Accenture outlook cloud_computing_where_is_rain
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  • 1. This article originally appeared in the October 2010 issue of The journal of high-performance businessOn the EdgeCloud computing:Where is the rain?By Kishore S. SwaminathanChief ScientistAccentureCloud computing makes traditional IT faster, betterand cheaper—and it has the potential to change boththe 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, as2Outlook 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 endoskeletonCloud computing in organizations also involves inter- actions with multiple business part- model—can now provide IT capa- bilities such as hardware, softwaremakes it considerably ners. Today, each business partner and services to thousands of small sells a discrete product or provides companies from outside and thuseasier 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 aprocesses 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 nametheir 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 of3Outlook 2010 Cloud computing provides an exo- white spaces to be filled by IT andNumber 3 skeleton model of IT: Data centers a lot of wealth to be created.
  • 4. Prediction 3: Cloud computing economical to source such business will give rise to what could be processes from the outside. Because called “business process utilities”— of their simplicity, these processes companies that provide simple and will require no customization and common business processes (say, can be taken for granted—essen- sales tax calculation, collection tially a business process utility and remission) but on a massive that one’s IT systems can plug into. scale that will dwarf today’s For providers, the simplicity of the software-as-a-service vendors. processes means there’s no need for variations and customizations, so Companies have many common they can achieve scale by providing business functions. While complex the same business process as a utility operations such as supply chain to thousands of customers. management typically require pro- prietary processes, simple business Today, a few such examples functions such as sales tax calcula- exist. VeriSign provides credit-card tion, collection and remission are authorization to millions of e-com- relatively standard and fixed. In merce vendors, and PayPal provides today’s endoskeleton model of IT, payment options to small vendors these simple functions are replicated and for small transactions. Cloud over and over in every enterprise. computing is likely to give rise to hundreds of such utilities special- Take sales tax, for example. While izing by industry and geography. this may be simple as a business This, in turn, will make enterprise function, managing the IT to systems simpler by avoiding the support it is anything but trivial. replication and maintenance of If your company does business common business processes. internationally, your billing systemOutlook is published by Accenture. needs to maintain a table—and peo- In other words, cloud computing© 2010 Accenture. ple to update it regularly—of sales is much more than on-demandAll rights reserved. tax tariffs for every province in pricing or lower IT costs. It provides every country where you operate. a new model for sourcing computing,The views and opinions in this article The sales tax must then be remitted which, in turn, will lead to signifi-should not be viewed as professionaladvice with respect to your business. to the appropriate tax authority, on cant changes in the business and IT time and with the requisite docu- landscape. To quote film producerAccenture, its logo, and mentation. Today, such functions Leonard L. Levinson, “A pessimistHigh Performance Delivered are executed over and over again only sees the dark side of theare trademarks of Accenture. (in-house) by every large company. clouds, and mopes; a philosopher sees both sides and shrugs; anThe use herein of trademarks that may As companies move to a cloud optimist doesn’t see the clouds atbe owned by others is not an assertion computing model, it will become all—he’s walking on them.”of ownership of such trademarks byAccenture nor intended to imply anassociation between Accenture and the Kishore S. Swaminathan is basedlawful owners of such trademarks. in Chicago.For more information about Accenture, k.s.swaminathan@accenture.complease visit www.accenture.com4Outlook 2010Number 3