Cloud computing is a game-changer for businesses, which now
face the choice of adapting to the demand for ubiquitous access to data or
losing customers to tech-savvy competitors, says a University of Illinois
expert in e-business strategy and information technology management.
Michael J. Shaw, a professor of business administration,
says big data is here to stay, and businesses need to adapt to the new reality
that cloud computing is not merely the next Silicon Valley dot-com bubble.
“If your competitors move to the cloud and you don’t follow,
that gives them a distinct advantage, because it introduces more intimacy in
their relationship with their customers, so they can react to what customers
want more quickly,” says Shaw, the Leonard C. and Mary Lou Hoeft Chair of
Information Systems at Illinois.
“You can almost sense the shifting consumer demand,” he says. “I think it’s going to evolve into something that’s going to be here to stay
for the long-term. It’s a model that comes from several developments—access to
computers, better networking, and the need of the consumer and enterprise
users.”
Shaw says this should be a real wake-up call for businesses,
because not only is cloud computing a huge leveler of the playing field, it’s
also a chance for firms to run their business more economically and
efficiently.
“It provides a new business model that many potential
clients might like,” he says. “Consumer expectation also has changed in a big
way. They expect that services and data—basically, everything—will be readily
available from the cloud. So it’s a new model to run a firm’s IT-infrastructure,
and it affords businesses more opportunity to integrate their applications,
which is greatly needed because it’s more efficient in terms of resources.”
Businesses also can improve their own internal processes
through cloud computing, Shaw says.
“It makes things like procurement a lot more efficient,” he
says. “Enterprise
applications and customer relationship software—that’s all increasingly running
in the cloud. The next step is adding the social media component, which will
ultimately make relationship management with customers that much more
innovative than it is now. Those factors all define the competitiveness of a
company.”
While cloud computing is really nothing new to anyone who
has ever checked email or watched a video in a Web browser, Shaw says it
changes the dynamics of IT for businesses big and small by creating economies
of scale.
“Cloud computing changes the calculus of running a data
center, as well as a way of building an information infrastructure,” Shaw says. “For big companies, it makes data more shareable. For smaller companies, it
makes a computational platform and enterprise applications more readily
available. It’s almost as if there are more rental opportunities—they can rent
the platform rather than buying it and building it themselves. So the economics
are a big driver.”
But cloud computing has what Shaw calls some “non-trivial”
risks and downsides, including some potentially huge security, data integrity
and environmental costs.
“The security issue is cloud computing’s biggest Achilles
Heel,” he says. “Although the security concerns are big, nothing in business is
without risk. Electronic banking carries the same risks, as would upgrading the
power grid into a smart-grid. So cloud computing is not unique to risk-management.
Firms just need to manage that risk, which really comes down to the issue of IT
governance. I don’t want to be wildly optimistic, because you really do need to
develop IT governance to manage the risk from cloud computing. Security is a
multi-layer issue not only related to computer and system security, but also
governance and control of the business process, application and management
levels.”
While the server farms and data centers necessary for a
seamless cloud computing experience consume an enormous amount of energy, that
may actually be beneficial from a sustainability standpoint.
“When you share computing resources, you are actually
helping the environment because you’re not wasting additional unnecessary
capacity by investing in your own information infrastructure,” Shaw says. “By
sharing, it’s less likely you would get rid of the outdated servers and related
equipment simply because you don’t need them anymore, because they’re now more
shareable.”
Although consumers are more familiar with commercial-centric
cloud-based services such as music and video streaming, Shaw says there will
eventually come a day when the cloud will be ubiquitous throughout our entire
households.
“Once we integrate it, it’s going to be seamlessly woven
into our lives,” he says. “Eventually, our refrigerator will let us know when
we’re low on milk, and will be able to send a reminder to a mobile phone to buy
some on the way home. Similarly, by coordinating business processes through the
cloud, companies can better manage their supply chains or respond to their
customers’ needs.”