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IBM Study Says Cloud Driving Fundamental Business Innovation

The number of enterprises using cloud computing to overhaul their business models will more than double within three years, according to a new IBM study. “Businesses that embrace the transformative power of cloud will have a significant advantage in the race to introduce new products and services and capture new markets and revenue streams.”

The IBM Institute for Business Value worked with the Economist Intelligence Unit to survey over 600 business and tech executives around the world about their current cloud use and future plans. The findings were released in its new report, The Power of Cloud: Driving Business Model Innovation.

“Companies are starting to understand -- cloud isn’t just about gaining efficiencies and cost savings; it’s about driving the kind of fundamental innovation that provides lasting marketplace advantage,” said Saul Berman, IBM global strategy consulting leader and co-author of the study.

Among the findings: 16 percent of executives surveyed say they’re currently using cloud capabilities for “sweeping innovation, such as entering new lines of business or reshaping an existing industry.” Although just over half said “improving organizational efficiency” was a business challenge today, just under a third (31 percent) expect it will be that way in three years. In fact, 35 percent expect to use cloud computing to transform business models in that time frame because they believe they’ll be focusing on growth and competitive initiatives instead.

Expectations are high for cloud initiatives. For example, the study found that 62 percent said increased collaboration with external partners is a key objective for adopting cloud. Over half (57 percent) said cloud was being driven by “competitive cost advantages through vertical integration”. Almost as many (56 percent) said “opening new delivery channels and markets” was a key business objective.

The study cites an example of an “online marketplace for handmade goods that has taken advantage of cloud’s cost flexibility to gain access to more powerful analytics online. The company is able to cost-effectively analyze data from the approximately one billion monthly views of its Web site and use the information to create product recommendations, providing it with access to tools and computing power that might typically only be affordable for larger retailers.” In other words: many companies envision that they can become mini Amazons.

The participants also say they’ll be moving front-office operations to the cloud, thanks to to the “cloud's capabilities to mask complexity and enable user-defined experiences, as well as its overall scalability and cost flexibility.”

You can download a copy of the executive summary, rich with specific survey details, here. No registration is required.

-- James E. Powell
Editorial Director, ESJ

Posted by Jim Powell on 03/14/2012

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