At Honest Buildings, we spend a lot of time thinking about the benefits of cloud computing and real estate SaaS platforms for the commercial real estate industry. So we're delighted when a real estate leader as well-respected and experienced as Shorenstein's CIO Stuart Appley writes an in-depth post on just that topic. Many thanks to the author for letting us re-share this piece.
Between the IT conferences and some interesting Twitter chats, I continue to hear discussions on the top cloud benefits. Cost savings in particular has come up a few times, but if you're looking at hard cost savings as a potential cloud benefit, you're not understanding where the real value lies.
Using the cloud is really about agility and adding business value. It allows IT organizations to focus their attention on doing things that help grow revenue, increase customer engagement, and open up new product channels. IT can spend less time managing commodity infrastructure and maintaining in-house developed code for non-core programs. They can leverage other resources in monitoring and security; resources that many SMB firms just don’t have access to. That’s critical.
Getting to specifics, my top benefits that come from using the cloud are as follows:
Being nimble and agile should be the mantra of all IT organizations today. Getting away from long and drawn out development efforts and implementations is expected today and critical for businesses who are fighting to develop market share and grow their company. Being able to quickly respond to changing business needs is a must and that’s what the cloud provides. Firing up new infrastructure in minutes or securing a new, focused SaaS app are fantastic business enablers and exactly what every forward-looking CIO should be focused on.
Acquisitions, mergers and high business growth trajectories are forcing IT organizations to quickly grow their capabilities and reach. Typically, you don’t have a lot of time when a merger, acquisition, or some other critical event is upon you, so setting up a quality model for quickly scaling is essential. Even with some time, the effort involved to scale adequately is time and resource intensive. Again, this is exactly what the cloud offers. Additional infrastructure is the obvious and easy scenario, but cloud apps that support business services are just as important.
Time to market
For companies bringing out new products or rushing to gain market share, IT has unique challenges in responding. The cloud is made for this with the ability to quickly deploy new software, configurations or the infrastructure required to be first to market. In industries that depend on this for their survival, the cloud is a business priority. How long would it take to develop a new application for a new product line if you weren’t leveraging the cloud in some manner? Platform as a Service products are great for this.
Access to broad and deep skill sets
Particularly for SMB’s, the cloud provides unheard of access to a trove of smart and focused people who have skills that are hard and expensive to source and access on your own. I like to use security as a good example of this benefit. Many say the cloud is less secure than on-prem infrastructure, but I argue the opposite. Just because you wrote it or have it in your own data-center doesn’t mean you’re doing a better job than a cloud vendor.
While it’s sure not a guarantee that a cloud company will do a better job, they typically have a much larger staff with a better focus on security than you do. Their business depends on it and they have the resources to quickly respond to ever-changing threats. What’s required for a CIO is to understand these differences, do the right due diligence on a new cloud vendor, and maintain an ongoing relationship with the vendor to ensure you know how they’re managing security. It’s not something you look at once and forget, but managing vendors becomes a critical competency. It’s still easier and more efficient than managing and finding (and keeping) a team of developers and ops guys who really know security.
Access to quality, pre-developed software
Developing software programs that address very little core, company specific business processes are a big mismanagement of internal resources. There are an amazing number of high quality applications that are already developed that address most of your business needs, and the number and quality is growing daily. This isn’t just for commodity applications like email, but there are a lot of industry specific SaaS vendors that provide applications that no IT organization can match. The platforms available are worth it alone. A cloud product is also constantly growing with critical features and they’re more in-tune with new software designs and usability trends than you can be. As cloud vendors continuously update their products, you’re immediately getting access to these new features and capabilities.
Speed of upgrades
This is one of my personal favorites. It’s not always seamless for some of the less mature or new SaaS vendors, but the speed of upgrades and the reduced requirements on internal organizational resources is transformational in my mind. I have seen plenty of organizations spend a countless amount of time and energy in analyzing, testing, and deploying upgrades to large on-prem applications. The effort spent on these upgrades are a tremendous drain and they take the focus away from helping grow revenue or providing top notch customer service.
Notice that “cost” is not on my above list? I’m not saying that long term, the cloud can’t be cheaper, or that it enables you to spend money in a different and more efficient manner (operational vs. capital), but those benefits don’t make my top 6. In fact, the cloud can be more expensive on a pure license perspective in the long run, but there is a lot more to this equation than licenses.
Reductions in your ongoing IT resource needs and the savings I mentioned earlier on organizational resources, all go to the bottom line and are savings over time. I just don’t focus on pure costs as agility and enabling business value is what I’m concentrating on.
Have other thoughts on the subject? Reach me on Twitter: @sappley