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Cloud Computing: Keeping it real

by tapangarg on December 3, 2010

Whitepaper by :
Satish Raghavendran, Deloitte Consulting.
Raj Sivaraju, Deloitte Consulting.

It is fascinating to see how large-scale distributed computing has resurrected itself in a new avatar as cloud computing. Professional services firms might be tempted to consider this as a new service to offer to clients – or as a technology to embrace internally.

John Hagel and Chris Weitz define cloud computing as “a paradigm of computing in which dynamically scalable and often virtualized computing resources are provided as a service over the Internet.” (Cloud Computing in the Enterprise: Not If, but When and How? The Dbriefs Technology Executives series, October 1, 2009). The compelling reason for cloud computing emerges when businesses scale their operations and require a rapidly expanded IT infrastructure to implement large-scale transaction processing support for a product or service delivery. It is also a revenue opportunity for IT infrastructure providers to offer processing capability to firms that want to aggressively scale.

From an internal adoption perspective, it is imperative for the CIO of a professional services organization to carefully assess the cloud computing solution on fundamental business dimensions, and to arrive at a balanced and meaningful decision for adopting cloud computing instead of being emotionally compelled to hop on the populist bandwagon of enterprise-wide cloud computing.

What about collaboration as a driver for the adoption of cloud computing? As professional services firms mature, they ascend the client’s value chain in offering them services that are transformative. The key enabler to drive the transformative initiatives is collaboration across professionals with deep intellectual engagement on the business issue, in order to provide an innovative solution. The infrastructure needed to build a collaborative environment may not derive the true benefits of adopting cloud computing models. By and large, the IT infrastructure available to professional services firms at present allows virtual collaboration across time-zones and is adequate for their needs. Moreover, the lack of state-of-art, heavy duty processing power offered by cloud computing is not a show stopper for an organization engaged in ideation and innovation.

What about offering cloud computing as a service line? The idea is hard to support. IT infrastructure firms are ideally positioned, given their business model, to offer processing capability to firms that want to aggressively scale without having to invest in IT infrastructure. The market is hyper-competitive with razor-thin margins. In contrast, the asset base for a professional services firm is their deep intellectual equity rather than information processing throughput. Furthermore, client-facing business units may be adversely impacted if IT is focused on revenue generation rather than support. The business case for adopting cloud computing as a service line for mature professional services firm, then, is not compelling.

More promising than hardware is the case for investing in thought ware – an area more consistent with the core capabilities of a professional services firm. Organizations that lose focus on this fundamental truth end up walking with their head in the clouds.

Raj Sivaraju
Regional Technology Director
Deloitte Consulting India Pvt. Ltd.

Dr. Satish Raghavendran, PhD
Deloitte Research
Deloitte Consulting India Pvt. Ltd.

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