by Aaron Lazenby
It’s a clear fact: cloud computing has revolutionized the use of information technology in the enterprise. According to IDC, IT cloud services will represent 58 percent of the world’s total technology expenditure by 2020. But massive adoption is not the whole story. Indeed, in a paper entitled “Worldwide and Regional Public IT Cloud Services Forecast, 2016–2020,” IDC also found that cloud computing plays an essential role in the adoption of the technologies that power digital transformation efforts across industries.
This is the crucial trend that Oracle’s Chuck Hollis has observed firsthand: a growing awareness that the cloud is an innovation engine. As senior vice president for Oracle’s Converged Infrastructure group, Hollis sees the cloud as a new economic phase that requires a more flexible and experimental view of business process and technology. “This is not incremental,” Hollis says. “Cloud is a game-changer that requires a much more open-minded business posture.”
Here, Hollis talks to Profit about cloud-based innovation, the development investments cloud vendors need to make, and the way the cloud serves as a great innovation equalizer for small and midsize businesses.
Profit: What do you think is the biggest misconception about enterprise cloud computing?
Hollis: Easy: that the primary benefit of cloud is cost savings. The economics of cloud computing are so powerful, it’s easy to get caught up in the impact on operating margins. But businesses don’t win on efficiency alone. If you want to win, you have to be something more than cheap.
I think there is so much more business value to explore in cloud computing. Today, I think cloud’s biggest benefit is how it delivers a faster time to value for the adoption of new technologies. I like to say that cloud bends the innovation curve. It has allowed us to establish a new economic equilibrium for the cost of innovation: it’s easier to get started, it’s easier to scale, and you can turn it off whenever you decide it’s not working for you.
Profit: Why is the cloud an innovation engine?
Hollis: If innovation becomes easier to consume, we’ll consume more of it. If you look at any of the potentially game-changing technologies that are evolving right now—artificial intelligence [AI], blockchain, the Internet of Things [IoT]—cloud makes all of those technologies really easy to consume and apply to your business.
This was not possible in the world of on-premises IT. I’ll give you an example. Let’s say you work at an elevator company and IoT looks like a real opportunity for you. You’d like to put sensors on all your elevators and automatically dispatch service when maintenance is required. Well, you can get the sensor data, but it’s not going to have much value until you connect it with your field dispatch application.
In the right cloud, that’s really easy to do. If your cloud provider has an IoT service, all you have to do is connect it to your cloud-based field dispatch application and—voilà—the Internet of Things is in your world.
Cloud-based innovation gives midsize and small businesses the tools they need to keep pace with competitors of any size.”
Business and technology are both moving at insane speeds. Faced with that environment, you want a cloud consumption option where the vendor is doing the heavy lifting and you are activating the technology as needed. Every few months, you’ll have access to the current modern best practices.
Profit: How does this mindset inform Oracle’s cloud development strategy?
Hollis: Let’s use AI as an example. Oracle has one of the world’s largest development organizations, but even we can’t AI-enable all of our 10,000 business processes overnight. So we’re starting with the ones that matter most to our customers—high-frequency, high-value transactions.
For example, think of the onboarding process. It’s something that requires a big investment of resources but will run thousands of times in a year. If I reduce my new-hire failure rate from 30 percent to 10 percent, how will that improve my business? It’s an excellent place for you to start applying AI. And there are plenty of other examples in procurement, pricing, and supply chain.
Oracle will make that possible on the back end. But on the front end, you don’t need to build a massive business case or reprioritize budgets and staff to implement AI. All you have to figure out is how and where you want to use it.
Profit: What impact does this reduced time to innovation have on smaller businesses?
Hollis: It’s a huge equalizer. Just like the big guys, small companies will now have access to world-class IT innovation. If you are a startup or a niche player or a regional business, it’s not a high priority to make significant investments in technology research and development [R&D].
But technology keeps advancing, regardless of your R&D budget. Cloud-based innovation gives midsize and small businesses the tools they need to keep pace with competitors. That’s part of bending the innovation curve as well—not just increasing access to next-generation technologies, but increasing that access for companies of any size.
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