September 11, 2012 | Written by: Shamim Hossain
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Recently I attended the IBM Cloud Innovation Forum 2012 in Melbourne, Australia — a premier cloud event by IBM. It was fascinating to hear firsthand from the IBM A/NZ Cloud Computing Executive, cloud subject matter experts from different IBM business units, IBM Business Partners and a leading analyst firm in Australia. I enjoyed my time there while learning about the latest developments and applications of cloud computing, benefits, inhibitors to adopt cloud, Australian and global cloud market, strategies and best practices to start the cloud journey and differentiating features, services and offering by IBM.
Audiences consisted of professionals from different industry sectors either representing business divisions or IT divisions which was evidence that both IT and business departments have now realized the potential positive impact of cloud computing, a new disruptor in IT Industry. Some of the participants confirmed that they have already started some initiatives and others were planning to get started on their cloud journey. Some interesting questions were raised by the audiences. It was apparent that audiences were keen to learn more about cloud computing as they are ready to embrace this technology, a powerful tool to transform business and innovate in this information or digital age. For those who have missed this event, I have taken an attempt at summarizing and added some additional information gathered through my personal research.
There is no doubt that cloud has become a reality now. As revealed by Gartner 2012 Hype Cycle for Cloud Computing, cloud has moved past the peak of Inflated Expectations and is finding a place in mainstream IT and our daily life. Adoption of cloud computing is growing at a dramatic rate. Before I start talking about the event, let me provide some predictive analyses and data from analyst reports, market study and surveys, which indicates despite some outages in recent time and over the last few years, confidence around cloud computing is bolstering.
Based on a recent research done by IDC, global revenue for public cloud exceeded 21.5 billion US dollars in 2010 and is expected to reach 72.9 billion US dollars in 2015. This represents a compound annual growth rate (CAGR) of 27.6 percent. This CAGR is more than four times the growth rate (6.7 percent) of global IT market as a whole. According to IDC top 10 predictions for 2012, adoption of cloud services will result in more than 36 billion US dollars in revenue in 2012 (up 28 percent) representing a growth rate more than four times the industry overall.
IDC also predicts that more than 80 percent of new applications developed in 2012 will be deployed and distributed through cloud. The cloud model will dominate over traditional models for enterprise application distribution and deployment. In this year, migration of existing applications to cloud will also accelerate. About 2.5 percent of packaged applications will be migrated onto public cloud which is four times bigger than the result of 2011. These data will give you some idea about the emergence of cloud computing worldwide.
Obviously there have been some inhibitors to adopt cloud computing. Some concerns around cloud computing are security, data location and sovereignty issues, compatibility and interoperability, business continuity and disaster recovery, speed and latency problems in communication networks and the like. Lack of knowledge about cloud computing and some media news aggravated concerns in the last few years. However, as IT professionals are getting educated and there have been many successful demonstrations of reliable cloud services, cloud is turning from fad to reality. As we will see later in the blog, some questions asked by the audience were on security concern and disaster recovery.
There is no doubt that organizations have to reinvent their businesses to survive in today’s competitive and borderless world. IBM Executive Brett Murphy opened the Cloud Innovation Forum with his welcome speech and then a very interesting and thought provocative presentation on how to “unleash the full potential of cloud computing to invent business and enable new level of innovation”. He discussed about current challenges, IT market, considerations for c-suite executives and IBM SmartCloud offering and strategies to transform business. An IBM CEO Study found that 80 percent of the CEOs anticipate that there are business challenges ahead and they need to innovate while managing unprecedented changes. CEOs need to consider three things in this regard:
- Build operating dexterity
- Reinvent customer relationships
- Uncover new profit opportunity
This study also finds that technology is the top most external factor impacting organizations. Ninety percent of CIOs believe that cloud is critical to their plans to move their business forward. Economics of computing are changing and business and IT are partnering to reinvent businesses in innovative ways. Brett Murphy emphasized the importance of common cloud standards for the delivery, integration and consumption of cloud. IBM has been a big proponent of open cloud standards and active participant in Cloud Standards Customer Council. The following four common cloud adoption patterns and relevant case study for each pattern were highlighted to illustrate how organizations can be benefited by choosing one depending on their need:
- Cutting IT expense and complexity through data center
- Accelerate time to market with cloud platform services
- Gain rapid access to business solutions on cloud
- Innovate business models by becoming a cloud service provider
SmartCloud is the IBM vision of cloud computing. IBM’s cloud capabilities are organized into three areas: IBM SmartCloud Foundation, IBM SmartCloud Services and IBM SmartCloud Solutions. For more information, please visit IBM Cloud Computing: Overview page. IBM’s strong partnership with business partners further enhances its enterprise class cloud capabilities.
The next session “The Power of Cloud: Driving Business Model innovation” delivered by Jamie Waeland was very interesting and rich with business insights and case studies of successful cloud implementations. IBM Institute of Business Values, in conjunction with Economist Intelligence Unit, surveyed 572 business and technology executives around the world. The resulting survey indicated that 72 percent of the respondents were either piloting, or had adopted or substantially implemented cloud in their organization. This number is expected to increase to more than 90 percent in three years with a rate of growth touching 215 percent for organizations which intend to substantially implement cloud.
It is not surprising that a study by Forrester found that global cloud computing market is growing at a promising rate of 22 percent per year through to 2020 to reach 241 Billion US dollars in 2020. IBM Cloud Survey, mentioned earlier, found that 35 percent of the respondents are planning to leverage cloud computing to tackle business challenges and innovate business models within the next three years. As indicated in this session, mobile revolution, social media explosion, hyper digitization and analytics are the major trends driving business change. Cloud harnesses the capabilities borne out of these trends to empower six potentially “game changing” business enablers to innovate business models. These six cloud attributes are:
- Cost flexibility – a shift from CAPEX to OPEX and pay per use software and services
- Business scalability – Provides limitless, cost-effective computing capacity to support growth
- Market adaptability – Cloud enables a faster time to market and helps in rapid prototyping, development and deployment
- Masked complexity – complexity becomes hidden from end user
- Context-driven variability – supports user defined preferences
- Ecosystem connectivity — enhanced productivity through customer and partner interaction
Along with these, three keys actions can help an organization reap benefits through cloud enabled business models:
- Establish shared responsibility for cloud strategy and governance across the Business and IT
- Look beyond your organization’s borders to maximize value derived from your cloud adoption
- Strategize whether your organization will be an Optimizer, Innovator or Disruptor through the use of cloud-enabled business models
The next session was delivered by Peter Carr, Managing Director, Longhaus. In this interesting presentation, Peter discussed the Australian cloud market with a special focus on the infrastructure as a service (IaaS) market. This presentation was based on Longhaus’ 2012 study on Cloud IaaS market. This report finds that IBM has retained the market leader position for a second and consecutive year in Australian IaaS market. Peter discussed the criteria and attributes used to assess a vendor’s cloud offering. There are some indicators which show the maturity of a cloud vendor. He touched on the attributes to look for when selecting a cloud vendor. Information security, accreditation to industry standards, performance SLAs, disaster recovery, compliance to Australian Privacy Act provisions etc have been the top concerns for Australian c-suite executive when choosing cloud vendors. These factors were later revisited when some of audience asked questions around selection of a cloud vendor.
There was a great opportunity to hear from IBM Business Partner, after morning tea break, who shared examples of their business transformations by embracing public cloud solutions. Alistair Swain, Director, Total Tel International Pty Ltd, showed how they introduced new businesses using cloud as a tool. Some of the benefits that they harvested using cloud are:
- 10 to 15 percent productivity improvement for their development team
- Easier to on-board offshore developers
- Improved capability and demonstrations
- Ability to leverage IBM brands
- Increased services and innovations
You can see that these benefits are resonant with six cloud attributes presented earlier.
The last session of the forum “IBM Cloud Transformation Case Studies” was delivered by Mike Schulze, Director, IBM Australia Development Laboratory. This presentation featured the case studies where IBM has used its cloud products to transform its business. Mike discussed a key program of works that migrated IBM’s worldwide development labs to an architected internal cloud environment. This effort covered 18 labs across all geographies and 35,000 standalone servers, achieving a significant amount of savings, improving efficiency and service levels. IBM Australia Development has also undertaken similar initiative and is progressing well according to the roadmap to improve efficiency and productivity, cut cost and transform the way businesses are performed.
In another room IBM Technical experts were demonstrating IBM cloud portfolios to customers and answering their questions. There were self-service kiosks which allowed the audience to browse IBM cloud portfolios and useful technical resources using touch screen displays.
As pointed out earlier, majority of the business and technology leaders are planning to adopt cloud computing to tackle the turbulent business challenges ahead. It is high time that you prepare some strategies and plan to “unleash the full potential of cloud computing to invent business and enable new level of innovation”.