Few companies are immune to the forces of market disruptions. In the US, in 2016 the average tenure on the S&P 500 was 24 years, and it is forecast to shrink to 12 years by 2027. Innosight, a strategy and innovation consulting firm, states that market turbulence points to the need for companies to embrace a dual transformation – making the core business more resilient, while at the same time pursuing a strategy to create tomorrow’s growth engine. 1
The rapid rise of digital technologies allows companies that use technologies such as social, mobile, cloud and analytics to offer more choice, lower prices, faster service, or even new offerings that were unimaginable years ago. To avoid becoming the prey of the next digital predator, companies must increase the pace at which they develop, deploy and enhance new products and services. At the same time, they must continue to execute the legacy systems which generate today’s revenues at peak performance, all while improving security and reducing costs to meet competitive pressures.
As the exploitation of digital technologies becomes more strategic, the CIO has to move beyond the traditional role of IT as a support organisation and shift towards an enabler role. As a broker of IT services, the CIO can help business units choose and manage a mix of internal and external hardware, software and resources to best achieve the organisation’s strategic objectives.
IDC defines digital transformation as “the continuous process by which enterprises adapt to or drive disruptive changes in their customers and markets (external ecosystem) by leveraging digital competencies to create new business models, products, and services. Digital transformation enables enterprises to seamlessly blend digital and physical business and customer experiences while improving operational efficiencies and organizational performance.” 2
Cloud as a technology enabler
The cloud plays a special role by both enabling new digital solutions, but also by freeing up CIOs from day-to-day technology management so that they can spend more time on strategic business issues. The common metric used for where IT spends its budget and resources is that 80% of IT spending is on maintenance (“keeping the lights on”) and 20% on innovation. Cloud has a major role to play in potentially reversing this imbalance.
Cost savings coming from cloud derive from the vast economies of scale that cloud providers can achieve. Purchased, on-premise infrastructure costs include:
- Real estate for a data room
- Large up-front capital expenditures
- High energy costs
- Security and access management costs
- Support and maintenance including upgrades and patching
- Human resources
These can be replaced with a single, monthly subscription charge from a cloud provider. But there are additional, strategic advantages to be gained from embracing hosted private cloud services.
Using the cloud can free up CIOs from managing a complex IT environment which, increasingly, delivers little to no competitive advantage. Now the CIO can focus on how to leverage infrastructure for greater competitive advantage through digital transformation. Now the CIO has greater agility to respond to opportunities by being able to spin up virtual hosted server, storage and network resources to take immediate advantage of market opportunities as they arise – without large capital expenditures. Now organisations can adopt development methodologies such as Agile and DevOps to bring new products and services to market more quickly.
Note that we are talking not about a single instance of a private cloud. We are potentially and more likely talking about an environment that includes legacy on-premise infrastructure, hosted private clouds (plural) and niche public cloud applications. These can include moving applications to the cloud, such as Office 365 and salesforce.com and so on. The key objective here is the transformation of the IT organisation and the CIO into agents of digital transformation and business transformation.
Engaging with a hosted private cloud provider is an excellent first step. Somerville has positioned itself to be a leader in the Australian cloud market. Somerville’s private cloud offering, underpinned by HPE’s technologies with its known and trusted brand, provide a powerful combination to deliver private cloud to the Australian market. Data centres in Sydney, Melbourne, Brisbane, Perth and New Zealand provide private cloud infrastructure with enterprise-class uptime, reliability and security. Customers get an Infrastructure-as-a-Service (IaaS) platform, with the cost-benefits of shared resources, access to expertise, and with SLAs around redundancy and uptime.
Somerville will manage the service including migration and loading of workloads, operational monitoring, day-to-day management and maintenance. All for a monthly subscription charge. Please contact us here at Somerville to begin your cloud conversation.