Are cloud services the saviors of today’s business?

“We cannot solve our problems with the same thinking we used when we created them.” – Albert Einstein

Successful market trend or just another fad?

‍Various types of services surround us. Terms like SaaS (Software as a Service), SCDaaS (SimCorp Dimension as a Service), IaaS (Infrastructure as a Service) or BPaaS (Business process as Service) and PaaS (Plattform as a Service) are on everyone’s lips. Not forgetting XaaS (Everything as a Service). It’s as though we believe cloud services are the magic bullet to reduce costs, mitigate risks and enable growth. On the other hand of course there are clear advantages which cannot be denied.

As it is quite typical to have new abbreviations and terms when it comes to new trends, it is also accompanied by different understandings of these terms. This makes a closer look at it obligatory in order to keep perspective. The success of a company cannot simply be transferred to another one. Especially with innovations and disruptive business approaches, one must take a close look at the requirements and success factors.

At their core, the questions and challenges in the business world are always similar. Topics are hyped in periodic cycles and decision makers have to figure out whether the market trends are fads or have substance that the company can benefit from.

In reality, a cloud service may well be a great answer, as long as we have asked the right questions, defined the challenge and prepared the solution effectively. Recently, Gartner® conducted a CIO and Technology Executive Survey and found out that 48% of the respondents will spend the largest amount of new or additional funding in 2022 compared to 2021 on cloud services (IaaS, PaaS, SaaS). There is obviously an increasing willingness to invest more money in cloud services. Certainly those in positions of responsibility at C-Level assume that their company or business area will benefit in the long-term and gain competitive advantage.

Appropriate planning and analysis will ensure that money is spent wisely. We see many examples of “lift-and-shift” to the cloud that simply result in increased costs of change and project risks, without making use of the benefits that cloud services can offer.

‍Different thinking: vertical view instead of horizontal view

‍Taking advantage of cloud services also means becoming aware of the different perspectives of the on-premise approach compared to the world of services. One of the major differentiators is the change of view. The on-premises view is built up on horizontal layers and is technology-led. Starting with physical servers and databases, the next layer is comprised of operating systems sitting beneath software applications that provide business users with the required IT solution.

In comparison, cloud services have another perspective. It is vertical downwards from a business user view. Starting with the end-user perspective, they supply the necessary business activity tools and support these with underlying IT components to enable the business user for example in Portfolio Management, Risk Management, Settlement or Accounting.

In an on-premise world, applications are chosen for compatibility with existing technology; in a cloud services world, solutions are chosen given that they are sufficiently interoperable and have an adequately open architecture.

‍Mind shift: varying approach

‍With the on-premise approach, the IT department is the driver and is working as an enabler for the successful execution of the business model through the provision of required IT-applications. On the flipside, in the world of services, the business department takes the lead and focusses on the added value for the company. This approach is more business oriented. For on-premise, processing power (CPU) and capacity drive costs act as constraints. For cloud services, capacity should be unconstrained and costs are in proportion to data and traffic.

The partner model is also different. While there is a “do-it yourself” mentality with on-prem solutions, what means customizing of software is needed, the technical part is the hand of the company and means being independent from vendors or foreign servers. With services it is all about vendor management and controlling. Of course, different approaches have to be evaluated in different ways. An unclouded view is required to ascertain the true contribution to your specific business case.

Take advantage – planning, clarity and communication are key

Cloud services are a market trend. Sustainable value comes with both – profound understanding (how to benefit) and precisely changes from current to target operating model (what to do); planning and executing the change will only bring the intended outcomes if all stakeholders understand and participate along the journey. Screening all opportunities and possible vendors carefully and ensuring compatibility to your organization are the ingredients of a successful implementation without surprises.

Boris Brosche, mobile: +49 151 43176060, email: boris.brosche@preyer.de
Julian Köster, mobile: +49 173 6686009, email: julian.koester@preyer.de

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