Cloud Computing : Where is the rain?

By: Kishore Swaminathan

Cloud computing professes many advantages: on-demand pricing, less IT overhead, lower cost through economies of scale, lower entry barrier into new territories and so forth. All these are definite nice-to-haves, but is this just a minor chapter in the IT saga or a proverbial paradigm shift? In other words, is this just a passing cloud or a rainmaker?

If I wind my mental clock forward 3-5 years, I see three radical changes that cloud computing could bring.

Prognosis 1: Cloud computing will lead to a dramatic increase in cross-company business processes that will dwarf today’s “business ecosystems”.

Prognosis 2: Cloud computing enables an “exoskeleton” model (as opposed to today’s “endoskeleton” model) for corporate computing. This will open up new white spaces for IT services in many large but fragmented industries such as construction, education, healthcare etc.

Prognosis 3: Cloud computing will give rise to what could be called business process “utilities” – i.e., companies that provide simple and common business processes (e.g., sales tax calculation and remission) but at such a massive scale that they’ll dwarf today’s SaaS companies.

There’s a lot of wealth to be created. But then there are also lots of technical problems to be solved. The first 3 parts of this series will examine each of the three prognoses above. The fourth will outline the set of technical problems that need to be solved in order for these prognoses to come true.

Prognosis 1: Cloud computing will lead to a dramatic increase in cross-company business processes that will dwarf today’s “business ecosystems”.

The moment a company’s IT systems migrate outside the firewall, they can much more easily communicate and exchange information with other IT systems from other companies to execute business processes that cross company boundaries.

To be sure, cross-company processes are not new. In the 80’s EDI was aimed at communication across companies to exchange information across a supply chain within different “business ecosystems” (most notably, within the automobile industry). The travel industry has integrated systems across airlines, car rental companies and hotels to create business ecosystems (e.g., the oneworld alliance, the Star alliance etc) to offer passengers a seamless travel experience across multiple airlines, hotels and rental car companies.  However, today such processes are handcrafted and hardwired across systems from a small number of business partners or orchestrated by third party “clearing houses.”

Cloud computing in combination with integration standards like web services and REST has the potential to create cross-enterprise processes at an industrial scale: complex, yet flexible business processes that snake through multiple companies that are part of fluid and ever-changing business ecosystems. One may very well ask: “even if this is technologically possible, what is the business driver for it?”

Practically any human experience you can think of – whether it’s a vacation, a stint at the hospital, or just living your average humdrum day – involves products and services provided by multiple companies. Today, companies provide discrete products and services that we, as individuals, manage and orchestrate. The ability to flexibly weave together a business process with

services from multiple companies around an individual and his or her life seems like a strong driver in the business-to-consumer world.

Much as an individual’s life involves touch points with multiple products and services, almost every process in organizations also involve interactions with multiple business partners. Today, each business partner sells a discrete product or provides a discrete service and organizations manage and orchestrate these internally into business processes. Cloud computing makes it considerably easier for companies to configure business processes that involve internal components and many external components into complex yet fluid processes around their business needs. This seems like a strong driver in the business-to-business world.

To be continued.

 

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