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Cloud computing

For private companies, hybrid cloud technologies are emerging as a potent force within the IT infrastructure.

Cloud computing continues to dominate the technology landscape for many private companies.

By 2019, it's estimated that around 40 percent of the projected $141 billion in spending on public cloud services will originate from small and mid-sized firms. For the third straight year, venture capitalists ranked cloud technologies as the hottest investment sector in Deloitte’s most recent global survey of investor confidence.29 Meanwhile, approximately two-thirds of chief information officers (CIOs) view cloud computing as a principal disruptive force in their businesses, according to a separate survey of technology leaders.30 As growing numbers of organizations choose cloud-based solutions — for enterprise resource planning, data centre support, and a host of other functions — the virtualization of IT is helping private companies go head-to-head with bigger competitors.

“Private companies are increasingly looking to the Cloud as a competitive differentiator,” says David Brassor, a director and Cloud lead for Deloitte Canada. “The ability to rapidly provision technology and new services enables organizations to more effectively react to market demands.”

By 2019, it’s estimated that around 40 percent of the projected $141 billion in spending on public cloud services will originate from small and mid-sized firms.

Issues

Early adopters of cloud computing, which provides on-demand access to shared technology resources through the Web, often viewed the innovation as a way to curb costs and free themselves from the restrictions of legacy software. But for pioneers and new converts alike, challenges remain. Cloud platforms typically enjoy a reputation of being ready to use, but the applications often must be integrated into existing technology across the enterprise. The technology also has to serve the company’s mission — a cloud application that manages consumer data for a retailer may not fulfill the needs of a manufacturing company, for instance. As with any external provider, CIOs should be vigilant to confirm that cloud vendors uphold service-level agreements covering cost and service delivery.

Security and privacy are also paramount. Cloud platforms can help companies manage growth in the Big Data era, but not all information is alike. Patient data, banking details, and personnel records are examples of information that are governed by discrete rules and regulations, and vulnerable to misuse if it falls into the wrong hands.

Opportunities

For private companies, hybrid cloud technologies are emerging as a potent force within the IT infrastructure. By combining private cloud environments with public cloud resources, companies can manage services on a common dashboard, filter data based on security requirements — keeping sensitive information on private servers — and make software changes based on business needs. The technology research firm, Gartner predicts hybrid cloud technologies will give rise to a new generation of applications powered by lightning-fast analytics that provide deep insight into customers and processes.

Cloud computing also can help private companies shift their IT spending from capital expenses (CapEx) to operating expenses (OpEx). For instance, cloud-based enterprise resource planning (ERP) systems for functions such as finance, manufacturing, and supply chain management can eliminate long-term investments in favour of pay-as-you-go expenditures. The OpEx approach also affords a degree of flexibility — companies can scale up or scale down depending on business needs and free up cash for other investments.

Private companies on the hunt for acquisition targets may also have an opportunity to use cloud computing to complete deals with lower IT implementation costs. Transactions can benefit from cloud applications that allow the sellers’ systems to integrate more quickly into the buyers’ infrastructure. In divestitures, cloud computing can also provide an effective way to build a computing infrastructure without major disruptions to customers.

For companies that may not be completely cloud-ready, executives should also consider emerging models that permit integration of cloud solutions with legacy software. These Integration Platform-as-a-Service (iPaaS) solutions allow companies to take advantage of the speed of the cloud while utilizing existing, on-premises applications.

Questions to consider

  • How can you integrate leading cloud solutions to help create the optimum computing configuration for your company? 
  • How do you decide whether the effort and money required to modernize legacy systems could be better spent on cloud- based solutions? 
  • In which situations should you choose a two-tiered computing model that combines the power of the cloud and your existing, on- premises software?
     

Author

Matthew Kenny
Partner
Consulting Leader
makenny@deloitte.ca
 

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