In an era of rapidly constricting budgets, innovation can be a dirty - and expensive - word.
Chancellor of the exchequer George Osborne has told the public sector of the swingeing cuts set to hit government as businesses are still recovering from the recession. At Beyond the Cloud, a series of conferences in London and Edinburgh organised by BT and Computer Weekly, expert speakers acknowledged that pressure on the average CIO's resources remains at an all-time high, but they argued that cloud computing offers organisations a real opportunity to drive organisational change, generate savings and hone the competitive edge required to ride out the era of austerity.
"There are a lot of organisations wondering if they should be afraid of this, but while change always presents risks, it also presents an opportunity. Cloud computing is an important trend and any smart, seasoned IT decision-maker has to look at this and how it can fit into their strategy," said futurologist James Bellini.
Conference delegates heard the term "cloud computing" encompasses tools and technologies that can deliver better flexibility, improved value and the opportunity to innovate and share. With these key qualities in mind, the real task is to identify where the technology can deliver value and how to implement it.
Lewis Lyell, managing director of specialist product sales at BT Global Services, underlined the point. Since adopting cloud technology, over 6,000 BT employees can now work anywhere and millions of pounds have been saved in accommodation costs.
"It's had a huge impact on the business, not just on costs but also on reliability and resilience," he said.
Fourteen months ago as the recession struck, BT faced huge financial problems, according to Mark Quartermaine, managing director of UK markets at BT Global Services.
"We could either see it as a crisis or a catalyst. In hindsight it was a good thing, as we had to radically look at costs and how to innovate. With the new government and proposed cuts in the public sector and the private sector facing problems, there are crises we all face and we can use it as a catalyst," he said.
By using cloud services, BT stripped £1.8bn out of its cost base in a year. The company cut its workforce by 35,000 people over 18 months, rationalised the supply chain, reduced travel costs by millions of pounds and cut energy costs by £17m per annum.
However, it is important to get employees on side. "Seventy percent of this is about engaging staff," said Quartermaine.
But cloud computing is not just about helping firms to do things cheaper, it's also about helping them do things differently and better.
The conference heard that organisations which have embraced cloud services are already achieving competitive advantage as a result.
During the recent volcanic ash cloud that stopped flights across the UK, customer demand placed on BT's cloud-based contact centre platforms went up by between 300% and 500% in 24 hours. Buying such levels of spare capacity would be unusual, and only those firms operating on cloud-based platforms were able to scale up with sufficient speed.
"That's why this is innovation: because cloud services offer a way to deal with some of the interesting circumstances that present themselves in our lives, week in week out," said Donald McLaughlin, director and general manager at Cisco Scotland.
Cisco UK CEO Phil Smith added that innovation must be tied with a solution and mean something to the organisation in question.
"The two areas CIOs talk about are innovation and productivity. They are strong drivers for success," he said.
Collaborative technology has had a big impact on innovation and is another area increasingly accessed via an on-demand, consumption-based model. For example, Cisco has used telepresence technology to reduce its global airfares from $750m to $250m in six months.
"Telepresence allows us to potentially change business models. It's not simply about automating; it's about changing business processes," said Smith.
Orchestral academy South Bank Sinfonia has used telepresence for its global auditioning process. High-definition video and high-quality audio technology help interview musicians from all over the world without having to travel to hear them play, saving 20 tonnes of carbon, 55,000 flight miles and helping the organisation to narrow 142 candidates to 32 players within a week.
"If your CEO is telling you to innovate and cut down on air travel and be greener, how do you do this if there is no extra money? A hosted unified communications platform where you integrate call centres and applications and buy on-demand can help reduce total cost of ownership within IT budgets," said Smith.
Bridget Taylor is CEO of Customer Service Direct (CSD), a partnership between BT, Suffolk County Council and Mid-Suffolk District Council. She knows about the importance of customer service and how innovation can help.
"CSD was set up in 2004 to deliver shared services for customer service, IT, HR and finance to the two founding councils and has transformed care delivery by providing multi-channel access for citizens and has solved business problems," she said.
"It means we can use experts wisely, rather than spread them thinly, and manage the demand of a growing elderly population. Before, the adult services department had waiting lists, low customer satisfaction, budgets spiralling out of control and no handle on demand. After redesigning the service so all the demand came into one place, using one phone number initially, it meant a small 22-person contact centre could do the frontline screening, which increased efficiency."
CSD's Care First cloud-based system allows up-to-date information about customer records to be accessed. Perception of customer service has improved with 95% of people saying they are very happy with the way they are dealt with. Productivity has also improved by moving from face-to-face assessments to the telephone, with 80% of assessments completed during the first phone call.
"Expectations are managed and the authority has a handle on its costs, so now the council can take proactive work and target its effort on face-to-face interactions. Demand will increase with an ageing demographic, and with a challenging financial agenda this is the way forward," said Taylor.
But she pointed out the importance of involving users. "If they feel it makes their job easier and gives them some autonomy, they will embrace it. You must involve them in any innovation you do and the technology will follow," she said.
UK plc has a steep learning curve ahead. The age of cloud computing may promise many benefits, but any innovations or inspiration it generates will be delivered in a challenging post-recessionary environment where many of the old rules will be rewritten.
The recession is driving fundamental changes in the way people will consume and exploit technology in the years ahead. In an age where operational efficiency and customer satisfaction will be key, businesses will increasingly be required to embrace digital consumer culture.
"We're going through the perfect storm at the moment. People think differently, and have become accustomed to having many more choices than ever before," said Nicola Millard, customer experience futurologist at BT.
"It's about clouds, crowds and customers. The internet has given us rank and transparency at the click of a button. It is hard to hide in an era of radical transparency."
Millard said the new generation wants to use their own technology at work and quoted a Gartner survey suggesting that 24% of employees use their own equipment on the corporate network.
"The challenge organisations face is they can't control crowds," she said, but organisations can decide how they react to users who are more technology-savvy and are prepared to use the internet and Web 2.0 technologies to voice their grievances.
While previously resistant to social networking and instant messaging, businesses must contend with an emerging generation that views Facebook during office hours as a basic human right, but they can also benefit from the "always-on" culture. While employees using corporate WiFi to post Twitter messages via their smartphones might traditionally be regarded with suspicion, when they are using the same technology to answer work e-mails at home, the perspective changes.
"This is the challenge for Generation X. While we might be most aware of the security issues, Generation Y has taken these technologies to heart and the impact upon their productivity is amazing. To make the most of these benefits we have to move into their world," said Neil Sutton, vice-president global propositions and product marketing at BT Global Services.
In the cloud-based, always-on, perpetually connected world, people are working faster, longer and more effectively. Business is learning the lessons of the consumerisation of IT, and virtualised unified communications services that bring together paper, voice and video are already being implemented in organisations such as the NHS, Santander, Clydesdale Bank and National Express.
Potential benefits aside, delegates raised the issue of security as a chief concern likely to deter implementation of the cloud. Speakers acknowledged the need for caution, but in addition to maintaining that any such technical challenges could be overcome, pointed out that small businesses would actually be outsourcing to secure and effective services that reduced their risk.
"Security is important and there is clearly much to be done by both government and business to reassure people, but there are already numerous examples out there that prove you can deliver cloud services in a very secure way," said Stephen Nunn, global managing director of Accenture's Infrastructure Consulting Group.
Security is often mentioned as a reason not to adopt cloud services, but Ray Stanton, global head of the business continuity, security & governance practice at BT, said there is a lot of "fluff" associated with the cloud hype.
"Security is not a disabler. It's an enabler and security must be built in from the outset. Organisations need to think about their end solution and build security into it," he said.
"The cloud changes everything and the cloud changes nothing. If you embed security into the resilience of the infrastructure, why would you not do this?"