Live From Pulse 2012: IBM Study — Cloud Computing to Rewrite Corporate Business Models

The number of enterprises turning to cloud computing to revamp outdated business models will more than double in the next three years, as business leaders move to capitalize on the rapid availability of data and the growing popularity of social media, according to a new study released today by IBM.

Organizations clearly intend for cloud to improve their business capabilities, in addition to enhancing internal efficiencies.

Businesses that embrace the transformative power of cloud will have a significant advantage in the race to introduce new products and services and capture new markets.

To better understand the shift in how organizations use cloud today and how they plan to employ it in the future IBM, in conjunction with the Economist Intelligence Unit, surveyed more than 500 business and technology executives worldwide. The findings were compiled in a new study, titled “The Power of Cloud: Driving business model innovation.”

“Companies are starting to understand — cloud isn’t just about gaining efficiencies and cost savings; it’s about driving the kind of fundamental innovation that provides lasting marketplace advantage,” said Saul Berman, IBM global strategy consulting leader and co-author of the study.

Changing Motivations for Cloud Adoption

According to the study, as they strive to better meet customers’ needs and drive future growth, business leaders will increasingly tap cloud to develop new business models that can exploit the capabilities resulting from these digital trends.

While 16 percent of the executives surveyed indicate they are already using cloud capabilities for sweeping innovation, such as entering new lines of business or reshaping an existing industry, by 2015 35 percent intend to use it to transform their business models. 

While a little more than half of the respondents indicated “improving organizational efficiency” as a top business challenge today, only 31 percent anticipate it will be a top challenge in three years. Instead the study indicates that their focus is shifting to growth and competitive initiatives in the future. The objectives cited by survey respondents for adopting cloud are in line with these business goals, indicating that business needs will soon rival IT motivations for cloud adoption:

• 62  percent of survey respondents said increased collaboration with external partners is a key objective for adopting cloud;
• 57  percent cited competitive cost advantages through vertical integration as a major motivation and;

• 56 percent pointed to opening new delivery channels and markets as an important objective.

Examples cited in the report showcasing how cloud is being tapped to drive new revenue streams and enhance business models include an online marketplace for handmade goods that has taken advantage of cloud’s cost flexibility to gain access to more powerful analytics online.

The company is able to cost-effectively analyze data from the approximately one billion monthly views of its Web site and use the information to create product recommendations, providing it with access to tools and computing power that might typically only be affordable for larger retailers.

The study also cites an online health information network that enables the exchange of health information and transactions among healthcare providers, employers, payers, practitioners, third-party administrators and patients in India.

By connecting more than 1,100 hospitals and 10,000 doctors, cloud computing’s capabilities are facilitating better collaboration and information sharing — helping the network to pursue a more collaborative business model and deliver improved care at a low cost.

Masking Complexity, Enabling Consumer Needs

The study’s authors point to cloud’s capabilities to mask complexity and enable user-defined experiences, as well as its overall scalability and cost flexibility as key reasons companies are planning to move it into front office operations in the near future.

“Cloud has the power to open doors to more efficient, responsive and innovative ways of doing business, and we believe the companies that will come out on top will be the ones that find ways to leverage it as a key point of differentiation in driving business value,” Berman said. “Whether they choose to tap cloud to optimize, innovate or even disrupt their business models, they need to start working on it now.”
 
Visit here to download and learn more about the study.

IBM Pulse 2012: Day 1 Keynote Session: Business Without Limits

This morning’s keynote session at Pulse 2012 keyed in on several key themes critical to managing the world’s infrastructure.  Opening musical act, Naturally Seven, lent their own seven cents, explaining through song and human-voice driven instruments that “I Built This Wall Around Me, I Built this Wall From The Ground, See.”

IBM Senior Vice President Robert Leblanc explains to the gathered IBM Pulse 2012 audience how visibility, control and automation are instrumental for companies looking to keep up with the changing IT and business landscape.

There’s a whole lot of building from the ground up that’s been going on with respect to some of the key areas the Tivoli portfolio focuses on.  And IBM Tivoli customer Wellpoint joined the stage to discuss some of those changes in the healthcare industry.

George Zaruba, VP for Tech Strategy there, explained that Wellpoint is one of the U.S.’ largest healthcare benefits companies, with some 37,700 associates. Major industry shifts are requiring Wellpoint to reinvent itself and in its relationship with the end customer, and to be able to deliver services in ways its customers are used to and comfortable with. “Our delivery model needs to be secure and stable and reach users across a myriad of devices and platforms,” he explained.

Which means infrastructure needs to be everywhere, and which will allow Wellpoint to manage the effectiveness of their customers’ experience.

That’s why infrastructure needs to be everywhere, to have full visibility into core services. Zaruba explained “We’ve achieved this over the past several years with ITIL management and best practices, and virtualization of storage and services.”

That also led Wellpoint to its partnership with IBM Watson, which Wellpoint is currently working on as the first industry deployment of that important technology to “find the best answers to some very tough medical questions.”

Next up, IBM VP Scott Hebner joined the stage and explained there are “8,000 of you from 79 different countries.”

That’s some Pulse!

Hebner explained IBM is “obsessed about learning from our clients, and this conference is a reflection of our obsession, which focuses on real-world experiences and bottom line results.”

Hebner explained the opportunities are vast and unprecedented, and yet “the opportunity highway has ditches on both sides of the road.” The implication being, try and stay out of the ditch!

Hebner shared some factoids: 80% of CEOs surveyed by IBM anticipate turbulent changes and bold moves, and 64% of CIOs work as senior business execs in their orgs to drive innovation.

And yet, still, there’s a 3X gap increase between the desired needs and the actual outcomes.

Red meat to this gathering of IT gurus, Hebner also explained jobs related to technology are forecasted to be the fastest growing segment through 2018, with cloud jobs increasing 60%, and mobility, 50%.

But, the planet on which we operate is rapidly changing thanks to the proliferation of lower-cost technologies.  People, systems, and objects can interact with one another in entirely new ways, and that creates new opportunities and expectations.

Infrastructure is now everywhere, he explained, across every industry. Where does my business infrastructure begin and end these days? How do I turn this new reality into an advantage.

Business without limits, is what Hebner explained this as. The smarter approach turns data into insights in real time, at the point of interaction — it must, as we can now instrument everything, from the devices in the home to the processes themselves, giving us millions of data points.

To help explain this opportunity, IBM senior VP Robert Leblanc joined the stage and suggested there’s no escaping all this change, and that technology was a key enabler, according the IBM CEO study stretching back to 2004.  Beyond “market forces,” technology is considered a requirement by CEOs to enable their businesses to adapt to all this change.=

“How do you drive the speed that the business needs to adapt to its markets?” Leblanc inquired.  The answer, simple to say, harder to do: Focus on fundamental business imperatives: 1) Build 2) Reinvent, 3) Uncover.

That is, create operating dexterity while creating new customer relationships and uncovering new profit streams.

Most clients want to reinvent around their customer relationships, Leblanc explained, and if you look back 25 years ago, those that lead the industries are different from the leaders today.  The CEO is making it clear: I need change, and IT has to change with it.

Analytics continues to be the driving requirement in the industry technology shift, followed by mobility and virtualization -- all key themes here at Pulse 2012.

Leblanc then shared some data as to what is driving an unprecedented shift in technology: Analytics, 83%. Followed by Mobility, 75%. And virtualization, 68%.

Insight. Everywhere. No matter where.

Implicit to all this, underlying concerns about security, and a focus on achieving all these desired business outcomes through “visibility,” “control,” and “automation.”

To have full visibility of the span of your infrastructure, you must have and assert control, and in order to be able to focus on new value added initiatives, you must automate the more mundane but critical capabilities.

Some examples, Leblanc explained: China Great Wall improved server utilization by 30%. BlueCrossBlueShield of North Carolina saved 5,000 hours of staff time by automating security processes. SunTrust improved productivity by automating 50% of manual processes.

Finally, it was Tivoli General Manager Danny Sabbah’s time to speak, and Danny explained how all of these changes and trends are re-orienting Tivoli customers’ outlooks and the things they specifically need to be focused on.

He explained that “our world is changing drastically whether we like it or not,” and that “simply put, we’re being forced to rethink the way we run our businesses.”

We find ourselves at the vortex of three dominant transformations taking place in IT: Mobility, Smarter phsyical infrastructures, and security.

Mobility, he explained, is nearly ubiquitous, and now accounts for 40% of the total number of devices accessing business applications.

We’re seeing embedded intelligence and resultant smarter physical infrastructures where previously passive devices are now equipped with sensors and RFID tags and other tracking capabilities. Companies are now building applications to exploit the data gathered from these smart devices to better understand and run their operations.

And thirdly, security threats have become an integral part of this much larger montage. The more embedded intelligence, the more mobility, the more ways we execute commerce, social collaboration, and so on.  So, security must become part of everything we do.

This intersection, then, has spawned an even greater degree of complexity across business infrastructures, and the environment we find ourselves in has become more interconnected, moresusceptible to threats and even more difficult to manage.

Utilizing the power of cloud computing, IBM is tackling these issues head on with its customers.  But if you want hype and marketing, Sabbah concluded, you’ll have to go somewhere else because “this conference is about solving real problems in the real world.”