Vantage Point: Get Your Head in the Clouds
Why Consumer Goods Companies Are Jumping on the Cloud Computing Bandwagon
By Kevin Tigges, Microsoft Corp.
What if I said that you could reduce costs while freeing IT resources, minimizing your carbon footprint and gaining instant, elastic scalability for your enterprise? If these cloud computing benefits have caught your interest, join the crowd. Analysts are consistently predicting increased spending and adoption of cloud computing -- the ability to deploy and consume IT services over the Web -- in the next few years.
In a 2010 Microsoft survey on cloud computing that involved approximately 3,000 business decision-makers in 10 major metro areas in the United States, more than half of the respondents said that their company has used cloud computing. The most common cloud services involved collaboration tools (56 percent), such as e-mail, and storage (48 percent). According to Microsoft's research, lower total cost of ownership (27 percent) and up-front capital costs (26 percent), along with reduced IT staff workload (21 percent) are the top drivers of adoption, while concern about data security and privacy (41 percent) is the greatest potential deterrent to cloud adoption.
Consumer goods (CG) companies are certainly represented in the pack of businesses adopting cloud computing, which was recently featured as one of the top new technology options in the annual report produced by CGT, RIS News, IDC Manufacturing Insights and IDC Retail Insights.* Many of the findings from this report aligned with our research. For example, the desire to "reduce overall IT costs" (60.2 percent) was the top reason cited by consumer goods organizations for adoption of cloud computing.
What's interesting to note in the industry-focused research is that the reason why CG companies are adopting cloud computing was the same one influencing other CG companies not to adopt. Indeed, CG respondents cited cost prohibitive (31.1 percent) as the top reason slowing adoption while data and information security concerns (27 percent) was also among the deterrents.
So, what should you believe? Is cloud computing really able to lower costs and free up IT resources? Or can it open the door to unforeseen risks for your organization?
Our belief at Microsoft is that cloud computing is the next step, the next phase and the next big transition for business. And, we're all in. As evidence, Microsoft currently employs about 40,000 people worldwide who are involved in building software and about 70 percent of those employees are working on entirely cloud-based or cloud-inspired projects. By a year from now, our CEO Steve Ballmer predicts that number will jump to 90 percent.
With Microsoft's position firmly in the clouds, we have had the opportunity to counsel many CG customers on developing a cloud computing strategy. We believe the best long-term approach for most organizations is to pick a cloud computing platform that delivers a consistent, connected experience. Your company should be empowered to choose whatever combination of on-premise software and hosted services that work best for your business -- with the flexibility to change as needed. Here are some CG scenarios to get your head around this fast-growing trend.
Trust in enterprise-class services 24/7, 365 days a year
When you consider the natural peaks and valleys inherent in a manufacturing cycle, your first thought might be the struggle to meet unexpected demand, plan for the holidays, respond to weather events, etc. In a typical IT environment you need to scale-up fixed, data center resources in advance of demand spikes or try to catch-up when it does happen. This can lead to periods of wasted capacity and increases in capital expenditures to acquire the hardware. Worst case scenario is that it can also lead to an undersupply or outages.
In a cloud computing scenario, IT resources can dynamically adjust to the very dynamic nature of demand. You'll gain the level of service you need, without the costs of unused capacity or under supply of capacity. When relying on enterprise-class service providers, you can stipulate and get top quality service level agreements. This ensures that your company is protected with 24/7 by 365-day availability and uptime service order agreements of 95 percent or better.
Harness the power of choice in CG's "information worker" environment
Cloud computing enables your company to leverage the power of choice. And by the power of choice we mean that your company can be free to choose where it wants solutions to run. This is a key differentiator between software-plus-services versus software as a service. In the software-plus-services world, you have the choice to run a solution in a traditional on-premise model, a hosted third-party model, or as a pure cloud-based service. Your company might also choose to run in a hybrid model and take advantage of any combination of these options where and when that makes sense for your business. However, in the purest software as a service model, everything always runs in the cloud and requires a live connection to the web.
Microsoft follows the software-plus-services model for our products and services. Our goal is to provide all of our software -- from operating system to productivity and collaboration tools to databases and systems management tools -- so that they can run on-premise, in the Microsoft cloud or via third-party hosts. Just like your company we operate in an "information worker" infrastructure relying on Microsoft Exchange, Microsoft SharePoint and Microsoft Office software. This is the application area that many of our CG customers are most eager to transition into a cloud-based infrastructure.
Deliver consistent, connected experiences across your global enterprise
Your cloud computing strategy can provide for movement from one device to another with access to the same applications and data. Say that you are a production manager, sitting in your office and reviewing production data or the status of your supply chain. As you walk out to the plant floor, you should still be able to access the same information and applications on your mobile phone as you did on your PC or other handheld device in your office. You need access to that information in order to make fast, intelligent decisions on the spot. Cloud computing gives you the power of choice from the front-end to the back-end on where and how you access information and on what device.
Another critical connected experience for CG companies is the way that your business and its employees collaborate, which has changed over the years and will continue to change. Coca-Cola Enterprises (CCE), the world's largest marketer, producer, and distributor of Coca-Cola products is an excellent example of a company that has embraced Microsoft's software-plus-services approach to unify its workforce. With more than 72,000 employees in more than 430 facilities around the globe, much of CCE's workforce is mobile, spending numerous hours on the road every week, traveling to internal meetings and customer sites. With increasing competitive pressures, CCE needed a more effective way for employees to collaborate, improve information flow and create more time for customer engagements. CCE implemented a Microsoft-based hosted worldwide intranet with messaging, online meeting and collaboration tools that span time zones and geographies. By providing access to all employees from any device, CCE is saving travel expenses while boosting productivity and time with customers.
And, with CCE's cost savings example, we've come full circle to where we started and why so many CG companies are considering cloud computing projects. At Microsoft we believe that any software-plus-services strategy should enable your company to confidently embrace the cloud. You'll create new opportunities to do important research, to build exciting new products and to drive forward doing fantastic, innovative things. With so much unrealized potential, there is no better time to get your head in the clouds.
By Kevin Tigges, Microsoft Corp.
What if I said that you could reduce costs while freeing IT resources, minimizing your carbon footprint and gaining instant, elastic scalability for your enterprise? If these cloud computing benefits have caught your interest, join the crowd. Analysts are consistently predicting increased spending and adoption of cloud computing -- the ability to deploy and consume IT services over the Web -- in the next few years.
In a 2010 Microsoft survey on cloud computing that involved approximately 3,000 business decision-makers in 10 major metro areas in the United States, more than half of the respondents said that their company has used cloud computing. The most common cloud services involved collaboration tools (56 percent), such as e-mail, and storage (48 percent). According to Microsoft's research, lower total cost of ownership (27 percent) and up-front capital costs (26 percent), along with reduced IT staff workload (21 percent) are the top drivers of adoption, while concern about data security and privacy (41 percent) is the greatest potential deterrent to cloud adoption.
Consumer goods (CG) companies are certainly represented in the pack of businesses adopting cloud computing, which was recently featured as one of the top new technology options in the annual report produced by CGT, RIS News, IDC Manufacturing Insights and IDC Retail Insights.* Many of the findings from this report aligned with our research. For example, the desire to "reduce overall IT costs" (60.2 percent) was the top reason cited by consumer goods organizations for adoption of cloud computing.
What's interesting to note in the industry-focused research is that the reason why CG companies are adopting cloud computing was the same one influencing other CG companies not to adopt. Indeed, CG respondents cited cost prohibitive (31.1 percent) as the top reason slowing adoption while data and information security concerns (27 percent) was also among the deterrents.
So, what should you believe? Is cloud computing really able to lower costs and free up IT resources? Or can it open the door to unforeseen risks for your organization?
Our belief at Microsoft is that cloud computing is the next step, the next phase and the next big transition for business. And, we're all in. As evidence, Microsoft currently employs about 40,000 people worldwide who are involved in building software and about 70 percent of those employees are working on entirely cloud-based or cloud-inspired projects. By a year from now, our CEO Steve Ballmer predicts that number will jump to 90 percent.
With Microsoft's position firmly in the clouds, we have had the opportunity to counsel many CG customers on developing a cloud computing strategy. We believe the best long-term approach for most organizations is to pick a cloud computing platform that delivers a consistent, connected experience. Your company should be empowered to choose whatever combination of on-premise software and hosted services that work best for your business -- with the flexibility to change as needed. Here are some CG scenarios to get your head around this fast-growing trend.
Trust in enterprise-class services 24/7, 365 days a year
When you consider the natural peaks and valleys inherent in a manufacturing cycle, your first thought might be the struggle to meet unexpected demand, plan for the holidays, respond to weather events, etc. In a typical IT environment you need to scale-up fixed, data center resources in advance of demand spikes or try to catch-up when it does happen. This can lead to periods of wasted capacity and increases in capital expenditures to acquire the hardware. Worst case scenario is that it can also lead to an undersupply or outages.
In a cloud computing scenario, IT resources can dynamically adjust to the very dynamic nature of demand. You'll gain the level of service you need, without the costs of unused capacity or under supply of capacity. When relying on enterprise-class service providers, you can stipulate and get top quality service level agreements. This ensures that your company is protected with 24/7 by 365-day availability and uptime service order agreements of 95 percent or better.
Harness the power of choice in CG's "information worker" environment
Cloud computing enables your company to leverage the power of choice. And by the power of choice we mean that your company can be free to choose where it wants solutions to run. This is a key differentiator between software-plus-services versus software as a service. In the software-plus-services world, you have the choice to run a solution in a traditional on-premise model, a hosted third-party model, or as a pure cloud-based service. Your company might also choose to run in a hybrid model and take advantage of any combination of these options where and when that makes sense for your business. However, in the purest software as a service model, everything always runs in the cloud and requires a live connection to the web.
Microsoft follows the software-plus-services model for our products and services. Our goal is to provide all of our software -- from operating system to productivity and collaboration tools to databases and systems management tools -- so that they can run on-premise, in the Microsoft cloud or via third-party hosts. Just like your company we operate in an "information worker" infrastructure relying on Microsoft Exchange, Microsoft SharePoint and Microsoft Office software. This is the application area that many of our CG customers are most eager to transition into a cloud-based infrastructure.
Deliver consistent, connected experiences across your global enterprise
Your cloud computing strategy can provide for movement from one device to another with access to the same applications and data. Say that you are a production manager, sitting in your office and reviewing production data or the status of your supply chain. As you walk out to the plant floor, you should still be able to access the same information and applications on your mobile phone as you did on your PC or other handheld device in your office. You need access to that information in order to make fast, intelligent decisions on the spot. Cloud computing gives you the power of choice from the front-end to the back-end on where and how you access information and on what device.
Another critical connected experience for CG companies is the way that your business and its employees collaborate, which has changed over the years and will continue to change. Coca-Cola Enterprises (CCE), the world's largest marketer, producer, and distributor of Coca-Cola products is an excellent example of a company that has embraced Microsoft's software-plus-services approach to unify its workforce. With more than 72,000 employees in more than 430 facilities around the globe, much of CCE's workforce is mobile, spending numerous hours on the road every week, traveling to internal meetings and customer sites. With increasing competitive pressures, CCE needed a more effective way for employees to collaborate, improve information flow and create more time for customer engagements. CCE implemented a Microsoft-based hosted worldwide intranet with messaging, online meeting and collaboration tools that span time zones and geographies. By providing access to all employees from any device, CCE is saving travel expenses while boosting productivity and time with customers.
And, with CCE's cost savings example, we've come full circle to where we started and why so many CG companies are considering cloud computing projects. At Microsoft we believe that any software-plus-services strategy should enable your company to confidently embrace the cloud. You'll create new opportunities to do important research, to build exciting new products and to drive forward doing fantastic, innovative things. With so much unrealized potential, there is no better time to get your head in the clouds.
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ABOUT THE AUTHOR
Kevin Tigges, U.S. industry solutions director, Microsoft Corp., leads Microsoft's sales and services efforts for the consumer goods industry with the goal of delivering optimal value for customers and strong business results for Microsoft and industry partners. More information about Microsoft's work in the consumer goods industry can be found at www.microsoft.com/consumergoods.
*Consumer Goods Technology, RIS News, IDC Manufacturing Insights and IDC Retail Insights, December 2009, "Shared Strategy Report 2009"
ABOUT THE AUTHOR
Kevin Tigges, U.S. industry solutions director, Microsoft Corp., leads Microsoft's sales and services efforts for the consumer goods industry with the goal of delivering optimal value for customers and strong business results for Microsoft and industry partners. More information about Microsoft's work in the consumer goods industry can be found at www.microsoft.com/consumergoods. *Consumer Goods Technology, RIS News, IDC Manufacturing Insights and IDC Retail Insights, December 2009, "Shared Strategy Report 2009"