IBM Touts “The Power of Cloud”

Here’s what I asked and how he responded:

Cloud Computing Journal: This new report states that the power of enterprise cloud remains virtually untapped. Can you put a specific number on that assessment, in terms of enterprise IT spend or percentage of IT spend? And how do you see things developing over the next three of four years?

Dr. Saul Berman: Our survey results indicate that while 72 percent of respondents have piloted, adopted or substantially implemented cloud today, that number will increase to 91 percent in three years. There’s no question regarding the growth trajectory, Forrester Research, for example, forecasts the overall global cloud computing market will grow to $241 billion by 2020.

But we believe organizations are just beginning to understand the power of cloud to help drive business innovation. Only 16 percent of our survey respondents currently utilize cloud for sweeping innovation, such as entering new lines of business or industries, reshaping an existing industry or transitioning into a new role in their industry value chain. However the number more than doubles to 35 percent that plan to utilize cloud for business model innovation within the next three years.

CCJ: A traditional view of cloud-computing follows SaaS/PaaS/IaaS adoption or some sort of checklist that monitors "progress" in moving to the cloud. In contrast, IBM’s "Power of Cloud" research identifies specific types of cloud customers – optimizers, innovators, and disruptors — who don’t represent straightline progress, but rather, sui generis archetypes.

SB: The Power of Cloud study approaches the topic of cloud computing from a business strategy rather than an IT perspective. As strategic decision makers most executives need to be concerned with the overall business and its positioning in the marketplace.

In our dealings with enterprises around the globe, we are seeing a significant number of companies looking to cloud as a new platform to transform internal operations, customer relationships, and industry value chains.

The results of this survey, which IBM conducted in conjunction with the Economist Intelligence Unit, reaffirms that companies are not only relying on cloud to enhance internal efficiencies, but also to target more strategic business capabilities. In fact, our respondents’ number one objective for adopting cloud is an external capability — that of increased collaboration with external partners– and only one of the top seven objectives cited focused on internal efficiencies.

CCJ: And how did you arrive at the three types of adopters?

SB: Looking at this landscape through a business strategist’s lens, we observed the three business archetypes, representing the extent to which organizations use cloud to impact their company/industry value chains and customer value propositions:

Optimizers use cloud to incrementally enhance their customer value propositions while improving their organization’s efficiency.

Innovators significantly improve customer value through cloud adoption, resulting in new revenue streams or even changing their role within an existing industry ecosystem.

Disruptors rely on cloud to create radically different value propositions, as well as generate new customer needs and segments – and even new industry value chains.

CCJ: Have you seen customers that fit into more than one category?

SB: Many of our clients fall into the Optimizer category. But we do see data showing that their use of cloud will spread more broadly in the future to create new revenue sources, which inevitably will push them into the innovation area, and possibly even the disruptor category.

Another interesting observation is that the more digital or information-based businesses seem to move more readily into the innovation and disruption categories.

CCJ: The report also mentions six key cloud enablers. How do these fit in with the three archetypes? That is, is there some sort of scale for each of the enablers that, added up, results in being viewed as an optimizer, innovator, or disruptor? Or is each customer a unique case?

SB: Our research illuminates six key cloud attributes being used to power business model innovation, which we’ve dubbed "business enablers." They are: cost flexibility, business scalability, market adaptability, masked complexity, context-driven variability and ecosystem connectivity.

There’s not really a scale for each of the enablers that would automatically place a company into one of the three archetypes mentioned above. But we do have a matrix which focuses on the customer value proposition i.e. where the company is in terms of wanting to enhance, extend or invent the customer value proposition; and the Value Chain, which reflects the company’s intent to improve, transform or create a value chain.

If you go far enough on one of the dimensions it will move you from one archetype category to another. But each company and every industry really is a unique case. Each company needs to look at all six of the enablers and see which combination of them will help them achieve their objectives.

Basically, the more they want to innovate and disrupt, the more of the enablers they’ll use.