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ServiceMesh 2014 Predictions - Regulated Enterprises Lead Renaissance of Innovation with Cloud Computing

VMblog 2014 Prediction Series

Virtualization and Cloud executives share their predictions for 2014.  Read them in this VMblog.com series exclusive.

Contributed article by Eric Pulier, Chairman and CEO, ServiceMesh

Regulated enterprises lead renaissance of innovation with cloud computing

In the IT industry, change is constant. The ebb and flow of disruptive technologies is a cyclical phenomenon, advancing in fits and starts across the IT landscape. Yet every so often a wide set of disruptions mature together, bringing with them the opportunity for wholesale IT transformation. In the enterprise today, that time is now. IT is moving rapidly to create a new kind of partnership with the business, causing an unprecedented shift in the way companies operate. The promise is to deliver innovation, differentiation and competitive advantage on a level never before possible.

Joe McKendrick recently wrote an article in which he discussed the 5 Benefits Of Cloud Computing You Aren't Likely To See In A Sales Brochure. One benefit he discussed is something we are seeing in action in some of the world's largest, most regulated organizations: Increased agility to address new market opportunities. I prefer to think of it as accelerated innovation, but regardless of the label, the end result is the same.  Enterprises that truly transform their development and operations functions with cloud computing are blazing a trail of productivity that allows them to put other companies and even smaller, more nimble competitors in the dust.

However, there is a big issue to deal with: How can a large, global enterprise with innumerable compliance hurdles, regulatory reporting requirements, and sheer administrative weight achieve this transformation?  The most important success criteria to note is that successful companies do not implement dead-end strategies which stop at the introduction of an IaaS or private cloud environment. They are thinking about the strategic goals of their move to a cloud IT operating model.  Organizations that fail to focus on strategic goals are often underwhelmed with their cloud ROI and have a certain degree of buyer's remorse because IT transformation is not about spinning up VMs faster or automating infrastructure, but rather in speeding up the entire Software Development Life Cycle (SDLC).

Enterprises that focus their cloud efforts on speeding innovation - from identification of a new market opportunity through to deployment - have the worldview (and as a result the supporting technology structure) that eradicates tactical process delays and other bottlenecks, allowing the enterprise to produce new applications and services in a fraction of the time at a fraction of the cost.

Take, for example, the case of Commonwealth Bank of Australia.  Faced with rising IT costs and labor-intensive processes, they undertook a massive cloud-based IT transformation project.  To become a value center to the business, the bank's IT team reorganized its staff, automated processes, and changed the way IT resources were sourced, provisioned, paid for, and reclaimed. This transformation of people, process, and technology to a cloud-based IT operating model resulted in dramatic cost savings and efficiency gains, with the bank reporting that it has cut its non-strategic IT spend in half. This is a testament to the strong leadership at that particular organization, but it's also a sign of things to come across the enterprise as we now see hundreds of other companies around the world already well on their way to follow.

Hearing this and similar stories, it is not hard to see that early cloud returns fund new strategic IT initiatives, creating momentum as transformation moves throughout the business. Tactical, short-term benefits will accumulate, but it is strategic long-term benefits that truly move the needle for the business. With this in mind, it is critical to understand two necessary building blocks for IT Transformation and the acceleration of innovation.

Business-Centric Application View of the World

The goal of IT Transformation is to serve the business, generating value by accelerating innovation while radically lowering operating costs. This happens at the application layer and in empowering the business to work more efficiently. Enterprises that do not take an application-centric and policy-based approach to managing their private, public and hybrid cloud environments are taking a step toward a rip-and-replace future.

It has been said, "a journey of a thousand miles begins with a single step". For an enterprise to succeed, these steps need both a destination in mind and a path to get there. And, that destination should include standardized application platforms, self-service IT and integrated application release automation because these are the capabilities that provide actual economic benefits. Automation of existing, manual workflow-based processes cannot create the wholesale IT transformation required to keep large enterprise competitive today.

Policy-Based Approach

In the near future, every organization will have a multi-vendor, hybrid cloud architecture.  There is no more debate on this topic worth entertaining, as the days of a single-source-only provider architecture are over. Managing this architecture will require an extensible policy control point. If an organization has multiple silos of policy across their landscape, there will be no chance of enforcing overall governance, compliance and security, which puts the enterprise at risk. While the enterprise will have many sources of Iaas, PaaS, and SaaS-it cannot afford to have many silos of policy. Without policy fidelity across every element of the ecosystem, an enterprise cannot manage change, cannot maintain compliance, and cannot scale.

What IT needs is a central policy engine that can orchestrate governance over applications, platforms and underlying infrastructure.  Fully automated policy control eliminates error rates for manual tasks and complex workflows, improves time to market, and streamlines processes, resulting in agility, and accelerated innovation--all of which lead to increased business competitiveness.

These benefits are the very heart of cloud-based IT Transformation. They will drive the business forward, and change the way IT is viewed by the business forever.  Enterprise IT is transforming to a model where agility, cost savings and accelerated innovation are not mutually exclusive, and it's not looking back.

Transformation, Revolution, or Evolution-call it what you will but one thing is for certain, it's not business as usual. It's time to get started and join The Cloud Empowered Enterprises in a renaissance of business agility.

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About the Author

Eric Pulier is recognized as among the leading entrepreneurs in government and enterprise technology. The best-known venture capital groups in the world have financed companies that Mr. Pulier has founded or co-founded, including his current venture, ServiceMesh. Named one of 30 e-Visionaries by VAR Business, Mr. Pulier is a popular public speaker at premier technology conferences around the globe. Pulier is a member of Bill Clinton's Clinton Global Initiative, the Center for Telecommunications Management, Executive Director of the Enterprise Cloud Buyers Council and a member of the technology strategy board of the Cloud Best Practices Network. Most recently, he founded the TM Forum Enterprise Cloud Leadership Council and is an inaugural member of the IEEE P2032 Intercloud Standard Working Group.
Published Wednesday, November 27, 2013 10:02 AM by David Marshall
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