The Cloud That Offers The Golden Lining

sanjoy

“It’s getting cloudy with a chance of gains!”

The market positioning for cloud computing is evolving at a rapid pace – so fast that it is difficult to decide whether this should be called evolution or revolution.  As always, this is aligned to the changing organisational objectives of potential users of this emerging technology. 

During the recent financial crisis and extended global slowdown, business organisations were tempted by lower and controllable IT infrastructure cost, arising from “harvesting the fruits of server farms”instead of “growing their own” servers.  The latter involved greater investment and higher costs – not just direct cost of IT infrastructure, but also real estate, manpower, energy and other costs associated with in-house IT infrastructure.

The new wave of economic and business optimism, that hasfollowedthe global crisis, is however driving the same organisations to reposition themselves for competitive advantage, efficiency, access to the best technical talent and most importantly, strategic and operational agility.

The Business Dictionary defines strategic agility as the ability for companies to stay competitive in their business by adjusting and adapting to new innovativeideas and using these ideas to create new products and services as well as new business models.  As John Kotter of Harvard Business School explains, traditional organisational infrastructures and hierarchies are typically not equipped to respond to an environment where change is the norm, and advises organisations to implement more agilestructures that allowthemto respond more quickly to changes, threats and opportunities in ways that add lasting value.

This is precisely where cloud technology comes in with its inherent ability to support this agility – both strategically and operationally. It brings in elasticity, scalability, efficiency in addition to cost-effectiveness, which in turn enables new business models.  If you have heard the song “nothing no-one nowhere” by the new Scottish band, this is the exact opposite – it is about “everything (for) everyone everywhere!”  The predicted convergence of cloud and mobile computing will only accelerate and further shape this change.

“Everything, everyone, everywhere!”

Continuing on the theme of “everything, everyone, everywhere”, the major trend that isemerging is a faster adoption of cloud technologies, as an enabler of organisational value and strategic agility, both globally as well as in India.

In the words of the Cloud Computing Innovation Council for India (CCICI), this phenomenon would have “significant macro-economic dimensions” for our country.  It would accelerate the development by enabling smaller business adopt new business models by limited investments in technology.  This, in turn,will give them the ability to compete with global giants, challenging their business models, if not their existence. Productivity gains can extend to government, to farmers, to academics and to specialised industry groups who can then leverage the cloud to do things better and faster, at a time when Indian stock markets are booming and economic optimism is ubiquitous.  On the supply side, the availability of trained technical talent in India and, in the words of our Prime Minister, the resulting “demographic dividend” will lead to global organisations selecting India as the hub of global cloud operations, further accelerating economic investment.

For a number of years, people have spoken about the digital enterprise, but not many corporates have been able to fully understand or implement what it really means.  Adoption of cloud computing will start making this a reality by merging real and virtual worlds, like a Hollywood science fiction movie, but hopefully not with disastrous consequences as in the “Matrix”.

There is no doubt that hybrid clouds will be the dominant trend, putting an end to the debate whether businesses should be looking at either public or private cloud infrastructures. Gartner predicts that the convergence of cloud and mobile technologies will lead to centrally coordinated business applications that can be delivered to any device, with a cloud-centric design ensuring seamless workflow with a shrinking proportion of then-to-be-called legacy applications running on physical infrastructure.This, in turn, will lead to the Chief Information Officer (CIO) rapidly becoming the orchestrator of cloud-related opportunities, linking up the various business and divisional heads with the related opportunities that the new infrastructure offers.  The physical data centre will eventually evolve to provide merely a backup of things that happen on the cloud.

“Never was anything great achieved without danger!”

Governance and risk management-related issues will clearlycontinue to dominate in terms of challenges related to the cloud phenomenon.  Adoption of cloud technologies would represent a strategic and more evolved form of IT and related process outsourcing.  This in turn, would require a repositioning of the governance mechanisms to more strategic levels, much higher than the level of the “contract manager” in traditional IT outsourcing. 

For organisations embracing radical change through the cloud, this new form of “strategic governance” would be driven by the Board and C-suite as an extension of their fundamental strategy-setting responsibility.Strategic governance would need to be a value-focused and transformational in approach, not just looking at preventing “bad things happening” but also continually reviewing whether the organisation is maximising the opportunities that the cloud phenomenon offers.

Fundamental concerns about security, privacy and resilience of data and applications on the cloud will remain – with significantly enhanced ramifications of consequences of any breach or security incident.  Data ownership and privacy will continue to remain key concerns, particularly in the more regulated environments such as banking and financial services, life sciences and healthcare, together with confusion as to who is the data owner and who is the data processor under various privacy enactments.  For example, the financial regulator in different countries, such as the Financial Conduct Authority (FCA) in the UK, the Fed in the US and the RBI in India would soon be breathing down the necks of financial services companies leveraging the cloud, chanting their equivalent of “SYSC 8” backwards and forwards. Legal issues will include confusion over legal jurisdiction, which will become blurred and contract compliance will become even more complicated.

It is a cardinal rule of human existence that barriers are always in proportion to rewards and the cloud phenomenon is no exception to this rule.  As a doctoral research scholar on strategic governance and risk management in outsourcing and offshoring, I am indeed hopeful that businesses will start to see costs of risk management and compliance as investment required to implement strategic objectives where the eventual returns will far outweigh the costs. Governance and risk management, although led by Boards and C-suite will have to be everyone’s responsibility, right through to the junior most staff.  It will need to feature in every element of IT infrastructure and as Gartner predicts, even through to “risk-aware” apps.