Insights

The Cloud: reality vs. myth and thinking differently

Deloitte Private

When people think about Cloud, they typically consider cost benefits and IT. Deloitte Risk Partner Alastair Banks shows that the reality of Cloud is as a business enabler.

As the use of the Cloud grows globally from $40.7 billion in 2011 (Forrester) to $130b in 2015 (Gartner) and expected to be $241b in 2020 (Forrester), there are very few organisations today that do not use or are not planning to use the Cloud. In Australia in 2011 Cloud usage was $732m (Forrester), in 2020 it is predicted to be $3.2 billion (Forrester). It isn’t really a choice of whether you are in the Cloud or not - the decision is more about how to use the Cloud better to run the business, to access new capabilities, new innovations, and new technologies, and where appropriate to enable business transformation.

Myth 1: Companies are moving to the Cloud to save money

Reality: Companies are moving to the Cloud for agility and flexibility, and speed to market.
•It can cost money to transition, but the Cloud primarily changes the profile of the spend.

Myth 2: Regulatory and privacy concerns prevent organisations using offshore Cloud providers

Reality: Australia’s current and future legislation allows data to be moved outside its territory.
•Reasonable steps should be taken to ensure data is protected to meet Australian requirements
•Privacy laws in most countries around the world provide protection for personal identifiable data and require notification when data is disclosed.

Myth 3: If you use an onshore Cloud provider your data won’t leave the country

Reality: Your data doesn’t have to leave the country if you don’t want it to – it is entirely up to you to negotiate this with the vendor.
•There is more capability onshore in Australia from both local and global players.
•There is an increasing recognition on where the data is encrypted rather than where it is stored. And who has access to it.

Myth 4: The Cloud is purely a place to store data

Reality: Absolutely not, moving to the Cloud is much more than just data hosting
•It is primarily about accessing scalability, agility and new business processes.
•It can be about re-engineering the way of doing business, accessing new business channels, different skills and opportunities.
 

Myth 5: The Cloud will make the CIO redundant and replace the IT Department!

Reality: The job description and the value of the CIO and IT Department will evolve
•The IT Dept. will become more of a service broker than a service builder
•The Cloud gives IT the opportunity to better re-define itself and its unique skillsets.
•The Cloud gives the CIO and IT Dept. the ability to anticipate and innovate for the business.

Myth 6: Cloud solutions are plug & play

Reality: Work needs to be done to integrate Cloud solutions with existing IT systems.
•Some Cloud solutions are Plug and Pay - the real value comes when Cloud is integrated with other services and business functions.
•The maturity of the integration and brokering market of the Cloud is quite immature.
 

Myth 7: Cloud solutions are less secure

Reality: Many Cloud providers have better security than most organisations because of the economies of scale of their business.
•Cloud service providers focus on security as part of their core business
•They can hire the world’s best talent.
•Like any prudent business, an organisation needs to gain assurance and to continue to monitor the service.

Myth 8: Once with a Cloud provider you don’t need to worry about business continuity issues

Reality: You cannot delegate business continuity planning to any external vendor.
•You need to understand what solutions and service levels the Cloud is providing.
•You need to develop your own business continuity solutions with your Cloud provider.
 

Myth 9: Cloud will still mean having to lock-in one provider

Reality: With the Cloud it will be easier to switch vendors as the distinction between data and software becomes clearer.
•For the Cloud to work effectively intermediaries will be needed to enable switching

Myth 10: Cloud is a technology issue

Reality: No. Cloud is a business value creator
•It is a strategic differentiator and a disruptor
•You can do new things with Cloud as an example Jetstar uses the Cloud to offer customers a one-stop for all travel needs e.g. through public cloud they provide customers with hotel options and the portal provides the agility and flexibility to expand alongside their customer needs. It was deployed in months, as opposed to years.
 

LAST WORDS

Flexibility and Enablement:

With the Cloud’s flexibility there are possibilities that on-premises solutions do not enable. The Cloud provides different business model possibilities, and different ways of involving multiple parties within an ecosystem. Internal private Cloud and the external public Cloud are no longer the only available options. Hybrid Clouds are now coming of age with capabilities and services that allow organisations to distribute their workloads to a Cloud environment that best suits their security, privacy and budget. Organisations will be empowered to build Clouds that meet their business models and not the other way around.

The Cloud enables multiple solutions, different points of integration, mobility, social collaboration and networking. It enables networking between the organisation, groups of vendors, business partners, and customers.

Deloitte Risk Services Partner Alastair Banks, along with Consulting Partner Kevin Russo lead an exciting Australian Cloud practice which provides end-to-end Cloud strategy and transformation services to Cloud providers and subscribers. The team uses a detailed playbook to accelerate and guide strategy, build architecture which incorporates design thinking, as well as implement Cloud services. As the nature of international regulation is becoming apparent, knowing how to navigate is critical.

This article was first published in Australian Banking & Finance April 2013.
 

Key contacts

Kevin Russo

Partner, Consulting

Key contacts

Michael Clarke

Partner, Deloitte Private

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