892RA - Switched-on: Cloud IT is Now About Business Velocity

What Is Happening? — For the past several years, the emphasis on most Cloud IT (i.e., SaaS, IaaS) acquisition and deployment by user enterprises has focused primarily on reducing costs and internal process improvement. One of the key selling points for enterprises of all sizes has been the ability to rapidly deploy without significantly affecting IT capital outlays. These factors alone could account for the vast majority of Cloud acquisition and deployment by user enterprises.

Within the past 12-18 months, however, Saugatuck has seen a dramatic and compelling surge in enterprise Cloud adoption and use by large enterprises – not only at the “fringes” of the business solution portfolio, but increasingly at its “core.” In many ways, this is being driven by factors beyond those that drove first-generation growth. The rapid, almost rampant, adoption and use of Cloud IT today is driven by an accelerating desire and demand by business executives to transform and improve their abilities to do business. Saugatuck has used the term “IT velocity” to help articulate the infrastructure and services aspects of this trend (874CLS, Can the Cloud Help Enterprises Achieve “IT Velocity?”, 14Apr2011). Based on analysis of our most recent research among enterprise and SMB executives and managers, we are adding the term “business velocity” to the Cloud lexicon as well.

Leading-edge Cloud buyers and users today seek something well beyond the traditional business benefits of Cloud noted above. Leaders are strategizing on, and investing in, Cloud to achieve business and IT transformation.

The net for Cloud buyers and providers is this: The Cloud opportunity is not just about the consumption of SaaS business solutions or IaaS storage or compute services. Cloud is about the transformation of enterprise business, and the increasing speed of that transformation.

Why Is It Happening? — As we have noted in several previous Saugatuck research pieces, there’s little about the Cloud that’s new (887RA, The Business Reality of the Cloud: Takeaways from Saugatuck’s Cloud Business Summit, 12May2011). It is Cloud’s size and scale that enable business and IT activity, growth, and change that few firms have been able to accomplish before. But there are pressures and other factors beyond this, contributing to a sudden emergence and emphasis on the speed of change for business and IT.

In his presentation at the All About the Cloud conference this week, hosted by the SIIA and OpSource, Saugatuck CEO Bill McNee summarized and explained those factors as follows:

•  Recessionary pressures shaping business approaches. In the wake of the “Great Recession,” businesses of all sizes have been reshaping themselves to better compete in an increasingly intertwined and complex global economy. This includes rethinking and reinventing ways of engaging with customers, as well as carving out new business opportunities.

•  Large enterprises are waking up. Saugatuck discussions with senior business and IT leaders, including our recentCloud Business Summit in New York City, repeatedly emphasize both the power and the threat of the Cloud – especially around the concept of accelerating Business Velocity for firms developing / implementing in the Cloud. Key benefits cited include substantially faster time-to-market and time-to-profit, a Cloud-enabled combination that Saugatuck has labeled “speed-to-business.” As noted earlier, in such an environment IT is increasingly being asked not only to help companies save money and facilitate internal process improvement, but to better enable the business to grow with differentiated new products, services and offerings.

Market Impact — What we see developing right now is that a more than significant perception and use of Cloud is shifting, from being fundamentally about saving money and reducing capital costs, to enabling business to. . .

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