Analyst Commentary: IBM, Cloud and innovation

Grazed from Business Cloud9. Author: Katy Ring.

In a global survey of more than 1,000 CEOs IBM found that a key theme amongst them is the requirement to collaborate to reinvent customer relationships, and that they view technology as being an increasingly important external factor impacting on business.

I caught up with Fiona Cullen, Vice President Cloud Computing, IBM Europe, who told me that she believes that Cloud delivery is part of the solution to providing CEOs with what they are looking for. Furthermore, she thinks Cloud is now becoming business as usual in IT departments, with a recent IBM/Economist survey finding that around 75% of companies have piloted, adopted or substantially implemented Cloud in their organisation…

However, while adoption for IT efficiency reasons is becoming mainstream, IBM finds that widespread understanding of how Cloud can enable business innovation is much less pervasive.

From K2 Advisory’s work with the CIO Research Forum this is not such a surprise because the main responsibility for migrating workloads to the Cloud or for selecting it as the delivery model underpinning new services belongs to the CIO.

So, it will only be in organisations where the CIO is not only represented at a senior decision-making level, but who also wants to suggest transformational business approaches, that Cloud and innovation will be natural bedfellows. In the meantime Cullen suggests that speed and agility are some of the main benefits that Cloud affords CIOs.

So how do CIOs cross the gap between using Cloud technology as a business optimiser, and using it to “transform” business? IBM’s own CIO office provides some useful information on this. It has implemented Cloud computing internally across six IT workloads: development and test, analytics, storage, collaboration, desktop and production applications.

In essence these implementations seem to have primarily been driven by operational efficiency and capital savings considerations. But, once some workloads had moved to the Cloud, the flexibility offered has helped IBM to conduct business differently.

In this vein IBM’s CIO office has been especially impressed by the benefits of putting analytics in the Cloud: IBM’s analytics cloud put an end to siloed business intelligence (BI) and the six-figure funding required for new BI projects.

Organisations across IBM are tapping into a centralized analytics Cloud known as Blue Insight, for tools and intelligence aggregated from hundreds of information warehouses. The associated savings are expected to reach tens of millions over five years. All of which nails the “technology as optimiser” business case.

However, IBM sales teams are using Blue Insight to gain a deeper understanding of each client’s needs, not just for their own IBM product group or region, but for all IBM products and services worldwide. IBM’s product development teams are using Blue Insight to analyse sales information, industry trends and customer perceptions more efficiently and to adjust their product planning and development specifications accordingly. This usage example moves the Cloud implementation into more of a business case supporting innovation and transformation.

As a CIO, once you can capitalise on a success like that, it increases the levels of permission to get more involved in discussions about business transformation. IBM’s CIO office also has some interesting views on how to go about developing a risk/reward profile for migrating different workloads to Cloud and makes the point that if you play it safe and stick to low risk workloads, you may not get much back in the way of business reward. Check out the paper yourself