Cloud Services Interest Erupts in Groundswell

The anticipated benefits from adopting managed cloud services have reached the executives suites of many corporations. Proactive CEOs and CFOs are pushing their IT leadership team to seek out actionable information and guidance.

There's also a constant stream of service providers announcing new offerings -- and the momentum is becoming a global phenomenon. As a result, Forrester Research has witnessed an expanding number of client inquiries around cloud computing.

The acceleration in market development has been building for some time now. Forrester analysts responded to more than 264 client inquiries about cloud computing between January 2008 and April 1, 2009 from companies of all sizes and industries.

IT Teams are Adopting Cloud Strategies
Once considered a niche business technology where awareness was viewed as optional, Forrester now says that knowledge of cloud computing has become an IT organization necessity. Interest is fueled by expectations of major cost savings, scalable and dynamic environments, on-demand infrastructure, and much smaller maintenance requirements.

In a recent research note, Forrester outlined the most common questions about cloud services.

Twenty-three percent of cloud computing inquiries were about the types of applications that companies were moving into the cloud and how best to leverage cloud service environments. People want to know the spectrum of possibilities -- what apps to put in the cloud?

Some questions are motivated by the need for improved business agility. The promise of better scalability and versatility makes cloud services appealing. Moreover, innovation is often stifled by the investment needed to acquire and deploy new IT infrastructure and associated application environments.

Fifteen percent of the inquiries were on challenges, risks, and the effects of cloud-based services on IT -- such as, what are the typical use cases, and how much enterprise data should live in public clouds?

Clouds are Coexisting in Hybrid Models
Forrester believes questions regarding when to build internal clouds, and the "internal vs. external" debate, will be at the forefront of cloud computing due diligence in the coming months -- which cloud service scenario is a best-fit for our particular needs?

Forrester concluded from their client engagements that cloud computing represents a significant shift in the way IT operates today -- it's not a passing fad, it's a trend that's based upon solid business need for a change in the status quo.

The following are Forrester's recommendations:

• Know your costs, requirements, and potential areas for cost saving.
• Businesses with basic requirements can begin to pilot public clouds.
• Evaluate internal clouds, while also considering a hybrid model.
• Formulate standards, and a cloud policy to govern procurement.
  

As the momentum for managed cloud services continue to build in 2009, we'll be on the lookout for additional sources of insight.

Exploring Managed Services - Key Performance Indicators

All business has become global. Companies of any size can now market products and services worldwide over the Internet. At the same time, competition has intensified because customers can investigate global competitors with ease.

To compete effectively in the global networked economy, companies need new capabilities:

• Global procurement and sales 24 hours a day.
• Integrated internal and external business processes.
• Up-to-the-minute access to sales, order processing, production, and other business critical information required for informed decision making.
• Flexible processes that can adapt dynamically to changes in the business climate.
  

The application of Business Technology is now a primary enabler of strategic advantage. However, chief executives have become impatient, as their companies have failed to keep pace with these advances. There are alternatives, for those who choose to act. The managed services model can be applied to accelerate this much needed change.

Review the following common business needs to decide if managed services can provide benefits to your business. If you answer yes to these key performance indicators, then perhaps there are areas where out-tasking could help drive change.

Are you a candidate for managed services? Consider these scenarios.

Our business is facing challenges:

• Staffing IT professionals.
• Staying up-to-date with evolving technologies and IT skill sets.
• Managing and maintaining current infrastructure, hardware, and software.
• Securing data, transactions, and communications.
• Responding quickly to time-to-market demands.
• Remaining flexible enough to maintain competitive position.
• Reducing network overhead costs.
• Operating in real time in order to meet 24-hour demand.
• Delivering services to branch offices and remote workers.
  

Our business is in transition:

• We need to upgrade, refurbish, move, or relocate existing infrastructure.
• The scope or scale of current business operations is changing.
• A merger, partnership, or acquisition is altering operations.
• We need to increase the range and level of service.
• Our growth targets depend on implementing new technologies.
• We are expanding into new markets.
  

Our business must increase profitability:

• We prefer to dedicate resources to our core competencies and mission critical processes rather than network support activities.
• We view managed services as a good strategy for gaining efficiencies and reducing costs.
• We need to implement a global network service but lack internal global resources.
• We are concerned with our ability to keep up with the latest security threats and to meet privacy or security regulations.
• We are experiencing dynamic business growth while undergoing downsizing and hiring freezes.
  

Initiate a dialog with a managed service provider, and you can begin to explore the possibilities of how to effectively adopt Business Technology as a Service.

A Boom in Managed Services - How to Prepare

New studies demonstrate the pros and cons of Business Technology deployments, especially as they relate to IT investments strategies.

First, the downside: in a recent study of IT management excellence, the results showed the continuing disconnect between finance and IT roles, and the value each one brings to the organization.

As the report states: "The lack of alignment within organizations is exacerbated by a lack of awareness on the part of both IT and finance about their own contributions to the problem. Nearly one quarter of the respondents report that discord between IT, business and finance is a frequent occurrence when making IT investments."

Why Clear IT Processes Matter
Lack of alignment is triggering a bigger cascade of problems relating to IT investment. For instance, sometimes companies excuse their lack of IT investment due to limited budget and resources.

In reality, "companies are unsure how to define or implement management processes, therefore they are unwilling to make significant changes and they allow other investment priorities to step to the front."

The temptation in this scenario might be to outsource the contentious area to a third-party to save money. This is exactly the wrong time to act.

Clearly, you have to get your own house in order before you take advantage of out-tasking, and then you have to apply strong governance to the service provider relationship. If you can't manage the process internally, you surely can't manage it externally.

Foundation for Competitive Advantage
Why do you need to get your house in order? Assume your competitors are going to act, and thereby gain an advantage from deploying managed services.

Forrester Research analyst Henry Dewing predicts in The Broad Opportunities in Managed Services that "macroeconomic factors, including rapid technology evolutions, a coming investment wave in IT, and market constraints on capital, increasing the attractiveness of managed services over the next 24 to 30 months."

In fact, Dewing proscribes the managed services model, represented by the confluence of faster technology change, a new technology investment cycle, and capital constraints. It's a proven way to take advantage of new technologies without capital investment -- while still having a hedge against increasing change.

Even more important, Dewing continues, "Given limited prospects for growth and the high cost of capital, Forrester believes that many businesses will turn to managed services to limit capital investments while increasing the flexibility of IT infrastructure."

Now, the upside: if you want to be in a position to take advantage of technological advancement to spur new growth -- while still hanging onto precious capital -- then managed services is likely the way to go.