In the last decade, breakthrough technologies have transformed the way companies operate and interact with their customers. Cloud computing is chief among the technological innovations driving these shifts. Hugely successful companies like Facebook and Netflix have based their core business operations in the cloud. These companies, among others, have given the world incredible insight into the potential of the cloud and have opened the door for many other businesses to explore its possibilities and benefits. Given the precedent set by these two household names, why hasn’t the cloud experienced mass adoption more quickly? And while more companies are moving more of their applications to the cloud, why haven’t we seen more companies going all in?
On the surface, it may seem more logical for companies likes Facebook and Netflix to host their business operations in the cloud since their respective core businesses run on one single application. In contrast, a typical enterprise needs anywhere between ten and 10,000 applications to operate. However, that is precisely why businesses should consider the all-in approach. Remember that for each different function, including purchasing, client relations and payroll – just to name a few – a different application is required. The process of building applications and the infrastructure to support each application can be very costly, time consuming and quite risky if the end product doesn’t meet the needs of the organization. For this reason, enterprises often rely on vendors with proven, large-scale cloud platforms, infrastructures and services for various functions. In turn, these services enable the customer to focus on their own mission.
Businesses stand to benefit from the all in approach for three key reasons:
- There’s no such thing as a unique business (at the app level): Every enterprise aims to deliver unique value to their customers and stand out in their respective market. However, at the infrastructure level, a very small percentage of applications are truly unique. This means that essentially all businesses in the same sector can leverage the same generic architectures. Companies therefore do not need to rely on their own legacy hardware to run their applications. It’s not necessary, and it’s not cost-effective, which brings us to the next point.
- Economies of scale: It’s been said before but it bears repeating – cloud computing was designed to scale. Multi-tenant infrastructures naturally require less hardware and the costs of maintenance and upgrades are distributed. The cost benefits are then passed on to the customers, who no longer need to rely on expensive legacy maintenance, software upgrades and time-intensive tasks. Consider the steps required to build even a simple database. An organization needs to specify the necessary hardware, complete the procurement process, rely on the teams that manage the data center to allocate space for the new gear and ensure that there will be enough power and cooling for the new equipment. In addition, the team will need to run all sorts of cables, engage the assembling team to perform physical gear installation, involve the operational system team to install the servers and the storage team to create the necessary disk volumes or buy additional disks – which may require going back to the procurement team. Lastly, they’ll need to engage the network team to perform the necessary configurations and finally involve a database administrator to install the database. This process is labor-intensive and can easily take three months.
- Specialized services are simply better: If you take a closer look at how many companies operate their own payroll systems, you’ll likely discover very few actually do. Companies like ADP and Paychex have built reputable brands and secure platforms that make the operation seamless to the customer through simple interfaces. And payroll is just one example of thousands of applications that are not unique to any particular business and can easily be leveraged by many. Another example is customer relationship management (CRM) and Salesforce.com. Why would anyone develop, deploy and maintain the systems needed to track customers in house when businesses just want an easy to use and efficient CRM tracking system? If an organization, like Salesforce.com, is in the business of helping other businesses deliver better service and grow in new markets, then it’s a no brainer to go with their service.
Remember, you don’t need to be Facebook to reap the benefits of the all in approach to cloud computing. The ‘as a service’ model provides businesses with proven, enterprise-scale and high quality services for each of their non-core business functions. By going all in to the cloud, businesses can stop worrying about managing and maintaining servers, and instead focus on their actual business.
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