Most studies underestimate the impact that cloud computing can have on revenue generations, overplaying the principle contribution to cost savings. As in the case of a study (part 1 and part 2) by U.K. Department for Business, Innovation and Skills, which concluded cloud computing would not materially contribute to the productivity of small and medium size enterprises (U.K.-based enterprises). They also noted that the cloud computing-based productivity of SMEs is approximately 5% less than large enterprises. However, a detailed review of their methodology show a fatal flaw in their analysis.
Most analysts can’t see beyond the obvious potential cost savings associated with provisioning on demand services, whether being infrastructure, services, and/or software. It is clear that under the right set of economic, operational, and business conditions, cloud computing can lead to significant savings in both infrastructure and human capital. But the benefits don’t end there.
The real narrative that CEOs/CFOs/CIOs want to focus on is how the cloud computing phenomenon can lead to top line revenue growth. But, in and of itself, the cloud does not. That’s right, cloud computing is not a DIRECT contributor to top line growth, unless you are one of the cloud providers. So, as in most cases, analysts conclude, incorrectly, that there are NO revenue contribution benefits whatsoever in having a cloud-centric business philosophy.
Now let’s jump over to those analysts assessing the benefits of systematic innovation programs. As in most cases, studies have show that companies who have vibrant andrepeatable innovation program (SEI level 3 or 4), can show predictable top line revenue results (Apple, Google, etc.). But what is the relationship between cloud computing and innovation?
Cloud computing is more about agility (ability to systematically change), that cost control. The ability have access to global networked set of computing assets, ranging from enterprise to high performance computing, as well as petabytes of storage and analytical services, all on demand, it key to ANY modernday enterprise innovation program. Being able to envision,conceptualize, and implement customer/client facing disruptive ideas within hours and have then vetted in the market in days is THE competitive advantage.
At some point the analyst will eventual look deeper into the cross organization implementation of cloud computing and report on system wide cause and effects benefits of provisioning on demand. But until then, we will, as a business community, need to rely on commonsense to help us in those business decisions impacting the top, as well as the bottom line.