The Foundation for Transformation
What Is It?
Cloud computing is not a new concept, but its meaning has evolved as cloud’s capabilities and usage have expanded. The cloud is no longer simply a place, but a collection of connected platforms with uses ranging from improving a single process to enabling a larger digital transformation.
Cloud provides a foundation where companies can reimagine their businesses for the digital age. It is at the core of many digital transformation initiatives because it includes the capabilities organizations of every size want to achieve – scalability and elasticity, cost efficiency, and room for innovation.
Why Is Cloud so Essential Now?
As Elias Khnaser, a VP analyst at Gartner, puts it, “If you have not developed a cloud-first strategy yet, you are likely falling behind your competitors.”1
Cloud is no longer a competitive differentiator. According to Gartner, 40% of organizations in North America alone plan to spend the majority of new or additional funding on cloud. Considering how many organizations now use the cloud, the question is no longer “Should you be leveraging the cloud?” but “How should you take advantage of it and to what extent?
Cloud has increased the pace of innovation by changing the way we design, build, and run the applications that power internal processes and external customer experiences. Additionally, it levels the playing field between the long-established enterprises and nimble new startups, which are now often competing for the same customers’ attention.
How Does It Work?
Pay for what you need, when you need it
Historically, a company would have to purchase and implement the storage and computing resources needed to handle its highest usage demands and pay to maintain that setup year round. In the retail space, for example, you had to build an infrastructure robust enough to meet the demands of Black Friday, even though you only needed that bandwidth a small percentage of the time. Similar examples include health insurance providers with open enrollment periods, tax preparation companies during tax season, or any other company that experiences ebbs and flows in site traffic or business events (read: pretty much everyone).
Elasticity in computing refers to the ability of a platform or resource to automatically scale up to meet increased demand and scale down when the demand subsides. This ability to scale up and down is one of the main tenets and benefits of modern cloud technology. As a result, your organization only pays your cloud service provider for the storage and computing power you consume, and no more.
Forrester states that scalable and elastic cloud solutions will be a priority in the enterprise software “buyer’s market” predicted to take place over the next decade.2 While the expense of purchasing and maintaining physical hardware is cost prohibitive for many small companies and those just getting started, cloud provides a way to not only pay for exactly what you need in the moment, but also gives you room to grow without needing a system overhaul. Small startups can effectively compete with larger organizations because they are able to increase their technology costs at the same rate as their need and revenue.
Centralized data, powering personalization
Successful marketing is built upon a good base of information. Providing a sound data structure is necessary for executing a valuable customer experience.
Many companies attempting to provide personalized, omnichannel customer experiences are running into the problem of siloed data dispersed in multiple legacy systems across their organizations. This poses a challenge for building a complete picture of your customer, let alone delivering relevant content at the right time. It can also be expensive, since you may be maintaining multiple, redundant systems.
Centralizing your data in the cloud, where all relevant teams and systems can access and contribute to it, can provide the unified view of the customer you need to achieve smart personalization across each channel. The extensive storage capacity and computing power available in the cloud also opens the door for predictive analytics and other big data projects, making them affordable for organizations that may not have otherwise had those capabilities.
Far-reaching CX benefits
Cloud technology’s ability to automatically scale up and down directly impacts the experience your customers have on your website. Instead of running into slow page speeds on high-traffic days, customers will enjoy the same smooth experience every time. Cloud provides an additional customer experience benefit for multinational and global organizations: reach.
There are limitations to how fast data can travel across geographic distances, so the closer you can physically place your services to your end user, the better their experience will be. Many of the major cloud providers have data centers all over the world. If your business wants to deliver content or a mobile or web app to audiences in North America and Asia, for example, you could store instances of those services on servers located in those regions. This ability lets you provide the same speed and quality experience to all your customers without the cost of building and maintaining separate local infrastructures.
Innovation without delay
Time spent updating existing applications and releasing new capabilities is a common point of frustration for organizations using dated, legacy systems. Delays in improving your customer-facing and internal systems can significantly impact your overall customer experience and your bottom line. When your systems are based in the cloud, the turnaround time for new releases and updates can go from months and years to a matter of weeks and months.
Who Has Done It Well?
Organizations that began in the cloud or have undergone significant app modernization are equipped to release new updates daily. Ebay, for example, has hundreds of production deployments per day. Every time the smallest change is made, it can be run, tested, and deployed to the production environment immediately, providing a constant flow of new functionality and capabilities for the best possible user experience.
The Ubers, Lyfts, and Airbnbs of the world would likely not have succeeded without the cloud. In addition to the cloud’s elasticity, reach, and cost effectiveness, another advantage enjoyed by these cloud natives is that they didn’t have to deal with the baggage of legacy systems and infrastructure. They are much more lightweight and nimble – ready to innovate and disrupt industries with older, more established organizations.
We believe this agility has contributed to the big push toward app modernization we’re seeing across industries. Organizations of all sizes are evaluating their legacy systems and the ways they build, run, and maintain them. Many have found that they need to reinvent those structures and processes to remain competitive, and have begun their journeys to the cloud by migrating their front-end, customer-facing technology first. The next wave of innovation will likely involve transforming the heavy-duty core business applications these enterprises run on, which are a bit more difficult to maneuver.
Finding ways to leverage the scalability and reach of cloud for these bulky core systems provides the same benefits to large enterprises that the small, native startups have been able to capitalize on from day one. Instead of asking whether you can afford to start modernizing and moving toward the cloud, the real question is whether you can afford not to take advantage of the speed, scalability, and cost savings it provides – especially when your competitors are reaping those benefits.
Where Can You Start?
When used effectively, cloud technology has the potential to transform your entire organization, enhancing internal efficiency, financial outcomes, and your customers’ experience.
While cloud is an enabler of change, it is not (and should not be) the principal goal of change. No organization should set its sights on the cloud because it’s the cool place to be in the digital age. Any move toward cloud capabilities should support and accelerate a journey. Conflating the vehicle used to power that journey with the actual destination can be a major misstep for business leaders.
One of the most common misconceptions about cloud is that it belongs solely in the realm of IT, which is just not the case. Cloud can fuel success in many different areas and processes in your organization, depending on your priorities and areas of focus. If you have a strong pipeline of acquisitions and mergers, for example, basing many of your core business applications in the cloud can help streamline integration and onboarding processes.
Capabilities enabled by cloud can provide the best kind of internal disruption throughout your organization. It can create new revenue streams and improve the profitability of existing revenue streams while also enhancing the quality and resiliency of your organization’s services. This means that everyone should take an interest in cloud. If leaders across departments can understand the business possibilities of cloud and its role in the organization’s overall success, they can be empowered to promote innovation and more rapidly achieve their goals.
To make a modernized, cloud-based environment a reality, start by recognizing what you’re trying to accomplish. What is important to your organization specifically? Before diving in, you should explore and answer these questions. Collaborate with leaders across your organization as you define your goals and implementation strategy.
Laying this groundwork will help your teams operate smoothly and avoid confusion. We recommend starting small and getting a quick win on the books to help build momentum. However you decide to begin or continue your journey to the cloud, have a plan and make sure it is both realistic and aligned to your goals.
Another important thing to keep in mind is adapting your organizational processes. Deploying a new model for designing, building, and running applications is not enough if your processes don’t also change. An effective move to the cloud will require a strategy on where to start, a plan for governance, security, and compliance, and a change management initiative to help bring your organization into alignment.