Category Archives: Business Transformation

Business Transformation, Enterprise IT, Gartner, News & Analysis, skills gap

Cloud computing will impact $1 trillion of IT spending decisions – Gartner

Growing Money - Chart In RiseAnalyst firm Gartner has predicted more than $1 trillion in IT spending will be directly or indirectly impacted by the transition to cloud computing by 2020.

As IT spend steadily shifts from traditional IT offerings through to the cloud, a process which the Gartner team has coined the ‘cloud shift’, the rate in which enterprise organizations transition through to cloud is expected to gradually increase year-on-year. The aggregate amount of cloud shift in 2016 is estimated to reach $111 billion, though this will increase to $216 billion in 2020. The Gartner team believe cloud computing will be one of the most disruptive forces of IT spending since the early days of the digital age.

“Cloud-first strategies are the foundation for staying relevant in a fast-paced world,” said Ed Anderson, Research VP at Gartner. “The market for cloud services has grown to such an extent that it is now a notable percentage of total IT spending, helping to create a new generation of start-ups and “born in the cloud” providers.”

In terms of the specific segments, IaaS is the largest market accounting for $294 billion, though demonstrates one of the lowest levels of cloud shift through 2016, only representing a cloud shift rate of 17%. Business Process Outsourcing, or BPaaS, will represent the biggest cloud shift rate at 43%, though the expected market value through 2016 will be $119 billion.

Gartner Cloud Shift 1

Cloud Shift Summary by Market Segment

While the potential of cloud computing has been exhaustively discussed over recent years, one of the growing debates in the industry has been centred on the skills gap. Cloud requires not only new skills within the organization, but also a different approach in problem solving as well as a new business culture, should be benefits be realized. This challenge is currently being addressed by numerous organizations throughout the world.

“There is no doubt that cloud delivers unmatched business benefits in terms of usability, choice and agility,” said Angelo Di Ventura, Director at Trustmarque. “At the same time it requires wholly new skills and capabilities, and a complete IT transformation to maximise the value that businesses can gain from it – cloud can cause considerable disruption if left unchecked.

“The transition from an internet-enabled business to a digital business running in the cloud represents a huge jump for the majority of IT departments, whose existing infrastructure is designed for ‘business as usual’ operations. Ultimately, there is no one-size-fits-all model when it comes to making cloud work for a business.”

 

Business Transformation, Cloud Enablement, Cost Reduction, Enterprise IT, News & Analysis, SDN, Software Defined Networking

SDN on the rise and cloud still not understood – survey

Dollar SignsResearch from Viavi Solutions has indicated SDN technologies are on the rise within enterprise organizations, but there also might be a number of organizations who are implementing the cloud for the wrong reasons.

In its ninth annual State of the Network study, the team highlighted enterprise organizations are increasing deployment of 100 Gigabit Ethernet (100 GbE), public and private cloud, and software-defined networking technologies. Two thirds of respondents indicated they had some kind of deployment in the production environment, and 35% have implemented SDN underlay.

“There is a growing trend of enterprise customers realizing how they can improve the operations of their network,” said Steve Brown, Director of Enterprise Solutions at Viavi. “It’s been a slow burner, but SDN is beginning to break through into the mainstream. While encouraging, the statistics are a little higher than we expected. After comparing the adoption rates from the last couple of years, we expected SDN to be around 50%, but the survey does highlight some real momentum in the industry on the whole.”

The findings also highlighted that while cloud adoption is continuing to rise, 90% have at least one application in the cloud and 28% said they have the majority, there is still a level of immaturity in understanding the perceived and realized benefits of cloud computing. Lower operating costs was listed as the top reason for the transition at 63%, while the faster delivery of new services and the ability to dynamically adapt to changes in business demands were the least popular reasons, both accounting for 39%.

“If you look at what the chief benefits which people are seeing, we’re seeing a lot of feedback on the CAPEX/OPEX reductions,” said Brown. “This is great, but that’s not really what the point of cloud is. Expenditure reduction is something which the top decision makers in the business want to see, it’s more of a tactical play. If this is the end objective these companies are not really seeing the promise of cloud and what makes me excited about cloud.

Deploying cloud

Top reasons for adopting the cloud

“The areas which I see the key benefits are the ones which are lowest on the results, delivering services faster and dynamically changing to meet the needs of the business. I found it quite surprising that these were quite low. The results show that the decision to enter the cloud for the majority of consumers is more tactical than a strategic decision.”

One conclusion that can be drawn from the findings is a lack of understanding of what the cloud can offer. Gartner’s ‘Cost Optimization Secrets’ highlighted the average cost reduction for companies implementing cloud propositions was just over 14%. While this is encouraging, whether cloud adoption would remain an attractive option for organizations if they knew expenditure would be reduced by just 14% remains to be seen.

“There’s more than just cost saving when adopting the cloud,” said Brown. “Are there savings, absolutely, but the majority don’t come upfront. If you’re going to be running applications which could see aggressive spikes, the flexibility of and agility of the cloud will reduce the cost. But at the same time it’s difficult to justify the cost savings because you may be taking on new projects due to the fact you have the ability to scale your capacity at a moment’s notice.

“Rather than thinking about it as a cost saver, hybrid cloud should be seen as an initiative enabler. Until this idea is recognised by the industry, adoption may continue to struggle to penetrate the mainstream.”

For Brown and the team at Viavi, the benefits of cloud computing are focused around the business capabilities which are enabled in the medium and long-term. Cloud offers companies the opportunity to react to diversifying market conditions faster and ensure products remain relevant on an on-going basis.

“In my own personal opinion, I would like to see people embrace a hybrid cloud model because it enables them to develop competitive edges,” said Brown. “This also justifies future investment in technology, it moves these new concepts and implementations from ‘nice to have’ to ‘must have’ as technology will then be one of the supporting pillars of the business strategy. Cloud has the ability to do this and to be a competitive enabler.”

agility, Business Transformation, Digital Transformation, EMC, Enterprise IT, Etisalat, News & Analysis, Telco Cloud

What does business transformation mean to you – view from EMC, Etisalat and Partner’s Healthcare

Business Transformation Pic

EMC’s President of Global Sales and Customer Operations Bill Scannell (Right), was joined by EMC customers John Grieco, VP of Information Technology at Partner’s Healthcare (Middle) and Etisalat Egypt CIO Khalid Almasouri (Left)

Speaking at EMC World, EMC’s President of Global Sales and Customer Operations Bill Scannell, was joined by EMC customers John Grieco, VP of Information Technology at Partner’s Healthcare and Etisalat Egypt CIO Khalid Almasouri to discuss the role of business transformation in the digital era.

Business transformation as a term has been used by the vast majority of the industry, though the wide variety of definitions of the buzzword has created some complications. What is generally accepted is there are few companies who would be able to compete with the digitally enabled, cloud-orientated new breed of organizations who have shaken the industry in recent years. Business transformation is a necessity for those organizations who do not want to head the same direction as Blockbuster.

“IT needs to be a business enabler not an obstacle to our employees,” said Grieco. “We need to make sure our people are able to do what they do best, and our IT systems do not hinder what they want to on a day-to-day basis.”

For Grieco and Partner’s Healthcare, business transformation is the process to ensure they are serving their customers as effectively as possible. Partner’s Healthcare is a Boston-based non-profit hospital and physicians network, the largest private employer and the biggest healthcare provider in the Boston metropolitan area, serving more than a third of the population. Grieco’s belief is business transformation will enable the team to create an organization which can serve its customers faster and safer.

“We want to be agile, we want to be nimble and we want to move,” said Grieco. “We want an enterprise look and feel, but the ability to perform like an SME. We want data to be accessible, and we want that accessibility to be fast. We want to drive down the cost of IT, and put that money back into the business. We want to reduce the complexity of the network, and improve its accessibility to the rest of the business. This is what business transformation means to us.”

While cloud and the digital era for Partner’s Healthcare presents an opportunity to better serve customers, it is very much a different story for Etisalat. The digital era has created a new environment which has challenged the telecommunications industry, and created a new level of competition for telcos.

The newly-empowered OTT brands are now stealing market share from the telco’s, offering services which are gradually eroding the profit margins of these companies. Business transformation for the telcos is not so much an opportunity to be better, but more a necessity to survive and more readily compete with technologies such as WhatsApp.

Business Transformation Pic 2

EMC’s President of Global Sales and Customer Operations Bill Scannell

“Business transformation is a change in business mentality,” said Khalid Almansouri, CIO at Etisalat Egypt. “IT used to be the backbone of the company, it used to be about keeping the lights on, but now the CIO has to be outside the IT department. The new breed of CIO needs to be throughout the business to create new opportunities by having a conversation with other departments to understand how technology can answer the challenges which are thrown out by the digital era.”

The rise of OTT’s will not mean the end of telco’s, but should these organizations want to continue to report revenues which shareholders have become accustomed to, there is a requirement for the business to be more agile, to deliver a new experience and also deliver new, innovative products, as fast (if not faster) and cheaper than the OTT’s. Transforming the business for the digital era is critical to achieve these goals.

“We used to know who are competitors were,” said Almansouri. “They were Orange or Vodafone and they were based in the same region as us. They had the same infrastructure, they had the same billing system, so we could compete.

“But now we’re competing with OTT’s who are on the other side of the world. They are more agile and are taking our market share. Business transformation makes us an organization which can compete with these organizations.”

Irrelevant of what the reasoning for business transformation, it is an objective for a vast number of organizations around the world. The introduction of cloud computing has created a horde of cloud native organizations who are disrupting the ecosystem. To answer the call-to-arms traditional business has had to transform to a digital-enabled organization. For EMC, this begins with the modern data centre.

“The first step in building a hybrid cloud or native cloud infrastructure is having a modern data centre,” said Scannell. “To have a modern data centre, you have to have a modern infrastructure. And to have a modern infrastructure you have to have a modern architecture. Scalable infrastructure is important. All flash is important. Software defined everything and cloud-enabled are important. That is how you achieve the modern business and drive digital transformation.”