Cloud computing’s inherent flexibility promises benefits across a wide range of industries. Here is a look at the ways cloud computing is impacting three huge global initiatives.

Healthcare

Healthcare providers are now able to keep patient records in the cloud, reducing paperwork for patients and staff and allowing more time for patient care. As long as specific security and confidentiality concerns are addressed, this will greatly improve efficiency and potentially organize the data in ways that help analyze trends in and connections among patient histories.  Other benefits to the healthcare industry lie in easier data sharing between distant facilities as well as in staffing and IT solutions. Though adoption among healthcare providers has been slower than other industries, cloud computing has potential to aid health initiatives in less-developed countries through easier record sharing and communication among doctors.

Sustainability

At this year’s meeting of the Clinton Global Initiative in New York on September 25, a panel of thought leaders discussed current world challenges and strategies to address them. Global concerns like sustainability call for international cooperation—regardless of company, industry, or country. The potential benefits of Cloud adoption to sustainability initiatives are obvious: Cloud computing facilitates discussion and data sharing among world leaders. Using the Cloud, leaders will be able to more easily track the latest environmental figures and analyze trends, catalyzing the implementation of new strategies.

Urban planning

By aggregating data about how city-dwellers use urban spaces, municipal governments will be able to understand the successes and failures of their own cities, allowing them to prioritize strategies for addressing problems and to improve functionality more quickly and effectively.  Cloud computing will play a role in the development of digital “smart” cities, as the relationships between devices in the city may be hosted in the Cloud. And in the urban planning context, Cloud adoption will have knock-on effects of economic growth and improved sustainability.

The digital transformation of business is an ongoing process, and “we’re only at the very beginning of the next digital wave,” says Didier Bonnet at the HBR blog. IT has a vital continuing role in this era of transformation– even as cloud computing gives business units more autonomy over technology purchase decisions. Bonnet’s post discusses the need for IT with specialized skills across a growing range of business functions and the methods digital leaders are using to shape their IT to meet this demand.

The research is unambiguous: Cloud security is a very big deal to executives (and as the chart at the bottom of this post shows clearly, other worries don’t even come close). Consumers, too, have concerns over privacy and data security – and Edward Snowden’s dramatic revelations about NSA snooping only serve to ratchet up the tension and increase pressure on companies that manage consumer data.

Now the news of government surveillance has European companies shifting their data storage away from US-based cloud platform corporations. Sweeping changes were announced to Europe’s approach to cloud computing last week at the 4 th Annual European Data Protection Conference in Brussels, with European countries taking measures to limit partnerships with US-based cloud computing services and tighten regulations within Europe.

Viviane Reding, Vice-President of the European Commission, EU Commissioner for Justice, outlined the plan for these regulations at the conference.  She talked about the economic significance of the collection and analysis of citizens’ data; according to the Boston Consulting Group, the data was worth €315 billion in 2011 and has the potential to grow to nearly €1 trillion annually in 2020.  It is imperative that cloud services in Europe regain consumer trust to maximize these potential economic gains.

Read the full press release here .

Reding discussed policy changes regarding territorial scope, international transfers, enforcement, and processors. She also stressed the importance of a “digital single market,” which would dispose of the current system (28 different sets of laws for 28 member states) and replace it with one standard approach to security regulation for the continent. She believes streamlining the approach to data security will ensure easier communication among member states and more successful enforcement of the regulations.

Restoring consumers’ trust in digital services is vital to cloud platform providers. In the months ahead, it will be interesting to see how cloud platform providers respond to the changes outlined at last.

C hart is from a study by Oxford Economics for SAP, “Protecting the Cloud.” You can download it (free, but registration required).

Security is the #1 concern for enterprise organizations when making a cloud decision. This issue has been aggravated in our post-Snowden/PRISM world. Security is a serious topic that requires thoughtful discussion.

There are many pressures along the security isobars of IT, and space for value- and business-oriented conversations about cloud services that help businesses become more agile and insightful are necessary.

The SAP Cloud Strategy and Customer Co-Innovation team regularly meets customers to discuss expectations, opportunities, and concerns. Many roundtables, forums, user group meetings, and expert sessions with organizations in various countries helped to shape the thoughts in this blog.

Here is a look at the 3 most important lessons we have learned from our experiences and interaction with customers.

Security remains the primary concern for businesses turning to cloud computing. According to a recent article from CIO Magazine , many CIOs are reluctant to adopt cloud services because of security threats. Several CIOs who spoke at the Security Insights forum (held in April in Sydney, Australia) explained the reasons behind their conservative approach to cloud platforms. Ramsay Health Care CIO Mick Campbell cited data leaks and the resulting reputational damage as a barrier to cloud adoption, and others expressed similar concerns, along with nervousness about inefficient government regulation and confusion over how and where data is stored.

These concerns are in line with the fears expressed by executives in a study conducted by Oxford Economics for SAP, Protecting the Cloud. Survey results show that security is the top concern among business leaders adopting cloud platforms.

Protecting data is an ongoing challenge, but there are ways to mitigate security risks:

  • Map out business processes to understand potential vulnerabilities.
  • Classify data and know how it is being stored and shared.
  • Recognize the potential cost of a data breach.
  • Identify gaps in existing compliance and security policies.
  • Increase the use of education and training to keep up with rapidly morphing security threats.
  • Avoid a locked-in approach—do not let vendors dictate a rigid set of proprietary tools and technology.

CIOs who express concern over cloud security have already taken a step in protecting their businesses: They are aware of the potential costs—financial and reputational—of a security breach. Armed with this awareness of their vulnerabilities and of the value of their data, CIOs should be able to outline a strategy for protecting cloud security that works for their organization’s unique needs. With a tailored and flexible approach to cloud protection, they will be able to experience the benefits of cloud computing.

Have you ever used the saying, “two sides of the same coin,” indicating there are two ways of looking at the same thing, maybe two different interpretations of a situation?

If you look at private cloud services, you click on a URL, register yourself, and start enjoying the beauty of an appealing solution experience. Your data persist in the cloud; you can access it from wherever you are and whichever device you might have – the definition of online. This is the freedom of cloud applications in private life – and obviously the shining front of the coin.  Many people now have the same expectation for their work life applications…

However, if you flip this coin over, you might be in for a surprise.

The recent study SMEs: Equipped to Compete, conducted by Oxford Economics for SAP, explores the ways small and mid-size businesses around the world are leveraging technology to boost innovation, strengthen customer relationships, improve agility, and expand their businesses. Based on an expansive global survey and a collection of in-depth interviews with SME executives, the report highlights key trends within these enterprises. Among the key findings: SMEs are defying the stereotype that they are technophobic and only think locally. In fact, they are transforming themselves in fundamental ways and thinking globally, allowing them to compete with both domestic and multinational rivals. Key to their transformation is their aggressive investment in new technology, including cloud platforms.

Cloud platforms allow these smaller businesses to automate systems, processes, and interactions in ways that were previously impossible, leveling the playing field against larger competitors.  They help companies roll out new services that connect all their data—and their partners’ data—seamlessly and efficiently. Cloud computing is a key component of SMEs adoption of new technologies, with 18% of executives citing it as a tool for better customer service and 25% attributing to it improved product and service development.

Yet cloud adoption among SMEs is less robust than one might expect. Among the key factors holding it back are security risk, data consistency across applications and job roles, and recruiting people with the necessary skills to support this expansion. Additionally, existing employees often need prodding to use new technology and lack understanding of cloud benefits. Regardless of the potential security risks and the difficulty of finding employees with the right skill sets, wider adoption of cloud will be a key to the global agenda and technology transformation expected to power SME growth over the next several years. The companies that quickly adopt a comprehensive approach to protecting and integrating cloud platforms will benefit most from them.

You can read more about these trends in the Oxford Economics study SMEs: Equipped to Compete . How are cloud platforms transforming your business?

I am fascinated by the role Cloud Computing plays in the business transformation that began to take shape in the last few years. Every day there is a new customer example, statistic, survey, or analyst report reminding us that we are in a new era of business performance. When engaging with customers and partners, we often hear that changes are taking place so rapidly that many line-of-business leaders are paralyzed by the speed at which they need to move—and furthermore, they don’t always know how or where to move. I discussed some of the trends influencing these changes on the SAP community network blog ( 10 trends for the year ahead ).

The convergence of cloud, social, mobile, and big data analytics has forced companies to adapt immediately to industry forces or risk becoming obsolete. And let’s not underestimate what is at stake: organizations large and small are all wrestling with how to win in their market and how to gain the competitive edge that will deliver unmatched value to their customers  and timely profits to their investors. The payoff is huge for those who execute well.

At SAP, we know this better than anyone, as our substantial customer base and vibrant ecosystem deals with this change firsthand. We deliver innovative solutions to our partners that help them keep the engine running while allowing them to change the tires for the next race. This is the single greatest challenge that organizations face: keeping the lights on while simultaneously preparing for the future and focusing on gaining a competitive edge. A key enabler is technology, and the goal is to achieve business velocity by finding the right foundation and mix of solutions.

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Few companies want (or can afford) a “rip and replace” approach – nor should they even consider it in most cases. We constantly hear from long-standing customers that they want to maintain some of the core systems that serve them extremely well, but need the innovation that the cloud affords. To help them strike this balance, they also need a strong relationship with a trusted, dependable partner who supports their changing, growing needs.

So the key business question is: How do you manage change and capitalize on emerging trends in a cooperative way?

A word like “critical mass” is so often used in the figurative sense, it is sometimes hard to remember its original, technical meaning: the smallest amount of fissile material needed for a sustained nuclear reaction. This was first achieved by the great physicist Enrico Fermi, in a “pile” (and that’s the technical term) of Uranium in the unlikely location of a squash court at the University of Chicago.

It turns out that different isotopes require a different mass to go critical. So Fermi needed a pile 8 metres high of unrefined Uranium, but a ball of just 10 cm (the size of a softball) of Plutonium is needed.

Cloud Network pioneers also wonder how long it takes to “go critical”. A common target in the network world is 50pp, 50 percent penetration of the target market. I prefer the term “network effect”, and the idea here is that networks ( just like a pile of uranium-235), when they get to a certain size “go critical”, and the benefits of adding a new node exceed the costs of creating and connecting it.

Let’s look at some Network Effects over the years. They all exhibit the same chicken-and-egg effect in that it makes no sense to buy a telephone (lay rails, string cables) if there are not enough people to connect to.

Network

Started

Critical Mass

Time Required

Built by

Railroads 1820’s 1880’s 70 years Tycoons, Barons
Electricity 1860’s 1930’s 70 years Local Govts, co-ops
Telephones 1870’s 1940’s 70 years Ma Bell
Oil Pipelines 1880’s 1920’s 40 years Standard Oil
Credit cards 1950’s 1980’s 30 years Visa
Internet 1960’s 1990’s 30 years Fed Govt
Cloud 2005 ? ? Various
Source: Infrastructure History Series (Amy Friedlander) http://www.cnri.reston.va.us/series.html

One fact that seems inescapable is that things are speeding up, just as we’ll, as  investors are unlikely to want to wait decades for the network effect to take off. Also, the time taken to get to “criticality” depends on the cost of setting up the node and connecting to the network. Stations on a railroad are expensive, so are the tracks between them.

There’s certainly more to a Cloud Network than just scale, such as the classic cloud benefits of service levels and guaranteed delivery but scale matters. And of course there are many examples of networks that fail to go critical at all: Apple’s Ping, the Philips Video Disc, the CueCat, the 3DO games console.

How can you tell if a network has reached criticality? The mathematical definition states baldly that at criticality, the value obtained from the network is greater than or equal to the price paid for access. Not very helpful, but there’s one important thing that is needed: a sustainable business model .

A sustainable business model is in effect when the profits to the network administrator scale in proportion to the value that its subscribers receive. If you have to endlessly pay for more hardware (e.g. phone lines, wireless spectrum, racks at Amazon Data Services) as you get more members, then you don’t have a sustainable business.

There are plenty of Business Networks out there, and when one of them goes critical, it’s going to create a really big noise.

We discussed in the past how . Our newest paper on PaaS integration finds that cloud leaders prefer to build their own cloud platforms and are using the cloud to collaborate with partners, suppliers, and customers.

Download our full paper (free, but registration required).