Remember the children’s game Jenga? Players would place wooden blocks atop each other in a criss-cross pattern until inevitably, the tower would come crashing down, as the delicate balancing act became unsustainable.
The Jenga concept is a good way to describe the increasingly complex supply chains that have come to define today’s global and diversified businesses. Businesses must manage the activities of multiple moving parts, all focused on the same objective, but not necessarily all on the same page with how to reach that objective. Unless steps are taken to bring all those parts together, a Jenga outcome is likely.
Until now that is. In the last few years cloud technology has helped businesses better manage and synchronize processes, achieve cost savings and maximize efficiencies in ways previously not even considered. Cloud services have been gamechangers in providing businesses with new options for integrating technology into their processes and allowing transparency and visibility to employees.
A summer 2012 survey by Everest Group and Cloud Connect of almost 350 business executives found that 95 percent were already using either Software as a Service (SaaS) applications, or Platform as a Service (PaaS) cloud solutions. The survey also found that 54 percent were using the cloud for application development/test environments, 45 percent for disaster recovery and storage, 41 percent for email/collaboration, and 35 percent for business intelligence/analytics.
Now that the cloud concept has moved beyond its infancy, businesses are finding more and better ways to meld its capabilities to fit their precise needs.
Cost Savings: The Wall Street Journal profiled an Omaha-based property storage business that is saving almost $85K annually as the result of moving certain functions to a cloud server. On a larger scale, a Massachusetts-based global supplier of electronics components saved more than $500K by moving its employee email platform to the cloud. And a report by McKinsey technology consultants found that cloud computing can save a business 20 to 30 percent in total IT costs.
Productivity: One California plastics company was able to transform operations by implementing a cloud –based videoconferencing application. Now, employees who previously spent days on the road repairing customers’ equipment are able to show remote workers how to make the repairs themselves. The net result is a considerable savings in employee time, as well as a reduction in travel costs.
Scalability: A huge appeal of cloud services is the ability to adjust service levels based on expected needs. A retailer that sees most of its sales during the holiday rush, for example, can contract with a cloud service provider to meet expected need. But during the summer down period, that level of service can be ramped down.
Regulatory Compliance: A 2010 Harris Interactive survey found that 81 percent of IT professionals said that maintaining regulatory compliance via the cloud was an issue for them. Many of these businesses opted to build their own “private” clouds, complete with dedicated servers and systems. But more recently, public clouds have proven adept at offering adequate compliance capabilities. Amazon, a leading provider of cloud services, is compliant with credit card data standards. And cloud servers allow businesses to store records and data often required to meet regulatory mandates.
Capacity Procurement: When a nationwide provider of “rent-to-own” products turned to the cloud to help streamline processes and gain visibility into procurement and spending practices, its management team was shocked at the efficiencies achieved via a cloud-based management system. With all employees and suppliers operating from the same system and following the same procedures, the company achieved a multi-million dollar savings
As these examples make clear, cloud technology, although still relatively new, is significantly changing business’ modus operandi.
Consider, for example spending on cloud services worldwide topped $91 billion during 2011, and is expected to more than double to $207 billion by 2016, according to analysis by Gartner. And here in the U.S., small businesses (businesses with fewer than 100 employees) are investing in cloud services – more than $3.5 billion during 2011, a figure that the Wall Street Journal expected would grow by 25 percent last year.
So it seems the sky is the limit as businesses increasingly look to the cloud for business solutions. And while certain “kinks” do remain – security concerns, risk of server failures – the cloud is bringing capabilities and options to businesses that were previously cost prohibitive.