'm serving as Director, Global Cloud Product Management at Ingram Cloud.
Streamline processes – Whether your goal is to consolidate your geographically dispersed company or to gain more visibility into your business operations, the journey to enterprise cloud computing must always begin with defining the improvements you seek. Minimize investments – Typically provided on a pay-as-you-go basis, cloud computing delivers sophisticated ERP solutions with minimal investments.
Simplify implementations – Streamlined implementation is another strong point of cloud ERP. Operate as a single entity – In today’s global economy, the ERP solutions deployed in the cloud bring about one more benefit: the ability to implement the same system in all subsidiaries and interconnect various activities to form a single entity.
Since small companies can now benefit from the same computing power and speed as larger organizations, they can handle any operations, respond efficiently and quickly to changing market conditions, and execute processes with greater responsibility.
Although the importance of execution capability cannot be neglected, another essential factor relates to expert knowledge of what needs to be done when implementing an ERP system. Furthermore, an expert in enterprise cloud computing can help you define your business goals and strategic objectives, and narrow down your organization’s needs, while serving as a trusted advisor throughout the implementation process. In conclusion, to make the most of cloud computing, irrespective of the sector in which your organization operates, the first thing you need to do is to define your goals along with the improvements you seek. The most significant ones are identified as business performance resourcing, rapid go-to-market, business agility, and cost reduction. This chapter describes the main reasons for using cloud computing, and discusses the basic situations in which they may or may not apply.
The reasons can be classified under five topics: agility, productivity, QoS, cost, and the ability to take advantage of new business opportunities.
Business agility requires the ability to create new business processes and change existing ones.
As well as resources to support the new business processes themselves, IT resources are often needed to support development and testing of new software.
Public or private cloud can eliminate the delay by enabling development resources to be available on-demand. These reasons a€“ faster development and reduced up-front investment a€“ are amongst those most frequently given by companies considering cloud computing. Deployed services may experience increases and decreases in usage volumes that require corresponding increases and decreases in supporting IT resources to meet user demands in a cost-effective way. The Konsort-Prinz fictional example in this Guide illustrates many of the considerations involved.
In some cases, resource provisioning is possible using programmatic interfaces, so that resources can be scaled automatically under program control without human intervention.
Resource scaling, whether manual or automatic, enables service levels to be maintained and reduces cost. Note that use of public or private cloud may require new service management skills, and use of private cloud may require new service provision skills.
Use of cloud-based tools for email, instant messaging, voice communication, information sharing and development, event scheduling, and conferencing is becoming an increasingly common feature of business life. The ability of the cloud to provide shared logic in a business ecosystem was discussed under Cloud Ecosystems. As collaborative working between organizations becomes increasingly important, this capability of cloud computing will be expressed as a requirement increasingly often. These reasons include better usage information, better manageability, better quality of IT provision, better business continuity, and better carbon footprint. Some of them apply particularly to public cloud rather than private cloud, and may equally apply to other forms of outsourcing. There is no fundamental reason why service use cannot be measured without using cloud computing, but often it is not measured sufficiently. Good usage information provides enterprise stakeholders with an understanding of how the enterprise IT is operating, and enables effective forward planning, equitable sharing of resources, and more efficient resource use.
The ability to provision and configure resources through a web portal a€“ or even automatically a€“ means that consumers of cloud services have substantially better manageability than they would expect to have with a non-cloud system. For providers, the fact that resource provisioning and configuring is done automatically in response to user requests means that a heavy management burden is removed.
An enterprise can very easily be a€?locked ina€? to its internal IT department, and unable to drive up quality by using competition as a lever, as it would for external suppliers. By using public cloud services, you can reduce your dependence on internal IT, reduce the need to devote management attention and resource to your IT infrastructure, and use the competitive dynamics of the cloud marketplace to obtain an IT infrastructure that is effective and efficient. With public or private cloud, the ability of users to obtain and configure resources by self-service can be a significant quality improvement, regardless of the capability of the IT department. Businesses wish to continue their operations as normally as possible in the event of disaster, such as a fire or flood destroying a data center, but the cost of providing duplicate systems and recovery mechanisms in-house can be very high. This means that you must either incur significant costs that decrease your competitiveness, or risk failing when disaster strikes.
Cloud computing is considered as a means to ensuring business continuity in Case 7: Business Transaction Assurance and Continuity. Through server consolidation, optimal resource utilization and use of thin clients (see below), cloud computing can make more efficient use of resources. Case 23: Green Footprint in Cloud Computing in Use is an example of a situation where companies are looking to cloud computing to help them reduce their carbon footprints. Given the advantages of agility, productivity, and quality that cloud computing can have, you might expect it to be generally more expensive. Cloud computing can help you achieve cost reduction through server consolidation, thin clients, or community cost sharing.
Another reason related to cost is the ability, with public cloud, to replace capital expenditure (CAPEX) by operational expenditure (OPEX) in some cases.
The Federal Cloud Computing Strategy published in February 2011 [FEDSTRAT] describes how US Federal IT suffers from inefficient use of resources. In the case of private cloud, the enterprise installs the virtualization and resource allocation technology as part of the cloud solution, and then obtains cost savings through improved resource utilization.
You should consider whether the overall traffic load fluctuates widely, or is relatively constant. The fictional Sam Pan Engineering example in this Guide illustrates how cloud computing can reduce cost through server consolidation. Another option for cost reduction is to move processing from clients to cloud-based servers. Significant cost reductions can be obtained by replacing expensive client devices a€“ such as high-specification PCs with high processing power and large amounts of memory a€“ by cheaper, less powerful client devices that just provide a user interfaceA to server applications that do most of the processing.
Community cloudA provides a way for a community of enterprises to share costs of common resources. Community cloud is perhaps the deployment model that is least talked about, at least in a commercial environment. A company with a high cost of capital, or which would benefit from reducing its tax burden, is a candidate for shifting CAPEX to OPEX, but other aspects of the business context, such as availability of appropriate solutions, or security constraints on using shared services, may contradict that candidacy. Using an OPEX model can potentially release capital that would otherwise be used for initial investment and ownership of IT assets. The cost of capital from sources of equity and cost of debt point of view can change for private and public industries that have stock market and government sources of funding.
If the overall goal is to maximize the use of capital by best use of the debt and equity funds, in cloud computing the use of OPEX moves the funding towards optimizing capital investment leverage and risk management of those sources of funds.
Cloud computing can give an enterprise new business opportunities as a provider of cloud services or added services. A particular case of this might be where a company implements a private cloud, has spare capacity, and sells that capacity as public cloud.
Processing power, data storage, and computer operating system capabilities form the basis of most IaaS and PaaS services today.
Software applications providers may well find that they can increase the markets for their products by providing them in the form of SaaS. The provision of added services using cloud services is described under Providing Added Services.
As cloud computing grows in scope and popularity, it will increasingly become the favored way for enterprises to deliver their services.
MaaS began by providing security, policy management, authentication, disaster recovery, billing, provisioning, capacity planning, monitoring, and systems management. IaaS provisioned hardware including processing, storage and networks to the consumer, while providing the consumer the capability to deploy and run both operating systems and applications on the provisioned resources. The next step in this evolution is to move a business vertical or an entire business division into the cloud, in the form of Business-as-a-Service (BaaS). Using BaaS, vendors will not only host the software solution on their infrastructure on behalf of an organization but also take part in managing the business, to ensure goals are met.
BaaS isn’t without some drawbacks, though most of them are arguably because of a lack of maturity. Infographics Library Customers A survey exploring the relationship between consumers and brands found that only 1% of consumers are satisfied with their customer experience—which leaves an astounding 99% up for grabs.

The competitive landscape in all industries has changed, and companies must up their agility and innovation game in order to survive.
To do that, Gracely proposes a two-part grid for evaluating options. Internally focused processes should be considered in the context of how the cloud can reduce costs or improve flexibility by, for example, improving scalability or expanding user access. That will come in the context of what Gracely dubs “customer and community.” These applications enable community engagement, reduce customer friction or better measure community and customer interactions. Taking advantage of those opportunities means abstracting applications to better incorporate technology and competitive changes. A good management strategy for dealing disruption is the OODA (observe, orient, decide and act) loop, and here is where cloud arguably delivers the greatest value. About Latest Posts Paul GillinPaul Gillin is the Senior Editor for Wikibon’s micro-analysis team.
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Organisations outsource ICT to achieve different business goals, from reduced risk and costs, to achieving greater agility for competitive advantage. By clearly communicating the strategy, addressing any concerns over loss of control and taking active steps to help embed the managed services partner’s staff within the internal ICT team, organisations can achieve the desired results.5.
Previous positions include product marketing at Plex Systems, senior analyst at AMR Research (now Gartner), marketing and business development at Cincom Systems, Ingram Micro, a SaaS start-up and at hardware companies.
But great things happen especially when industry-specific solutions, such as enterprise resource planning (ERP), are deployed to the cloud. If you intend to reduce the downtime associated with ERP system implementation and maintenance, and to eliminate the manual operations known to cause inefficiencies and create error-prone results, an ERP solution deployed to the cloud might be the answer you’re looking for.
Default configuration settings streamline the entire implementation process, reducing the time and costs associated. Using the cloud to connect the main office to different locations will allow you to benefit from real mobility, boost efficiencies, and reduce capital expenditures in the long run. In a nutshell, small companies now have an equal opportunity to grab their share of the market.
Since most SMBs don’t possess in-house IT staff to perform complex ERP implementations, finding a trustworthy consultant willing to offer unbiased guidance is sometimes more valuable than knowledge and experience. Then, find a reliable service provider who isn’t only able to recommend the right cloud ERP solution for your company, but also ready to walk you through the implementation process. The decision depends on a complex combination of reasons, rather than being based on a single factor.
Cloud computing usually does provide greater agility, for example, but it does not always reduce costs or mean a better Quality of Service (QoS). These concerns can often be addressed, but in some cases they may mean that cloud is not appropriate. Use of public cloud, for example, can mean that you avoid the risk that a large investment in IT resources will not pay off but, on the other hand, it can introduce security risks, due to sharing resources with unknown parties, and risk of non-compliance with regulation, due to lack of control over how and where data is stored.
It is based on the use-cases developed by The Open Group Cloud Business Use-Cases project and includes some considerations identified in The Open Group Cloud Report on the Computing Business Scenario Workshop [BUSSCEN].
Cloud computing delivers improved agility because it has on-demand self-service and rapid elasticity.
In Case 7: Business Transaction Assurance and Continuity, frequent mergers and acquisitions mean drastic changes to business processes, which cloud computing can make less painful. Public cloud can reduce the cost of development and eliminate the additional business risk because it replaces an up-front investment in development resources by usage-based payment. Automatic resource scaling matches resources to demand most efficiently, enabling the lowest cost of operation consistent with adequate service. It provides a more productive environment for collaborative working, and improves productivity by enabling participants in a business ecosystem to share processing logic. This is so much the case that people often do not think about it as being a€?cloud computinga€?. They are widely used on mobile phones and browser-less devices as well as on PCs with web browsers. They are accustomed to using cloud servicesA for social interaction and sharing personal information.
If you are considering public cloud in order to improve the quality of your IT, you should look at other forms of outsourcing also.
The virtualizationA technology that underpins many cloud solutions provides convenient measurement facilities that other technologies may lack.
In Case 1: Business Activity Reporting, good usage information delivers a direct business benefit.
Where an in-house department does not keep abreast of the latest developments, adopts a a€?not invented herea€? attitude, or becomes ineffective or inefficient in other ways, it can be hard to remedy the situation. IT is not a core competence of most enterprises, but their dependence on it forces them to give it significant attention and management resource, which would be better devoted to their core activities. This is a significant pain-point, especially for small businesses, where the cost is proportionately higher than it is for large ones.
For large cloud vendors, economies of scale make the cost and effort of providing duplicate systems and recovery mechanisms a relatively small overhead, so that they can deliver disaster recovery capabilities to businesses of all sizes at low cost. But they are expecting to see rapid growth in their use of IT, and corresponding growth in emissions from increased power consumption. This is, however, not always the case, and reduced cost is one of the main reasons why companies are turning to the cloud.
There is also a tendency for servers to be dedicated to particular departments or projects, with no attempt to balance surplus in one area against shortage in another.
It estimates that, by using the cloud computing model for IT services, the US federal government will be able to reduce its data center infrastructure expenditure by 30%. This is difficult and time-consuming, and the delay between the change in resource use and the corresponding re-allocation of resources makes manual optimization far from perfect.
With public cloud, the enterprise obtains cost savings by paying less to the cloud provider than it would have paid to run its own systems inefficiently. If there are large variations in your resource needs then public cloud can deliver cost savings by pooling your traffic with that of other users. This is, however, likely to mean a substantial increase in traffic between client and server across the network, and will not be viable unless the network is reliable and fast.
If viable payment and governance models can be established a€“ and these may not be easy things to achieve a€“ then community cloud can be a very cost-effective way for those enterprises to obtain IT resources. It may nevertheless have a significant role to play, just as community software development has come to play a significant role through the open source movement. If a move from CAPEX to OPEX is desired, then the company should be considering and evaluating outsourcing solutions, including public cloud, hybrid cloud, and outsourced private cloud. Alternatively, you could invest in a cloud computing platform and make changes to the payment and funding of the service as it is amortized over a wider shared service model for economies of scale. There may be opportunities to sell infrastructure or platform services based on other kinds of resource. By implementing your services on the cloud, and making them accessible via the Internet, you can reach a vast, global market. There are several intermediate stages in this evolution, such as Management-as-a-Service (MaaS) and Business Process-as-a-Service (BPaaS). It’s the service that will be provided to the consumer in the form of an integrated set of transactional and collaborative activities to accomplish a specific organizational goal. BaaS will bring together the architectural, modeling, technical, design, planning and monitoring templates and competencies necessary to allow an enterprise to quickly deliver low-cost, scalable and reliable business solutions to their customers. Without standards in place, the quality of service transparency and management will be questionable.
This is what IT is traditionally done, but it’s not where the action will be in the future. Gracely cites the example of Target Corp., which could not have planned for the impact that applications like Pinterest or Instagram would have on its business. By using a building block structure, application program interfaces and a services orientation, IT can improve business agility by creating a more responsive cloud-based operations model. He is the author of five books and more than 300 articles on the topic of social media and digital marketing.
Set high goalsFor ICT managed services to work, there needs to be a genuine commitment to continuous improvement, innovation and cost-reduction on both sides.A good managed services provider will be diligent in assessing ways in which they can achieve these goals.
Get your team on boardIt is essential that everyone is on board and organisations need to communicate expectations and goals for both the internal team and the managed services partner. Trust and let goIt all comes down to trust and understanding each other’s role and strengths.
A company that combines cloud computing with the right ERP solution can realize incredible benefits, more quickly, and with lower costs compared to an organization using an on-premise ERP solution. However, you have to delineate clear goals and metrics before starting the implementation process. But only the service provider knows how to perform technical configurations, what modules and settings to enable and disable, what analytical tools to select, and how to adjust system processes to help you exploit the true potential of the solution you’ve chosen. The Cloud Buyers Decision Tree will help you to assess whether cloud is appropriate in your situation and, if so, what kind of cloud service to choose.

It will help you start to gain the understanding that you need to obtain the benefits that cloud computing can bring.
IT resources can be acquired and deployed more quickly and, once deployed, they can be increased or decreased as needed to meet demand. Because the cloud resources are operated by an external organization, there is less need to train people within the enterprise.
The difficulty of doing this, and the time that it takes, can be a major barrier to innovation. In an enterprise that has an established private cloud, the divisions and departments can use it in the same way. In addition, the need to pay for expensive resources for development of a new product or service can add significantly to the business risk. In some cases, it can enable the organization to acquire capabilities that it would otherwise not consider. Nevertheless, these services generally exhibit the five essential cloud computing characteristics, and are part of the growing trend to do business a€?on the clouda€?.
They expect to have business collaboration tools that are equally effective and easy to use. How far they apply varies from one enterprise to another: an enterprise with an inefficient IT department is likely to find cloud a more attractive proposition than one whose IT department provides a superb service, for example.
In a private cloud, it may be used for internal charging, and should in any case be used for resource planning. Such problems often first become visible in the help desk, but this may be only symptomatic of a deeper malaise. Alternatively, businesses can implement disaster-recovery capabilities themselves by using cloud services whose underlying resources are geographically separated.
A large enterprise might just as well achieve cost savings by optimizing server utilization across departments a€“ yet few do. Virtualization technology, with software-driven resource allocation, makes the process automatic. In this case, the cloud provider is likely to keep a proportion of the savings, as a fair return for its services.
If, however, your needs are pretty constant then you will be paying a premium for elasticity that you do not use when you buy public cloud services.
It is, however, often classed as a form of cloud computing because the processing is moved from the client a€?to the clouda€?. For example, in Case 16: Service Delivery, a telecommunications service provider considers how it could provide a€?network as a servicea€? and a€?transport as a servicea€? to online consumer service companies. Today, most organizations have started at least one cloud project, with the promise of costs savings and faster time to realize tangible revenues. Additionally, BaaS will allow CXOs to accomplish specific organizational goals and jumpstart their businesses by providing relevant tools, operating models, SLAs and integrated sets of transactional and collaborative activities.
Security of data, processes and applications will be another concern because of the lack of maturity of cloud security policies and standards.
Setting IT priorities around this goal is the way to make the technology organization a hero. Gillin has 23 years experience in tech journalism, including his time as founding editor-in-chief of B2B technology publisher TechTarget as well as editor-in-chief and executive editor of the technology weekly Computerworld.
It’s critical to ensure these goals are protected within the contract as well as ingrained within the organisational culture and work practices.3.
Managed services providers need to be very focused on the needs of the business and the individuals that work within it, as well as being alert to using their vast experience with other clients to introduce best practices and new ideas for improvements.At the same time, all levels of the client organisation need to trust the expertise and experience of their managed services partner and truly share responsibilities to achieve optimal results from the partnership. They form a good representative sample, illustrating the variety of reasons why enterprises are turning to the cloud. Building ROI from Cloud Computing discusses the factors of cost, agility, and quality in more depth. This means that enterprises can innovate, introduce new products and services, enter new markets, and adapt to changing circumstances. Skills acquisition often takes longer than any other operation associated with deploying a new resource.
Cloud computing can remove this barrier by enabling the enterprise to add to or change its IT resources quickly and easily. It can remove the need for training in specific products and services, but may introduce a need for generic training that applies to a range of cloud-based services.
Private cloud may therefore be the cheaper option overall, particularly for a large enterprise. If your overall load is constant but composed of a number of variable project or department loads, then a private cloud can reduce your costs. For example, a business may want to improve cash flow by moving to a direct usage model but still retain investment in CAPEX for differentiated private business processes. More and more enterprises are turning to third-parties to reuse their solutions rather than lock their valuable capital in sourcing hardware and software themselves.
This concept of Business as a Service will allow end-users and partners to remotely run and monitor entire business verticals in the cloud, and allow CXOs to focus on their core businesses instead. Finally, there is a lack of governance in cloud computing, with data consistency, integration, policy management and oversight still in their infancy.
It is the slow, but steady evolution of a thought process, a way of evolving business from one stage to the next.
Cloud can help in that respect, Gracely asserts, but businesses will derive greater value by focusing on a new dimension of cloud benefits: creating new business opportunities. Scrapbooking was a game changer in some parts of the retail industry, and those companies that adapted their Web presences most quickly prospered. He is a Senior Research Fellow at the Society for New Communications Research and a member of the Procter & Gamble Digital Advisory Board.
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The reduced training needs for public cloud are a major contributor to cloud-based agility.
It means that cloud computing delivers fast and effective resource optimization, moving processor, memory, storage, and network capacity between consumers almost instantaneously.
If you can separate your load into constant and variable parts, hybrid cloudA could be your best choice.
This model is allowing those enterprises to get more efficient, lower costs and achieve business agility across multiple channels, markets and customer segments.
However, none of these are insurmountable, and as BaaS comes into its own and matures, these problems will vanish. We’re seeing the next stage of this evolution, as startups are being born in the cloud, and are shaping very future of the cloud itself. If all of your component loads are constant, or vary predictably, and you can optimize manually, cloud will not produce a saving for you.
Even a modest shift in IT spending toward growing or transforming the business could help you compete better in a complex marketplace.
High tech industries are the dominant industry represented with 18% of respondents, followed by financial services, government and manufacturing (each accounting for 10% of respondents). The following graphic provides an analysis of how cloud computing technology is impacting each of the areas shown in respondent’s enterprises.
Enterprises are expected to invest an average of $1.5M in cloud-based services during the 2013 – 2014 timeframe. Chief Marketing Officers (CMO) are the easiest to convince, with just 6% of respondents mentioning this group of executives being a challenge to convince regarding the value of cloud computing.The percentage of organizational IT budgets allocated to SaaS increased from 8% in 2012 to 13% in 2013 according to the last two IDG Enterprise Cloud Computing surveys. Infrastructure-as-a-Service (IaaS) increased to 10% of overall IT budgets, up from 7% in 2012. In aggregate, 44% of IT budgets are spent on cloud computing today, increasing to 51% by 2015 in the base of enterprises interviewed for the study.Enterprises continue to migrate applications to the cloud that increase collaboration and enhance customer relationships first. The following graphic shows which applications are moving to the cloud today and the plans for migrating applications in the next 12 months, and over the next 1 to 3 years.
Read In Search of Insight and Foresight: Getting More Out of Big Data by the Economist Intelligence Unit to find out.
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