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10 Reasons Why Cloud Computing Will Assist with Recovery and Growth (Reason #9)

If you’ve been waiting for Reasons 9 & 10 in this series…I profusely apologize. As pointed out in my last blog, we’ve been busy discussing Reasons 1-8 with many business owners and leaders. Thanks for the interest and dialog.  It’s been great.

So, let’s wrap this series up and introduce Reason #9

 Decrease Your Company’s Carbon Footprint

On average, most premise data center’s servers are between 10% – 20% utilized. That means that the remainder of the time, the idle hours are spent sucking power with no real benefit for the company. The Cloud dynamic of pooling resources provides a great opportunity for consolidation and conservation of energy. While this will save your company thousands of dollars in utility costs, it also has the potential of reducing your overall IT carbon footprint by as much as 90%.

The conservation goes beyond the premise based power consumption alone.  Again, due to pooling of resources, significantly fewer “boxes” are required to support the collective.  The fewer “boxes” needed to be manufactured, shipped, and then sometime down the road, disposed of, the lower the carbon footprint!

Will IT Continue to Operate Under the Regulatory Radar?

With so much focus on “climate change” within political communities and a regulatory environment expanding at a record pace, how long will it take for this dynamic to impact IT?  IT is a “hotspot” of energy consumption within the enterprise. Power that runs the “boxes” and keeps them cool is a concentrated area of usage. While this remains an area mostly unregulated, the question becomes “for how long?” By moving the data center to the Cloud, a business can move that potential area of regulatory hassle to the Cloud Service Provider, who is more capable of spreading the cost across scale.

For most Cloud Service Providers, because of scale, the energy efficiency of the data center far exceeds what is economically practical for most premise based systems.

Some Additional Thoughts on the Power of Cloud Computing in the New Normal

Growth Within the New Normal

It’s been great getting all the feedback and dialog from our “10 Reasons” list highlighting reason why the Cloud can play a role in a business’s growth and recovery.  And even though we have two more reasons to go, based on the interest and conversations, I thought I would add some additional thoughts on what’s been published thus far.

When meeting with business owners, the dialog always includes how their company will conduct business in the “New Normal” economy. While many companies have managed through the economic downturn, they are now looking for ways to recover and grow. Certainly every business is unique. However, specific economic issues are universal and will continue to influence the economic environment in which the enterprise operates and will continue to apply pressures counter to the efforts of business to find areas of growth.

One of the largest influences over our economy is our National Debt.  At the macroeconomic level, our National Debt weighs heavily on our economic condition. With the National Debt now approaching $17 trillion with no end in sight to deficit spending, the hard reality is that this only hints of the actual U.S.debt. The more imposing issue is the burden of almost $84 trillion (and growing) of unfunded liabilities/commitments such as Social Security, Medicare/Medicaid and now liabilities from the Affordable Care Act. Since our Government keeps three sets of books, (The Official Budget, the Audited Version, and a third unpublished version which includes the net present value of these liabilities/commitments), the discussion of these unfunded liabilities can be complicated.  However, most analysts report that in order for our government to begin to cover the current imbalance, revenues must grow at a minimum from the 50-year average of 18% of GDP to at least 25% of GDP. 

This increase of revenues means an increase in taxes that will have a long-term macroeconomic impact on our economy and the businesses that operate within that economy. Many economic analysts predict that for the foreseeable future, our economy will be flat or even trending down. In short, higher marginal tax rates results in a smaller economy.

And here in lies “the rub.” If the economy is going to continue as the “New Normal,” flat or even trending down, where can a business find growth? Again, if the economy is flat, can real and sustainable growth come from a business’s existing markets, which will also be dealing with flat or trending down economy?

Most businesses that I meet with are now recognizing that real growth will need to come from their entry into markets that they previously had not actively pursued. With the decision to enter new markets, the business managers must build plans that allow for:

  1. Strategic Agility
  2. Reduction of Risk
  3. Competitive Advantage

And here is where the Cloud can play a critical role in facilitating growth and recovery in the “New Normal” economy.

When a business begins to explore and experiment in new markets, limitations to traditional IT methodologies can get in the way. By placing the data center in the Cloud, the provisioning of IT resources can be immediate and without upfront capital, as opportunities develop. As the opportunity matures, these resources mirror the state of the opportunity.  In other words, there is little or no risk deploying IT resources in the Cloud. If successful, the IT environment for the new market experiment can be matured, advanced, expanded, etc. Should this experiment not pan out, the IT environment in the Cloud can be decommissioned on demand and the company is not stuck with expensive and capital intensive IT resources that are not producing revenues.

One of the greatest benefits of moving IT to the Cloud is the liberation of IT resources to focus the business to once again seek out technologies for competitive advantage.  As companies look toward new markets for growth, the idea of competitive advantage, in order to capture a significant portion of that market, comes to the forefront. When IT first entered the business environment, huge gains in competitive advantage and productivity occurred. Then, over time, the dollars and the professional capital that a company spends on an annual basis for IT began to shift from innovation to maintenance of the “boxes” that support the existing IT plumbing. By moving the IT plumbing to the Cloud, the enterprise can save significant financial and professional capital to be used for higher and better purposes such as finding, developing and implementing that next “killer application” that provides the necessary competitive advantage for that new market.

In summation, if the economy is going to remain flat or trend down, the enterprise will need to move beyond its existing markets to find growth as those existing markets will themselves remain flat or trend down.

By moving their data center into the Cloud, a company can:

  • Remove IT complexity that limits strategic agility
  • Allow for experimentation or testing of the waters in new markets without upfront outlay of precious capital resources greatly reducing risk.
  • Refocus dollars and internal IT staff in the development of customer facing solutions that drive revenues and provide real competitive advantage.

 

 

 

 

10 Reasons Why Cloud Computing Will Assist with Growth and Recovery (Reason #8)

A Change in the Nature of Today’s IT Conversation Is Underway

As economic realities are settling into a position of what many are calling the “New Normal,” what’s the nature of your company’s IT conversations? While business continues to manage through current economic conditions, IT spending is increasingly being reviewed through the lens of value creation. IT is finding it must move through barriers of IT complexity and re-imagine itself as a source of customer facing innovation that drive revenues.

The IT conversation must move away from traditional and long established budget and spending patterns that trap the bulk of a company’s IT spend in merely keeping the existing “IT Plumbing” working.  Instead, IT leaders are being asked to support business innovation and provide value and productivity.

How to Begin Creating a Cycle of IT Value Creation

  • Prioritize managing IT activities to the creation of value. Business outcomes become the real and only value measurement of IT worth. Simultaneous activities of managing IT cost and focusing investment on IT solutions that provide competitive advantage.
  • Manage out complexity. The real power of IT within the enterprise are the applications. Hardware is the only the overburden necessary for the applications to run. Simplify overall data center management through outsourcing routine acquisition, implementation and support of hardware, and point liberated funds towards innovation.
  • Manage in Innovation. Support unique business functions by providing solutions to business problems through technology. This is the only way to provide value over time.
Shifting focus from technology outcomes to business performance is not easy with traditional premise based data center approach. The Cloud provides a great first step in a company’s effort of IT value creation. By using Cloud services a business can liberate both precious capital and personnel resources that can be utilized for the higher and better purposes of creating customer facing, revenue generating, and new market penetrating solutions.  The Cloud allows a business the opportunity to manage out complexity … manage in innovation, while finding the dollars to do both.