Business in the Cloud - Smart & Cloud Show, Seoul, Korea
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Transcript of Business in the Cloud - Smart & Cloud Show, Seoul, Korea
1© 2011, Michael Hugos Center for Systems Innovation [c4si]
Smart & Cloud ShowSeoul, Korea 8 September 2011
Business in the Cloud
Michael Hugos
CENTER FOR SYSTEMS INNOVATION
[c4si]
COEX, Seoul, Korea
2© 2011, Michael Hugos Center for Systems Innovation [c4si]
Smart & Cloud ShowSeoul, Korea 8 September 2011
PART 1
Business Realities
3© 2011, Michael Hugos Center for Systems Innovation [c4si]
Smart & Cloud ShowSeoul, Korea 8 September 2011
Business Continuum
• For last 100 years business focus was on efficiency
• Efficiency requires predictability and stability - hard to find
• Product life cycles now measured in months not years, new products and new companies appear quickly
• Responsive and agile enterprise is to real-time economy as efficient assembly line was to industrial economy
• Biggest change since introduction of assembly line
• Profits come from responsiveness to change!
Efficient Responsive
4© 2011, Michael Hugos Center for Systems Innovation [c4si]
Smart & Cloud ShowSeoul, Korea 8 September 2011
Responsiveness Trumps Efficiency
VERY FAST on straight road; sharp turns cause car to flip; slow deceleration
LESS FAST on straight road; capable of sharp turns; quick deceleration
20th Century Industrial Economy 21st Century Real Time Economy
FAST CAR (Efficient) AGILE CAR (Responsive)
5© 2011, Michael Hugos Center for Systems Innovation [c4si]
Smart & Cloud ShowSeoul, Korea 8 September 2011
A Cybernetic Economy
• “One time purchase transactions are replaced by ongoing commercial relationships between parties over time”*
*Jeremy Rifkin, The Empathic Civilization, 2010
• Customers buy access to services not just products− Netflix instead of buying movies− Zipcar instead of buying a car− Cloud services instead of buying hardware and software
• Respond to customers – or become irrelevant− Example of evolving mobile phone…− Is it a thing or an ecosystem of services?− Is it even a phone or is that just one of the services?
• How to keep up with pace of change?
6© 2011, Michael Hugos Center for Systems Innovation [c4si]
Smart & Cloud ShowSeoul, Korea 8 September 2011
Move from Cap Ex to Op Ex
Fixed Cost Traditional IT (Cap Ex)
Actual IT demand
Forecast IT demandFixed Cost of Capacity
B
AVariable Cost Cloud IT (Op Ex)
A = over capacity
B = under capacity
In times of high change reduce risk by moving from fixed cost to variable cost
7© 2011, Michael Hugos Center for Systems Innovation [c4si]
Smart & Cloud ShowSeoul, Korea 8 September 2011
Cloud Computing is a Utility
Cloud Computing – applications, computing power and data storage as a metered service with low initial cost to acquire and pay-as-you-go operating model (variable cost – op ex)
Like Electrical Utility – Cloud Data Centers serve many customers
Cloud Data
Center
CloudThe
Cloud
8© 2011, Michael Hugos Center for Systems Innovation [c4si]
Smart & Cloud ShowSeoul, Korea 8 September 2011
Manage Process not Technology
• In-house IT groups typically spend 70% of budget on datacenter operations, software licenses, system administration
• Outsource these activities to make operating costs variable
• Manage and improve business processes that deliver your unique value add
• Coordinate with outsourcing partners to meet desired performance levels – business process management (BPM)
• Focus IT spend on core value-added activities – things customers pay you for
9© 2011, Michael Hugos Center for Systems Innovation [c4si]
Smart & Cloud ShowSeoul, Korea 8 September 2011
PART 2
Moving to the Cloud
10© 2011, Michael Hugos Center for Systems Innovation [c4si]
Smart & Cloud ShowSeoul, Korea 8 September 2011
Technology of Cloud Computing
Hardware Virtualization
Data Storage and System Management
System A
System B
System C
System D
Application System Software-as-a-Service
SaaS
Platform-as-a-Service
PaaS
Infrastructure-as-a-Service
IaaS
Public – Private - Hybrid
11© 2011, Michael Hugos Center for Systems Innovation [c4si]
Smart & Cloud ShowSeoul, Korea 8 September 2011
Cloud is about Business Agility
• Main impact of cloud is agility (not cost savings)
• Be strategically focused and tactically agile
• Look for market trends - respond when opportunity appears
• Smart use of cloud computing enables creative responses to unexpected developments
• Think big; start small; deliver quickly!
12© 2011, Michael Hugos Center for Systems Innovation [c4si]
Smart & Cloud ShowSeoul, Korea 8 September 2011
Business Agility = Profitability
• Company sees opportunity to use existing expertise and supplier relationships to launch new product line
• Establish new sales offices in new locations
• Support sales process with appropriate systems
• Use business intelligence in field offices and headquarters
• New product needs engineers to customize installations for unique customer needs – requires meetings with customers
• How to quickly explore new opportunity?
13© 2011, Michael Hugos Center for Systems Innovation [c4si]
Smart & Cloud ShowSeoul, Korea 8 September 2011
Global Business Agility
“Just do it”
Lower risk…
See what happens!
OFFICE
OFFICE
OFFICE OFFIC
E
OFFICEExpansion
used to be expensive and risky – big up front investment
Cloud and SaaS
14© 2011, Michael Hugos Center for Systems Innovation [c4si]
Smart & Cloud ShowSeoul, Korea 8 September 2011
Cloud - Social Media - Consumer IT
Data Center
Integrate in-house IT with cloud based technology
15© 2011, Michael Hugos Center for Systems Innovation [c4si]
Smart & Cloud ShowSeoul, Korea 8 September 2011
Global Business Networks
Industry Operating Systems - evolving applications and services for specific industries
Cloud Coordination – collaborate using Business Intelligence and Simulation
Cloud Backbone – Companies connect and communicate
Cloud Systems
CompanyA
Market Demand
CompanyB
CompanyC
16© 2011, Michael Hugos Center for Systems Innovation [c4si]
Smart & Cloud ShowSeoul, Korea 8 September 2011
What Does It All Mean?
Are we seeing emergence of a global cerebral cortex?
Our bodies are of billions of autonomous cells talking to each other… Our planet now has billions of us talking to each other…
17© 2011, Michael Hugos Center for Systems Innovation [c4si]
Smart & Cloud ShowSeoul, Korea 8 September 2011
Learn MoreThis presentation excerpted from my newest book:
Meet me at book signing immediately following this presentation
Next to Information Desk at Smart & Cloud Conference, 8 Sept. 2011
Read my blog at CIO.com: Doing Business in Real Time
Reach me at: www.MichaelHugos.com