IDC research vice president, Dave McCarthy says the cloud is no longer considered a location but rather an operating model for future innovation. "The agility provided by cloud methodologies enables organisations to quickly deliver at scale on rapidly changing requirements from internal and external stakeholders," he added.
In the Asia-Pacific region, IDC says organisations have accelerated digital transformation (DX) and the adoption of cloud in the past two years. They have adopted various cloud operating models as the core foundation to help them pivot towards a digital-first economy. However, given the anticipated strong headwinds and recessionary pressures rising, IDC predicts that businesses will seek to derive greater benefits from their cloud deployments beyond typical gains such as IT productivity.
FutureCIO spoke to Franco Chiam, vice president for cloud, data centre & future of digital infrastructure at IDC Asia/Pacific, for his thoughts on how cloud computing has altered the valuation of computing to businesses.
What is the value of cloud computing to commercial businesses?
Franco Chiam: Over the last decade, cloud platforms have transformed everything from what we used in day-to-day payment systems to consumption-based service models. Consumption as a service has become the basic form of business, especially in a rapidly developing digital economy.
"Cloud computing can significantly reduce the upfront costs associated with hardware, software, and infrastructure and by using cloud services, businesses just need to pay for what they need and scale up or down based on their requirements."
Franco Chiam
What are the key elements beyond cost?
Franco Chiam: With a flexible (cloud) platform, things can get complicated if not managed well and it is therefore critical to note that while cloud services can bring tremendous value to any potential organisation, it is equally important to be able to manage this double-edged sword.
Therefore, a cloud modernisation framework and strategy are key to any successful cloud adoption and ongoing management. Here are some of the key considerations beyond cost:
- Business value alignment
- Leverage native cloud solutions/technologies
- Disaster recovery
- Data & security
- Customer satisfaction
What metrics should be included in the quest to quantify this value?
Franco Chiam: There are many metrics of consideration, and I would mention two aspects:
Business Alignment: Total cost of ownership (TCO) must always be in-tune with business value, and this means the measures of the total cost of a cloud solution over its lifetime, including upfront costs, ongoing maintenance, upgrades and how these recommended solutions will contribute to the desire business outcomes. By comparing the TCO of a cloud solution to the TCO of an on-premises solution, businesses can evaluate the cost-effectiveness of their investment.
Customer Satisfaction: Business leads will agree that a happy customer drives profitability. This metric measures the satisfaction of customers who use the cloud solutions invested in by the organisation. By improving customer satisfaction, businesses can retain customer lifetime value and improve services and products. It is of utmost importance that solutions must be built based on customer feedback and relevancy!
How relevant is cost optimisation as a value lever in the current recessionary environment?
Franco Chiam: Cost optimisation will always be a key value lever in any economic climate and even more so during the current environment. Businesses are constantly looking for value-added services, opportunities and means to optimise cost and maximise efficiency to maintain profitability and sustainability.
In addition to the current recessionary environment, businesses need to work not just on cloud solutions, but also on areas such as process and supplier optimisations. For example, more efficient and effective supply chain management can provide better quality products and services at lower costs. Likewise, an improvement in internal and/or external processes can reduce waste in labour, and time spent and therefore reduce unnecessary waste.
What are the pragmatic steps enterprises can take to maximise value realisation?
Franco Chiam: Think big but start small. Define S.M.A.R.T. (Specific, Measurable, Achievable, Realistic, Time-based) targets.
The first step is to always start defining clear business goals and objectives in alignment with business needs that can be achieved with technological solutions. Stakeholders need to understand the importance of the value propositions to support and drive execution.
Develop a technology strategy and roadmap that detailed the milestones and targets to achieve business goals and improvements. This may include consolidation and retirement of legacy systems and environment.
Foster a culture of cloud-first strategy or digital-first mindset across the organisation. This prepares an organisation to always leverage the best-fit solution in achieving business goals and objectives.
Finally, always measure the outcomes and review for lessons learnt and improvement. Measure performance (KPIs) through time to deliver, product to market, and service levels. Measure success in the form of customer retention, satisfaction score, feedback, etc., and employee satisfaction and review.
