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August 4, 2015

Reality hits business as cloud loses competitive advantage

The next step for cloud adopters is to deploy cloud deeper into their infrastructure.

By James Nunns

The cloud no longer offers a strategic advantage because of its universal adoption.

Cloud vendors have been so successful in pushing cloud technology that businesses are finding there it no longer offers them a competitive advantage.

This is according to the Harvard Business Review Analytics Services, which found that the emergence of reliable cloud services that provide speed and agility has set a new benchmark for business performance.

Angelia Herrin, the report’s author, wrote: ""The ability to adapt quickly is less of an advantage when everyone can do it; rather, not adopting cloud is becoming a competitive disadvantage.

"Achieving a competitive advan¬tage is no longer a given as more organizations join the club. Advantage in the future will come from how well cloud is managed and to what extent companies can use it to decrease friction in all of their business activities."

While there are still advantages and disadvantages to be made and had from the correct deployment of cloud services, it seems that simply picking a cloud service won’t see you race ahead of your competition.

According to the respondents, 40% have found that using cloud has increased revenue, with 36% saying it has increased profit margins.

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This isn’t to say that cloud equals immediate success over competitors, advantages can still be gained from management and a more strategic approach.

The report found that only 16% of those surveyed saw a competitive advantage, compared to 30% in the previous year.

Perhaps then the cloud market is now reaching its second stage, the surface – easy automation implementation of cloud is increasing to deeper infrastructure operations. The report found that 84% are increasing their use of cloud.

This is perhaps somewhat surprising, given the historical reluctance of companies to trust cloud with the most mission critical operations.

According to the report, there is a strategic shift in what part of organisations are making cloud purchases. Instead of line-of-business going around IT, it is the IT that is making 43% of purchases.

Keith Tilley, EVP, Global Sales and Customer Services, Sunguard, told CBR that cloud is entering the era of the ‘Cloud Hangover’: "Cloud Computing promised so much. It was presented as an IT cure-all; the solution to no end of traditional tech challenges.

"Now the hype has died down, organisations are beginning to wake up to the realities of the model, seeing both its limitations as well as its strengths. The era of the ‘Cloud Hangover’ has begun."

"Organisations need to recognise cloud computing not as a technical achievement, but as a tool to deliver a specific, individual business outcome.

There is no doubt that cloud can be as positive as the hype suggests, (with 64 percent of businesses enjoying increased agility, 53% experiencing cost reductions, and 44% improving response to customer and market demands), but it requires a sensible and pragmatic approach to achieve the transformational outcomes that many have seen."

Cloud still maintains the ability to be a differentiator but businesses need to take their implementation deeper into core systems to gain greater advantages.

The survey questioned 452 organisations which included 32% of 10,000 employees or more and 31% with 1,000 to 10,000 across North America, Asia/Pacific, Europe and Latin America.

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