Cloud for digital business

Gregor Petri, Gartner research director, looks into the cloud and the new age of digital business

For a while, business leadership considered cloud computing merely as a smarter way to do IT – with smarter most often meaning faster, better and, especially, cheaper.

The part about the cloud being faster is certainly true. Many a company finds their IT department is able to respond significantly faster to their needs by using cloud services. And if not, they gain speed by going rogue, simply bypassing their IT department and going straight to the cloud themselves.

Cheaper is a different question. Even though cloud providers, such as Amazon Web Services, Microsoft Azure and Google Compute Engine, continue to lower their infrastructure service prices, many companies find that the cost of infrastructure is only a very small part of their total IT cost. So the use of the cloud is not necessarily making overall IT significantly cheaper.

In response, perception of the cloud phenomenon is shifting from merely a smarter way to facilitate “business as usual” to the best way of moving companies into the new age of digital business.

Digital has taken the business community by storm. After decades of IT lingering at the bottom of the annual chief executive top ten priority list and cost reduction becoming the most discussed aspect of IT in boardrooms across the world, the idea of gaining competitive advantage through digital capabilities is back with a vengeance.

Perception of the cloud is shifting to the best way of moving companies into the new age of digital business

Granted, new imaginative capabilities, such as 3D printing, smarter decisions through big data analysis and the potential of reaching out directly to millions of consumers through social networking technologies, did more good to the momentum of digital than IT departments finding ways to run their existing enterprise resource planning system “in memory” or “on Amazon”.

This made some argue that digital business should not reside under the current chief of information processing and indeed we are seeing the new role of a chief digital officer or CDO emerge in many organisations. Some old-school chief information officers (CIOs) may worry that these fast-moving CDOs have the same devastating impact on IT’s role as that other type of CDO, collateralised debt obligation, had on financial markets in the wake of the sub-prime crisis.

Other CIOs cannot wait to embrace the role themselves to get back into making a real difference by using the cloud to run what could be described as “software-defined business”.

Over time, digital business will make digital resources as important to companies as today’s most mentioned critical success factor – human resources or HR. And just as businesses did not concede day-to-day control over their human capital to a corporate staff department, neither should we expect them to do so with digital.

Already we see lines of business taking a more active role in defining their digital future. For example, by bringing architects and developers back into their line organisation. That would mean the emergence of “rogue” or “citizen” IT is not a passing fad, but a sign of times to come.

To manage this change, corporate IT will need to eschew its traditional service provider role for a brokering role, similar to the role of central HR in corporations, to provide the crucial governance, compliance and business continuity still needed in the ever-faster moving digital economy.