Cloud is not revolutionary - but it's causing a revolution

It is becoming clear why so many technology vendors say the cloud is a revolution for IT. It’s because it’s threatening to be a revolution for them.

Take a look at two very different illustrations of this point this week.

In the private sector, the business services giant Rentokil Initial has opted for a cloud-based HR system from software-as-a-service provider Workday for its 66,000-strong workforce. The firm is already a big supporter of cloud, using Google Apps for 35,000 users globally. Clearly the firm’s first experience of the cloud has not put them off.

Take another look at those suppliers, by the way. Workday for HR – not Oracle, or SAP. Google for productivity tools – not Microsoft. Revolutionary?

In the public sector, the Cabinet Office recently released the first invitation to tender for the G-Cloud. It emerged this week that so far more than 380 companies have expressed an interest in the project.

When was the last time 380 IT suppliers wanted to bid for a major government IT project? Most small IT suppliers won’t go near Whitehall procurements because of the cost and bureaucracy involved, leaving it to the usual big players to bid against each other.

The Cabinet Office G-Cloud team has gone out of its way to make it as easy as possible for these non-traditional IT suppliers to be involved. Of course, nobody has been awarded a contract yet – but can you at least imagine how much of a shake-up such a broad competitive set is going to cause among the cosy oligopoly of major systems integrators? Especially if those smaller suppliers win.

Ask most IT leaders, and they say that cloud is part of their plans, but is an evolutionary technology. Ask them what they think is revolutionary about it, and they say they hope it sticks a rocket up the rear of their vendors.

The cloud is not a revolution in technology – at least as far as its users are concerned. But it is a revolution in the relationship with their suppliers. And that’s why cloud is going to be so important to the public sector, in particular.

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The point about the cloud threatening to be a revolution for legacy IT vendors is well made. It is clear to see that 'true' SaaS is beyond the capability of traditional software firms both from a technical perspective as well as from a business model perspective. They are simply wedded to the licence revenue and maintenance model that will decline over time. We are already seeing the impact in the contact centre market with large traditional vendors losing significant amounts each year and squeezing expense as top line declines; of course this impacts R&D, sales and marketing, channels and customer support. Something of a death spiral.

As an additional thought to Bryan's blog, our experience at NewVoiceMedia is that cloud adoption is not just confined to early adopters, we are seeing very established and conservative businesses embracing cloud services, that would normally be considered laggards in the adoption curve. This indicates that other forces are at play around the buying decision and probably ones that impact the business lines more than the IT group. Factors such as competitiveness, customer service, flexibility, speed to market and (sadly) the economy. It seems clear that the force of change is coming from business managers who are focused on business benefits rather than how the IT services are delivered.