How Cloud Computing Supports the New Workplace

For the first time in modern history, workplace technology has lagged behind consumer technology, and consumers are more likely to adapt to new technology than businesses are. Of course, consumers are less risk averse when it comes to technology, but in some part that is attributed to the fact that workplaces are becoming multigenerational.

Different generation of employees have different work preferences and behaviors. Millennials (born from 1977—1998) in particular may tend to be more familiar with technology and collaboration tools, and also expect their work environment to allow or even encourage them to use these tools. By the end of 2014, 50% of the world’s employees were those born after 1980. This huge percentage includes many supervisors and managers—more than you might expect, since Millennials are assuming leadership roles earlier than any generation in the United States to date. In 2015, those born in the 1980s are around 35 years old, holding roles in middle management, leadership, and in many cases are entrepreneurs launching start-up companies. Also, while the median age of the working population in the United States is around 36.7, it is closer to 26 in some industries, with a larger younger population of workers led by these start-up entrepreneurs. New companies are more likely to adopt the preferences of Millennial workers as a result. One new technology that has been particularly advantageous to start-up entrepreneurs is Cloud computing, commonly referred to as the Cloud. Rather than having to invest in building a technological infrastructure, new business can pay to use an already-established infrastructure provided by the Cloud. Increasingly, this technology will be the backbone of new businesses, and will be used by new competitors.

Up-and-coming leaders from this latest generation have grown up in a technological age, and their expectation is that they can compute, connect, and communicate at work the same way they do in daily living. Their ability to gather, leverage, and use information in shorter periods of time comes from their comfort with the technology and the data at their fingertips. The technological tools used for navigating daily life are expected to be available in the workplace. It is incumbent upon businesses to make that option a reality.

Today’s businesses have a workforce made up of multiple generations: Baby Boomers (born 1946 to 1964), Generation X (born 1965 to 1976), and Millennials (born 1977 to 1998). By 2020, Gen Z will be joining the workforce. In their book, The Gen Z Effect: The Six Forces Shaping the Future of Business, authors Tom Koulopoulos and Dan Keldsen stated, “One of the biggest mistakes you can make is to take slow technology adoption on a generational divide by assuming that the entire generation has the trait of technology avoidance; this is exactly what we have done historically when we stereotype ‘older’ workers when we say they don’t ‘get’ technology.”¹ Meghan Biro, writing for Forbes on the “5 Disruptors in the World of Work for 2015,” also notes, “In 2015 there’s no such thing as a non-mobile, non-networked workplace. Social media is a standard component of the HR platform—from recruitment to onboarding, education to engagement. As job seekers set their smartphone alerts for positions, business wakes up, ensuring their platforms fit on mobile. To overlook social and mobile renders your company image that of a dinosaur, especially given the younger generations’ eye, who use mobile and social as their de facto means of everything.”²

This leaves some businesses and industries in a place where they may not want to be. Having spent millions of dollars over the last several decades investing in on-premise technology infrastructures comprised of hardware, software, data centers, and the like, to have to rapidly change to a new mode simply to support everyday business processes can be a tough pill to swallow for many executives and technology leaders. However, doing nothing may prove more costly than adapting to new technology. Regardless of industry, the next wave of technology and workers are here and are part of today’s workforce. Executives need to understand how the combination of new technologies and new workforce expectations are forged to grow the products and the industries of the future.

Taking a Look at Cloud Computing for Your Business

Technology in its simplest form enables day-to-day activities and business functions. Whether an individual, corporate, or government entity, the objective of technology and the desire to adopt newer technology advancements is for efficiency gains. Why invest in a new technology if it does not make your business more efficient and less costly, or save you time as you make your way through various daily tasks, whether personal or business related? Business should also consider the growing mandate for information security, particularly as it relates to data privacy.

What exactly is the Cloud? Does it provide these efficiencies? Does it secure your data? How about social networks and mobility, how secure are they? If allowed in the workplace, are there security measures you need to take? What is your level of responsibility? Does the Cloud provide the technology platform that supports the multigenerational workforce that now exists? These are all questions business leaders are grappling with, as all industries have differing needs and investments in technology.

The National Institute of Standards and Technology (NIST) defines Cloud computing as “a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (for example, networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.”³ Others have described Cloud computing as a deployment model for on-demand and on-line delivery of information and technology-related services. Numerous companies currently offer such services, such as IBM, HP, Microsoft, Google, and Amazon, to name a few. These companies make big promises, particularly in providing enhanced security while reducing costs, particularly in capital expenditures budgeted for technology. The question of whether they can provide these services and security has industry and academia’s technology experts scrambling for an answer. Currently, numerous studies are underway to quantify security and costs and their relationship to Cloud computing adoption.

The Cloud and the as-a-Service Model

Most executives will be using the as-a-Service model, which is almost 10 years in existence and is rapidly growing into mainstream computing. While the Internet, Wi-Fi, hotspots, and broadband give everywhere computing unprecedented access to information, data, and media, they also blur the lines between personal and job-related usage. Where does the Cloud fit in? Cloud computing products are represented within 3 primary “as-a-Service” models that a customer (tenant) can leverage: Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), and Infrastructure-as-a-Service (IaaS). While there are other as-a-Service offerings being developed in the technology world, these are the primary 3 that most executives should be leveraging.  The efficiencies within the Cloud are realized from a fee structure based on usage, lower computing cost, and service-level agreements (SLAs), which are designed to support business functions and manage technology interaction more efficiently, thus significantly reducing capital expenditures while technically enabling a more ubiquitous and mobile workforce.  Companies that have invested in their own infrastructure have a capital and operating expenditure model to overcome, and migration to the Cloud from a legacy platform is not inexpensive or simple.  Short-term costs can be high, but over the long-term, most companies—when looking at Total Cost of Ownership (TCO)—will most likely see a leveling out of technology operating costs when migrating to the Cloud. Return on Investment (ROI) models suggest that over the long-term, Cloud adoption, at least from a cost perspective, is positive.

The as-a-Service structure is a business model, not a technology. In actuality, the technology in the Cloud does not really change. The hardware (networks, servers, computers) you may have invested in over the years may not differ from what hardware exists in the Cloud. All the original equipment manufacturer (OEM) vendors sell hardware to Cloud providers for their data centers in the same way they would sell to corporations for on-premise systems. Thus, in the Cloud, you are leasing the technology, as opposed to owning it. Similar to the condominium business model, you no longer have to worry about owning the building, you simply pay to maintain it and own everything inside, such as your
corporate data. The Cloud represents a leasing agreement in place of owning hardware and equipment (infrastructure), where software and services can also be offered. It has and will continue to be a thriving business model.

There is one model in the Cloud that does give many business leaders pause and does come under some scrutiny—it is the enduring question of configure or customize. Simply put, many large companies and industries buy applications and customize them to map to their specific business processes, to mirror the way they operate, on a company-by-company basis. In the Cloud, it does not work that way—SaaS vendors provide 1 line of code that all companies (tenants) adopt. In most enterprise Cloud applications, you do not have the ability to customize an application to fit your specific company. Instead, software companies that design Cloud applications use the one-size-fits-all approach and then allow a business to configure the product to its specific needs. While there are limitations, in the long run, the cost benefits are proving to be immense as customization has proven to be very costly when companies take on long-term technology and application implementations, and then customize them to their specific business processes.

While large companies may take the position that they are unique in how they do business, new thinking suggests that most companies within an industry, as a whole, operate in the same way. While there are nuances within businesses and across enterprises, most companies within any industry truly have similar operating models. For instance, if you are a manufacturer or distribution company within a given industry, your manufacturing and distribution model is not radically different from one of your competitors. While there may be business processes that you perceive to be better or more efficient, those nuances—when calculated into hard dollars spent—may not be giving you the competitive edge you seek to offset the expenditure. This assumption, based on empirical data, provides the basis of what Cloud SaaS providers are banking on.

This relates to one area where Cloud providers need to mature: in industry-specific applications. Different industries have different business processes that they require to run their operations. Cloud software providers need to spend more time developing industry applications, and they are not there yet on a widespread basis. One of the fastest growing elements of Cloud computing is IaaS. Considering IT spending overall is at a slight decline, companies are looking to the Cloud and IaaS in particular to help manage technology needs.

IaaS provides the IT hardware and platforms that firms may need to host their enterprise applications. “Gartner forecasts public Cloud IaaS to grow at a 29.1% CAGR [capital annual growth rate] from 2014 through 2019, and is expected to reach $44.4 billion, 5 times more than any other IT spending.”⁴

Having an IaaS contract may be beneficial. The IaaS model allows you to divest from a costly infrastructure, yet can be designed to support your current enterprise applications, where industry-specific SaaS applications may not yet exist.

Leading in a Technology Transformational World

For many businesses, traversing the landscape of technology can be daunting. While technology is always fast paced, the last decade has been transformational, and with the added behavioral changes of the workforce, the culture of workplaces is changing drastically. Regardless of industry, no manager or executive wants to lead from behind. Within today’s market and economies there is a changing landscape when it comes to technology and the workforce and the geopolitical engine that is driving future inventions and innovation. At the same time, there are real capital and operational expenses that have to be considered, which create other issues in addition to the disruptions caused by
an ever-changing technological ecosystem. Managing businesses, technology, and work-force capabilities against market pressures and capital spending has and will always be a balancing act. Adopting new technologies such as Cloud computing may provide a competitive edge that can help businesses adapt to changing times.

^1.   Tom Koulopoulos and Dan Keldsen.  The Gen Z Effect: The Six Forces Shaping the Future of Business (Brookline, MA: Bibliomotion, Inc., 2014).

^2.   Meghan M. Biro. “5 Disrupters in the World of Work 2015,” Forbes (December 2014).
http://tinyurl.com/orqgzqx

^3.   Peter Mell and Timothy Grance. “The NIST Definition of Cloud Computing,” National Institute of Standards (September 2011). http://tinyurl.com/3cwq47r

^4.   Gartner, Inc. “Forecast Analysis—Enterprise IT Spending Across Vertical Industries, 1Q15 Update,” Gartner, Inc. (April 2015).