1. This article originally appeared
in the October 2010 issue of
The journal of
high-performance business
On the Edge
Cloud computing:
Where is the rain?
By Kishore S. Swaminathan
Chief Scientist
Accenture
Cloud computing makes traditional IT faster, better
and cheaper—and it has the potential to change both
the business and IT landscapes in fundamental ways.
2. What’s not to like about cloud com- they can much more easily com-
puting? After all, among other things, municate and exchange informa-
it promises on-demand pricing, less tion with other IT systems from
IT overhead, lower cost and the ability other companies to execute busi-
to scale IT up and down quickly. ness processes that cross company
boundaries.
To be sure, all these are definitely
nice-to-haves. But in fairness, they Intercompany processes are not
don’t quite seem to add up to a pro- new. In the 1980s, Electronic
verbial paradigm shift. So is this Data Interchange was aimed at
just a passing cloud with no rain? communication between compa-
nies looking to exchange informa-
In fact, I think that anyone in the tion across a supply chain (most
C-suite (not just CIOs) should pay notably, within the automobile
close attention to cloud computing— industry). The travel industry
not because it makes traditional has integrated processes among
IT faster, better and cheaper but airlines, car rental companies and
rather it has the potential to change hotels to create business ecosys-
both the business and IT landscapes tems (the oneworld alliance, the
in some fundamental ways. Star Alliance, etc.) that offer pas-
sengers a single travel experience
Three predictions across multiple airlines, rental car
On a purely technical level, cloud companies and hotels.
computing blurs the line that
separates the IT that’s inside an Today, however, such processes are
organization from the IT that’s handcrafted and hardwired among
outside an organization. I predict systems involving a small number
that this is likely to lead to three of business partners or managed by
distinct classes of business and third-party “clearinghouses.”
wealth-creation opportunities.
Cloud computing in combination
I think these impending develop- with integration standards like
ments are significant because web services and service-oriented
the traditional data and process architecture has the potential to
isolation between and among enable inter-enterprise processes at
companies is about to break down, an industrial scale: complex business
and in its wake, new business processes that snake through
ecologies and value networks are multiple companies and their IT
about to emerge. Herein may lie the systems and that can be configured
proverbial paradigm shift inherent and reconfigured on the fly.
in cloud computing.
But you may very well ask: “Even
Prediction 1: During the next if this is technologically possible,
five years, we are likely to see what is the business driver for it?”
a dramatic increase in intercom-
pany business processes that, in Practically any human experience
turn, will lead to the emergence you can think of—whether it’s a
of “business ecosystems”—that is, vacation, a stint at the hospital or
groups of companies with comple- just living your average humdrum
mentary strengths that work seam- day—involves products and services
lessly with one another through provided by multiple companies.
intertwined business processes. Today, companies provide discrete
products and services that we, as
2
Outlook 2010
The moment a company’s IT sys- individuals, manage and orchestrate.
Number 3 tems migrate outside the firewall, The ability to flexibly weave together
3. a business process with services and applications can support a com-
from multiple companies around an pany from outside its firewalls. This
individual and his or her life (as the simple change is significant for two
travel industry does today) seems reasons. Smaller companies can have
like a strong driver in the business- access to sophisticated IT capabilities
to-consumer world. without incurring the overhead of
running an IT shop; at the same time,
Much as an individual’s life involves enterprise IT companies—for which
touchpoints with multiple products small companies were not attrac-
and services, almost every process tive targets under the endoskeleton
Cloud computing in organizations also involves inter-
actions with multiple business part-
model—can now provide IT capa-
bilities such as hardware, software
makes it considerably ners. Today, each business partner and services to thousands of small
sells a discrete product or provides companies from outside and thus
easier for companies a discrete service, and organizations achieve scale.
to configure business manage and orchestrate these inter-
nally (procurement or supply chain Interesting, but how important a
processes that integrate management, for example). development is this for businesses
and the IT industry as a whole?
internal components and Cloud computing makes it consider-
many external compo- ably easier for companies to configure There are many fragmented
business processes that integrate industries and groups of public-
nents into complex yet internal components and many sector entities—construction, educa-
fluid processes around external components into complex yet
fluid processes around their business
tion, health care, legal and small
municipal governments, to name
their business needs. needs. This seems like a strong driver a few—where the industry as a whole
in the business-to-business world. is large but the companies that make
up the industry are relatively small.
Prediction 2: Cloud computing They are large in the aggregate but
provides an “exoskeleton” model fragmented to the point that they
for IT capabilities as opposed to are not an economically viable market
the “endoskeleton” model we use for large enterprise IT vendors.
today. As a result, fragmented
industries (which are collectively Consider construction. In the United
underserved by IT today)—con- States, for example, it accounts for
struction and education, to name approximately 4 percent of GDP. But
a couple—will become attractive it is made up of architects, builders,
white spaces for technology and workers, material suppliers, con-
service companies to fill. struction equipment makers, ware-
house operators, building inspectors,
The current IT paradigm may be and many other constituent parts,
called an endoskeleton model of all with significant dependencies
IT: Data centers and applications and a need for coordination. Cloud
support a company from inside computing, with its exoskeleton
its firewalls. As such, to a large model, can serve the entire ecosys-
extent, only big companies have tem by consolidating their process
had the need and the ability to run and data flows. In other words,
complex data centers and applica- individual companies are too small
tions. Consequently, large companies to need ERP-like systems, but the
have been the traditional targets industry as a whole does, and cloud
for large hardware, software and computing makes that possible.
service companies.
This means that there are lots of
3
Outlook 2010
Cloud computing provides an exo- white spaces to be filled by IT and
Number 3 skeleton model of IT: Data centers a lot of wealth to be created.