There is a fundamental change that is taking place in the way businesses use IT and pay for technology.
Organizations are becoming more and more services based, delivering scalable and elastic resources with much greater speed, and driving economies of scale with shared resources.
With cloud computing, services and data are provided by shared computing resources in scalable data centers, and are accessible over the Internet. Key advantages are that services are easily available on demand and can rapidly scale both up and down as needed. Sometimes these external services are being used to augment internal systems, providing extra computing and storage resources at times of peak demand.
Organisations can compute in the cloud to run anything from a few servers to entire enterprise software environments, rather than invest in their own (physical) systems.
Current types of cloud service include applications (software as a service); development tools (platform as a service); and virtualized computing resources such as servers (infrastructure as a service).
A recent global survey conducted by analyst firm Gartner has found that cloud computing services from external service providers is increasing and now represents 10.2 per cent of IT service spend. Over 1400 IT professionals from 40 countries including Australia responded to the survey. The Asia/Pacific region spent between 40 and 50 per cent of cloud budget on services from external providers.
Gartner reported that 46 per cent of respondents with budget allocated to cloud computing indicated they planned to increase the use of cloud services from external providers. 39 per cent of respondents indicated allocating IT budget to cloud computing was a key initiative for their organisation.
One-third of the spending on cloud computing is a continuation from the previous budget year, a further third is incremental spending, and 14 percent is spending that was diverted from a different budget category. Forty three per cent of participants expected an increase in spending for private cloud implementations while only 32 per cent cited an increase for external use.
What impact will cloud services have on an organization?
Cloud computing gives organisations an alternative to buying and maintaining costly in- house infrastructure and allows users to securely access their business applications whenever they want to and wherever they are. Because there is no hardware or software to buy, businesses can avoid all up-front costs and eradicate the unpredictable nature of IT and demand more investment over time. Suddenly, being able to predict IT budgets far in advance looks like an overdue and welcome reality. For example, the scalability of cloud services makes an organization able to map out the next three years with far more granularity.
With cloud computing, organisations can now access the latest technologies without having to finance and pay for them in the traditional way. It also allows for the rapid adoption and deployment of the latest technologies and applications to enable business growth.
Businesses can achieve a faster return-on-investment and reduce costs in the long-term. Instead of wasting resources managing technology they simply manage relationships, allowing for a potential reduction in internal headcount and the ability to re-focus attention and resources on core business activities.
Cloud computing is providing businesses with the ability to securely access enterprise level IT solutions that are transformational for businesses. What this means to the CFO is that they are now able to plan their budgets better with no unwelcome surprises. This also frees up company resources so that employees are able to focus more on what they do best, serving their customers.
Summary
The challenge for CFOs is to show their IT departments that cloud computing is not something to be feared. It is just as much an opportunity for IT professionals as it is for the companies they work for, provided they are helping to drive the strategy forward and utilising cloud computing as a component of delivering business objectives.
The state of the world economy has placed huge pressure on CFOs faced with the conundrum of doing more with less, however, the good news is that there are practical, cost-effective solutions that provide Australian businesses with access to the most innovative technologies and at a lower cost.
Businesses using cloud computing only pay for the services they use so business administrators can concentrate on managing their applications rather than spending money on buying, managing and upgrading servers.
Cloud computing offers significant potential benefits— by deploying new services more quickly, scaling services to meet demand, and realizing operational flexibility. It also provides greater stability within IT environments, reducing the likelihood of corporate system downtime and the associated expenses and lost opportunities that may arise as a result.
- Small businesses can access world-class IT systems that might otherwise be unaffordable
- Businesses can also make their computing resources available to other users during downtime
- Organisations can reduce capital outlays and change the way they deploy IT assets and business processes
- Private Cloud services can improve the creation and delivery of IT by allowing companies to access services more flexibly and cost-effectively.