A commonly held belief is that cloud computing—autility model for computing capacity, software andbusiness functionality—is a phenomenon whose valueresides primarily in reducing IT costs. In fact, the flex-ibility that the cloud makes possible for infrastruc-tures, services and processes means that it is alsocapable of driving significant innovation.This is a key finding of new research from the LondonSchool of Economics and Accenture, based on a sur-vey of 1,035 business and IT executives, as well as in-depth interviews with more than 35 service providersand other stakeholders.The innovation trajectory of the cloud will be cumu-lative. Beginning first with technology and operation-al changes, its effects will then be felt at the businessprocess level, changing the way companies operateand serve customers. It will be capable of deliveringmarket innovations that enhance existing productsand services, create new ones and enable entry intonew markets. Finally, the cloud will support new waysof designing corporations themselves.
Reducing the friction: Operationalinnovation
One of the key ways that cloud computing supportsoperational and technological innovation is by mov-ing an organization more briskly through the experi-mental or prototyping stages—or, as some of ourinterviewees put it, by “reducing the friction” of development. In a cloud model, companies acquireprocessing, storage or services when they need them,then can quickly decommission those resources whenthey are not needed.Such a model supports “seed and grow” activities andfaster prototyping of ideas. With traditional IT models,a decision to prototype a new system generallyinvolves the procurement and installation of expen-sive hardware, with the associated checks and delaysthat conventional purchasing requires. Cloud provi-sioning, on the other hand, can be implementedrapidly and at low cost.That means the cloud can also reduce the risks of operational innovation. Projects and processes thatwould have been too risky to attempt if they requireda large capital investment become worth attemptingif unsuccessful experiments can be decommissionedeasily.
Language of the business: Processinnovation
A distinctive feature of cloud computing is its abilityto hide the technical complexity of solutions. Theacquisition and deployment of IT becomes almostsecondary. Companies are actually deploying a processor service, and that means business and IT executivesneed no longer try to communicate across a technol-ogy gap. They can speak a common language aboutwhat the business seeks to do and how it intends todo it.Steve Furminger, group chief technology officer of global digital marketing agency RAPP UK, underscoresthis point by noting that the cloud is providing hiscompany with the ability to produce solutions morerapidly without needing to be concerned at such adetailed level about how they are going to do it froma technical perspective: “Just a few years ago, that
Point of View
September 2011, No. 1
Professor Leslie Willcocks,Dr. Will Venters and Dr.Edgar A. Whitley
are in theOutsourcing Unit of theDepartment of Managementat the London School of Economics and PoliticalScience.For more information,contact email@example.com.
A new era of innovation: Cloud and thefuture of business
By Leslie Willcocks, Will Venters and Edgar A. Whitley