Cloud service providers claim that adopting a cloud for business will lead to competitiveness and optimize business outcomes by improving agility. These claims is inspiring but let us first understand agility from the perspective of both, business and IT and examine how cloud models can support business agility. Firstly, the definition of business agility states that it is a term or a concept where organizations approach their markets and operational changes as a matter of routine. Business agility is a quality in which organizations adjust immediately to changing market conditions, take advantage of potential opportunities quickly, rapidly deploy new distribution channels at reduced costs and maximize their profits in the process.
CIOs experts claim that among the number of new technologies available, cloud computing models are ideal to realize business agility within an organization. This is because cloud models permit scalability (up and down), adjustable per user costs, pay for each resource and so on. Cloud computing can embrace an agile organization by supporting mobility, encouraging internal communication through collaboration software and permit interactions with customers in real time in order to create a constant feedback loop to drive business agility efforts.
The concept of agility is similar to the methods of agile project management where project teams analyze their priorities and project tasks are continuously evaluated throughout the entire project life cycle, rather than evaluating outcomes and performance at the end of the project. Basically, business agility is a systematic approach in change management which provides a framework for the organization on how to respond to change without neglecting the needs of the entire organization. An agile enterprise is understood as immune to change, and proficient in adopting itself to any change (internal or external) in a sustainable manner.
Agility is achieved in cloud computing because of its elasticity and flexibility. IT resources can be deployed much quickly and can be increased or decreased to meet market demand. Due to this flexibility enterprises can introduce new products or services, and adapt to changing circumstances. This flexibility and elasticity is applicable to all cloud deployment models. In addition to this since, the infrastructure is managed by an external cloud services organization there is no need to train IT staff within the company. Cloud models support agility in certain key areas for business enterprises, they are:
- Quickly adapt to changing business processes: In agility existing business processes are changed or new processes are introduced. This change in processes would require IT resources to be replaced or new resources to be added. Cloud computing easily handles these changes by allowing companies to quickly add or change IT resources easily to support their changed processes.
- Enables on-demand resources for development and testing: Resources are needed to support business processes and to test and develop new software. Procuring new resources and implementing them within the existing infrastructure can be time consuming and can introduce significant delays in capitalizing business opportunities. This can also be a business risk since money is spent on new expensive resources and must not become counterproductive. Adopting a cloud model will eliminate these risks as resources are available on-demand which saves time. Further, the usage based payment offered by cloud models replaces the initial up-front cost spent on new resources within the company.
- Optimizes IT budgets: The usage model of pay per resource supports business companies to implement and test projects faster, saving money from new resources to be procured and made available. This eliminates budget allocation for IT capital expenditure, and supports finance to easily allocate fixed costs incurred on monthly basis. Cloud models makes it possible to have good control on unexpected IT spending with very little effort.
- Focus more on IT strategies: Clouds are flexible and can scale quickly to provide speed and efficiency for business processes and transactions. Cloud applications can be accessed via the internet which supports businesses to access their elements and have more productive interactions with customers. IT teams have less burden of maintaining an infrastructure and the focus can be more on implementing new applications that are productive and will drive business results.
In June 2014, HBR Analytic Services conducted a survey titled “Business Agility in the Cloud” to show the link between the cloud, business agility and increased competitive advantage. The survey sponsored by Verizon included 527 participants from large and medium business enterprises. The results indicate that 71% of the responses have implemented cloud computing to reduce complexities in business processes and IT management. Within the cloud adopters, 74% mention that their business is able to achieve competitive advantage by moving their business processes to the cloud.
The Verizon report also explains that 32% of the companies having adopted the cloud are able to achieve business agility in rapidly changing and competitive markets. These 32% respondents further emphasize that with cloud adoption their enterprises are able to see benefits around speed, simplification and are able to connect with people and data which are all enablers of business agility. Looking into the above benefits and advantages and data, cloud computing models are becoming mainstream IT delivery models for enterprises.