Enterprise cloud computing is the use of cloud computing for competitive advantage, going beyond savings from procurement, management and maintenance of infrastructure, by providing a model of utility computing that enables rapid agility and collaboration capabilities to support business innovation. This can be characterised as:
- CapEx to OpEx. Adoption of cloud computing should enable enterprises to quickly shift fixed costs to variable costs. Computing power is scaled up and down as you use it (elasticity).
- Lower risk start-ups. New business ideas can be tested without justifying up-front capital expenditure (or losses), and if those ideas take off, the ‘limitless’ computing utility will not inhibit growth.
- Exploit and enhance collaboration. The cloud offers easier access to mechanisms that promote collaboration, at ever-increasing levels of business intimacy. Shared services allow a number of enterprises to collaborate and utilise optimised processes, driving down the costs incurred in a value chain, increasing competitive advantage
What is challenging for the typical enterprise is not the first foray into the cloud; most IT departments will dabble with a non-critical system to test the new capabilities and explore any potential limitations. Rather it is the next step, when an enterprise faces more fundamental questions about how to truly realise the value of implementing cloud-based technologies.
It’s all about service
As far as the business is concerned, the key concept is service. However, if an enterprise sees the cloud as yet another service to consume, then the business benefits will be limited. Virtualisation of your on-premise servers will only deliver tangible efficiency savings if, a) you have enough redundant capacity to aggregate into a useful resource, and b) you have identified sufficient numbers of paying customers to consume your service.
So what does this mean for enterprises who want to fully exploit the cloud? There is an implicit assumption that we are referring to the technologies that support a utilitarian model of IT infrastructure delivery. However, enterprise cloud computing is more about what business value can be derived from the innovation potential of the cloud, by concentrating upon cloud services that can be created and delivered at will.
Enterprises that want to adopt cloud computing need to be able to represent and coordinate their own functionality as a collection of services, after which a move to the cloud is simplified. We refer to such enterprises as service oriented enterprises (SOE).
Service oriented enterprise
Service oriented enterprises can be distinguished by:
- exposing internal services to external marketplaces;
- rapidly changing services to optimise business operations;
- using open standards for communication between services;
- enhanced collaboration with customer and business partners;
- using enterprise architecture to embed a culture of continuous change.
An SOE must have a definitive understanding of its business functionality, and can describe this as value-driven services. You might now be wondering what is new about cloud services architecture. After all, the IT industry has spent the past decade trying to adopt service oriented architecture (SOA).
Essentially, SOA has transformed the re-engineering of back-office systems, enabling faster and more flexible opportunities to integrate increased numbers of disparate IT systems, often by centralising and sharing services. Thus, SOA is essentially a technology-driven transformation.
Cloud services, on the other hand, are about deriving value from customer-facing, front-office interactions. External-facing interactions present an opportunity for differentiation in the marketplace, both in terms of existing service delivery as well as new service composition. This is not to say that SOA is inappropriate for the design of cloud services, but the goal-directed drivers that define the decomposition of business functionality into services fundamentally alters the way in which SOA is utilised to embrace the cloud.
Realising the service oriented enterprise
Changes to IT systems invariably are driven by an impetus to increase efficiency and reduce costs by rationalising technical functionality. For instance, the business may see cloud computing as a means of reducing staffing cost through outsourcing. At a stroke, the management of the systems is delegated to a supplier and operational costs are reduced. However, aside from scalability of the existing infrastructure, what direct contribution has this made to the future development of innovative business systems?
The legacy systems have not been specified as services, so any new customer requirements will require re-engineering to suit. So the cloud characteristic of rapid agility is only satisfied in part, and it relates to the back-office capabilities, not the front-office customer-facing part of the system. As far as deeper collaboration is concerned, this has not been achieved. The technological infrastructure has become more optimised, but the business operation stays the same.
Enterprise cloud computing, through cloud services, requires not only a technical shift, but also a cultural shift. The new mind set assumes continuous change and a process-centric view of operations. The traditional, project-based approach to IT systems change is just too restrictive for today’s marketplace. What is required is an approach that embraces emergent outcomes by engineering incremental changes into the operations of the enterprise.
Business process as a service (BPaaS)
As we architect a new vision of technology-facilitated business, it becomes apparent that Infrastructure as a Service (IaaS), Platform as a Service (PaaS) and even Software as a Service (SaaS) cannot offer what an enterprise truly seeks. SaaS is effectively pre-packaged applications that are made available over internet protocols, offered on a multi-tenancy, pay per use delivery model.
The application might be an ERP or CRM ‘solution’ that negates the need for an enterprise to own and manage significant on-premise resources. But these solutions are still limited by silo, application-based thinking, inhibiting the potential to reconfigure and extend itself as new business opportunities emerge.
Business Process as a Service (BPaaS) is a more horizontal approach (Figure 1), which is concerned with process fulfilment through service orchestration. If a typical value chain can contain upwards of 10 different suppliers, competitive advantage is more likely to be gained by providing a mechanism that supports deeper collaboration between the different suppliers, rather than attempting to package together a one-size-fits-all solution.
One advantage of this approach is that it directly facilitates the emergence of processes, as each stakeholder optimises their own contribution, and is therefore a key enabler of value.
Ready for exploitation
Business is becoming more about faster change and adaptability. The strategic use of cloud services can assist this transformation by building responsiveness into the IT architecture of a business, through engagement with enterprise architecture. The cloud is already a collection of services that are ready for exploitation, and through business process orchestration, service oriented enterprises can develop and offer modular, flexible ways of service fulfilment, to realise more value generation.
- Mulholland, J.A., Pyke, J., Fingar, P., (2010). Enterprise Cloud Computing: A Strategy Guide for Business and Technology Leaders. Perfect Paperback, Meghan Kiffer. ISBN-10: 0929652290.
- Sapir, J., (2009). Power in the Cloud: Building Information Systems at the Edge of Chaos. Perfect Paperback, Meghan Kiffer. ISBN-10: 0929652312.
About the author
Richard Hill FBCS is Professor of Intelligent Systems and Head of Computing and Mathematics at the University of Derby, UK.