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Tuesday, April 02, 2013

Business in the balance: Shifting IT investment from infrastructure to innovation

By Bob Evans, Chief Communications Officer, Oracle

Cloud computing’s enormous business value is convincing a rapidly growing number of CEOs and CIOs to join the cloud revolution. Executives are viewing the cloud as a way to begin shifting the IT-budget spending ratio – from the traditional 80% on infrastructure and 20% on innovation to something much closer to 50-50, which would liberate capital to fund market-facing growth initiatives.

Bob Evans, Chief Communications Officer, Oracle

It’s a fantastic opportunity … in theory. However, in practice many IT professionals – and even some vendors – appear to be at considerable risk of replicating the same insatiable jumble of technology that has challenged CIOs for decades. It is about the complex systems built from hundreds of disparate components that chew through huge chunks of IT budgets and leave very little for innovation. In an ideal world, enterprises would avoid the problem by implementing a complete end-to-end suite of cloud products that contain all three layers – applications, infrastructure, and platform. This approach would require little or no integration and free up precious IT dollars for customer-oriented initiatives aimed at growth, deeper engagement, and better decision-making driven by real-time analytics.


Redrawing the boundaries

Today, whatever boundaries exist for the cloud can be redrawn, reframed, redefined, and recast to match the relentless expansion of this technological inflection point. It is not only remaking the tech industry; it is also changing the way businesses view the potential of IT and how they should invest in it.

Imagine if a three-year business-transformation plan forged through some bold collaboration between the CFO and the CIO used cloud computing to enable a big corporation to liberate USD100 million in IT spending to fund growth-oriented and customer-facing innovation.

Instead of spending, year after year, 78% of the IT budget on low-value infrastructure, the CFO-CIO cloud plan would see that ratio move from its current level of 78% for keeping the lights on and 22% for innovation, to 74%/26% after one year; 70%/30% after two years; and 65%/35% after three years.

That liberation happens when companies turn to the cloud to reduce overdependence on big up-front capital investments and overall IT spending, and are thereby able to invest more in initiatives such as Customer Experience (CX) rather than another round of infrastructure sprawl whose value is increasingly hard to pin down.

That’s the real magic of the cloud: It lets businesses rethink where and how they deploy their precious IT dollars, and allows those businesses to focus more of their IT budgets on projects that truly matter.

Transforming the business ways

Organizations aren’t turning to the cloud to be technologically hip but rather to help themselves begin to strategically transform the ways in which they do business. That’s because, after years of being overhyped and underperforming, cloud computing has become an ideal platform for driving those transformations in ways that are effective, affordable, and sustainable.

They want to:
  • Get better products to market faster
  • Deliver better and more-engaging service to customers
  • Optimize mobile-powered sales teams with right-time information and insights
  • Align talent all across the company with business priorities
  • Reduce risk for compliance and reporting

All of those imperatives are being driven by a set of global forces that are stressing and reshaping every kind of industry and every type of business.

Taken together, these forces make cloud computing a powerful alternative for businesses scrambling to keep up with an information explosion, a stunningly fast move to mobile commerce and lifestyle, and the parallel rise of social as one of the most powerful shapers of corporate image and success today.

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