Staying competitive means moving to the cloud

Dirk-Peter van Leeuwen

In December 2011, market researcher IDC noted that spending on the IT industry's next dominant platform, built on mobile computing, cloud services, social networking, and big data analytics technologies, is growing at about 18% per year and is expected to account for at least 80% of IT spending growth through 2020.

That's a lot of money. It's compelling evidence that we are in the midst of a fundamental transformation, where information is becoming the primary raw material in organisations large and small and maximising the value created from that information is the increasingly strategic role of IT. This creates enormous opportunities for companies to find and exploit new market niches that may not have even existed a few years ago.

In some respects this isn't news, even if the cutting edge aspects of mobility, cloud, social, and big data are. The companies that grew up on the Web have had IT technology at their core. Nearly as well known are examples from companies that design and manufacture high technology components. Or financial services firms that depend on the latest and greatest hardware and software to rapidly price and execute trades. These types of businesses are cutting edge on the "3rd Platform," as IDC calls it, too —but that's what we've come to expect in these industries.

What's most different today is that the cutting-edge IT story doesn't begin and end with such companies. Rather, it's nearly pervasive. In part, this is because access to advanced IT is no longer limited to companies with the budgets to buy and operate rooms full of servers. Startups can now routinely rent computing power by the hour at public cloud providers such as Amazon Web Services and Rackspace.

Software-as-a-service (SaaS) is arguably even more democratic. SaaS—essentially, hosted applications delivered over the internet—is primarily for fairly standardised applications that are useful to many different types of organisations rather than something unique and differentiating. Nonetheless, SaaS means that even small firms have access to what's often the exact same software used by huge enterprises; they just pay the same per-user charges. This is important when you consider that, historically, small businesses were often disadvantaged by limited IT resources and skills to handle basic keep-the-lights-on tasks. Now, running the same email or customer relationship management system as larger competitors is as close as an internet connection and a credit card.

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