business in the cloud - smart & cloud show, seoul, korea

1© 2011, Michael Hugos Center for Systems Innovation [c4si]

Smart & Cloud ShowSeoul, Korea 8 September 2011

Business in the Cloud

Michael Hugos

CENTER FOR SYSTEMS INNOVATION

[c4si]

COEX, Seoul, Korea



PART 1

Business Realities



Business Continuum

• For last 100 years business focus was on efficiency

• Efficiency requires predictability and stability - hard to find

• Product life cycles now measured in months not years, new products and new companies appear quickly

• Responsive and agile enterprise is to real-time economy as efficient assembly line was to industrial economy

• Biggest change since introduction of assembly line

• Profits come from responsiveness to change!

Efficient Responsive



Responsiveness Trumps Efficiency

VERY FAST on straight road; sharp turns cause car to flip; slow deceleration

LESS FAST on straight road; capable of sharp turns; quick deceleration

20th Century Industrial Economy 21st Century Real Time Economy

FAST CAR (Efficient) AGILE CAR (Responsive)



A Cybernetic Economy

• “One time purchase transactions are replaced by ongoing commercial relationships between parties over time”*

*Jeremy Rifkin, The Empathic Civilization, 2010

• Customers buy access to services not just products− Netflix instead of buying movies− Zipcar instead of buying a car− Cloud services instead of buying hardware and software

• Respond to customers – or become irrelevant− Example of evolving mobile phone…− Is it a thing or an ecosystem of services?− Is it even a phone or is that just one of the services?

• How to keep up with pace of change?



Move from Cap Ex to Op Ex

Fixed Cost Traditional IT (Cap Ex)

Actual IT demand

Forecast IT demandFixed Cost of Capacity

B

AVariable Cost Cloud IT (Op Ex)

A = over capacity

B = under capacity

In times of high change reduce risk by moving from fixed cost to variable cost



Cloud Computing is a Utility

Cloud Computing – applications, computing power and data storage as a metered service with low initial cost to acquire and pay-as-you-go operating model (variable cost – op ex)

Like Electrical Utility – Cloud Data Centers serve many customers

Cloud Data

Center

CloudThe

Cloud



Manage Process not Technology

• In-house IT groups typically spend 70% of budget on datacenter operations, software licenses, system administration

• Outsource these activities to make operating costs variable

• Manage and improve business processes that deliver your unique value add

• Coordinate with outsourcing partners to meet desired performance levels – business process management (BPM)

• Focus IT spend on core value-added activities – things customers pay you for



PART 2

Moving to the Cloud



Technology of Cloud Computing

Hardware Virtualization

Data Storage and System Management

System A

System B

System C

System D

Application System Software-as-a-Service

SaaS

Platform-as-a-Service

PaaS

Infrastructure-as-a-Service

IaaS

Public – Private - Hybrid



Cloud is about Business Agility

• Main impact of cloud is agility (not cost savings)

• Be strategically focused and tactically agile

• Look for market trends - respond when opportunity appears

• Smart use of cloud computing enables creative responses to unexpected developments

• Think big; start small; deliver quickly!



Business Agility = Profitability

• Company sees opportunity to use existing expertise and supplier relationships to launch new product line

• Establish new sales offices in new locations

• Support sales process with appropriate systems

• Use business intelligence in field offices and headquarters

• New product needs engineers to customize installations for unique customer needs – requires meetings with customers

• How to quickly explore new opportunity?



Global Business Agility

“Just do it”

Lower risk…

See what happens!

OFFICE

OFFICE

OFFICE OFFIC

E

OFFICEExpansion

used to be expensive and risky – big up front investment

Cloud and SaaS



Cloud - Social Media - Consumer IT

Data Center

Integrate in-house IT with cloud based technology



Global Business Networks

Industry Operating Systems - evolving applications and services for specific industries

Cloud Coordination – collaborate using Business Intelligence and Simulation

Cloud Backbone – Companies connect and communicate

Cloud Systems

CompanyA

Market Demand

CompanyB

CompanyC



What Does It All Mean?

Are we seeing emergence of a global cerebral cortex?

Our bodies are of billions of autonomous cells talking to each other… Our planet now has billions of us talking to each other…



Learn MoreThis presentation excerpted from my newest book:

Meet me at book signing immediately following this presentation

Next to Information Desk at Smart & Cloud Conference, 8 Sept. 2011

Read my blog at CIO.com: Doing Business in Real Time

Reach me at: www.MichaelHugos.com

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