The game has changed. No longer do providers need to peddle the merits of the cloud. Nearly two thirds of organisations now utilise a public, private or hybrid cloud environment. The narrative is shifting to focus on how businesses can use their hybrid environment as a platform for innovation. Until now, the focus has been on the cloud’s role as part of an organisation’s infrastructure and the benefits it provides, such as greater scalability, increased speed and reduced costs.
At the same time, the role of the CIO has changed. Their mandate to cut costs and manage their organisation’s IT infrastructure has evolved. They are now under orders to foster innovation too. Businesses need to create services, provide experiences and achieve business goals – that they simply couldn’t without the cloud. This provides challenges, of course, but it also places the CIO in a position of increased power.
CIOs must change their approach and ensure their business is prepared to leverage the hybrid cloud to drive digital transformation.
Starting at home
To realise the true potential of their hybrid environment, organisations must first reshape their internal value chain. Offloading the management and maintenance of their infrastructure to a larger, dedicated provider is an effective way of freeing up budget, time and resources to focus on other business-critical projects. And this shift is already occurring. Traditional data centre outsourcing is falling, per recent research from Gartner – which asserts that by 2020, 90 percent of organisations will adopt hybrid infrastructure management capabilities, with global spend on infrastructure utility services (IUS) hitting $37 billion in the same year.
Free to innovate
Shifts like this leave businesses free to focus on innovation and creating new, differentiated experiences for customers. That places them in disruptive territory. Airbnb and Uber are often cited as the poster companies for modern disruption. Free from their own legacy infrastructure, they were founded as completely cloud-based startups – and exploited an ecosystem connected by cloud to provide the functionality and features they needed to truly disrupt the established elite.
This “API economy” has emerged because leading companies realise that partnering in new ways made possible by the cloud drives innovation. A large financial institution recently decided to scale-back its in-house app development because it lacked the on-premise expertise to create truly valuable and disruptive services. Instead it licensed its data to others and tasked them with creating the applications that it couldn’t imagine, illustrating how the API economy can help a business achieve its goals faster.
Of course, partnerships are, at their best, mutually beneficial. A leading mobile network operator (MNO) linked up with a navigation and mapping services provider to offer real-time traffic updates using its customers’ location data. By licensing its information, the MNO generated a new revenue stream – while the navigation company added a valuable new layer to its service.
We are committed to helping foster this API economy with Watson, as an example. Companies from across a range of industries are beginning to leverage cognitive technologies through our APIs, testing and deploying innovative new products and services via our cloud platform as a service IBM Bluemix.
Traditional drivers continue to influence the decision to adopt the hybrid cloud. Money remains a significant factor, as always; more than a third of businesses look at cost while evaluating a cloud solution. And that pays off – organisations with a hybrid cloud environment are 38% more likely to see a reduction in IT spend.
Security remains a core consideration – nearly half of businesses take this into account, alongside compliance, when deciding which workloads to migrate to the cloud. But organisations are now integrating their existing security systems with their cloud environments, going some way towards allaying these concerns about the security of data.
Traditional business imperatives continue to drive hybrid adoption, but they are no longer enough on their own. Real hybrid cloud is a driver of digital transformation and disruption. Businesses that already acknowledge and practise this are reducing costs, maximising the value of their existing infrastructure and using improved productivity and business processes to dedicate more time to creating innovative experiences.
If you change your approach, you could do the same.
To find out more about leveraging your hybrid environment to drive innovation, read the Harvard Business Review and see how CIOs can think differently about the role data plays in business strategy.