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January 26, 2016

Evolution of the Cloud and its impact on Procurement

Talking about cloud computing today has become commonplace as cloud-based technologies play a more critical role in business.  But much like other technological innovations, one thing leads to another, with each iteration building on its predecessor. Consider the evolution of the power grid, of telecommunications, of the personal computer, or of the Internet.

Based on the advances of technology leaders like Amazon, Google and Salesforce. Today, most of us in the IT industry understand that it is the evolving technology that will continue to impact business. Looking specifically at some of the stats on the growth of cloud computing and predictions overall is simply mind-boggling. Quite frankly, the cloud represents the next “Big Thing.”

  • IDC notes that public IT cloud services spending reached $56.6 billion in 2014 and will grow to more than $127 billion by 2018.
  • A Goldman Sachs study published in 2015 projects that spending on cloud computing infrastructure and platforms will grow at 30% CAGR from 2013 through 2018, compared with only 5% growth for the overall enterprise IT.
  • According to the Cisco Global Cloud Index (GCI) By 2019, more than four-fifths (86%) of workloads will be processed by cloud data centers; 14% will be processed by traditional data centers.
  • Gartner notes that by 2019, more than 30% of technology and service providers’ software investments will shift from cloud first to cloud only. They even go so far as to say that in five years an on-premises-only policy will be untenable.

With this growth, it is clear that as the number of applications and use cases evolve, cloud solutions and services will be so prevalent in B2B that they will be the norm. So what accounts for this tremendous growth? Much of it is based on these key characteristics, which demonstrate the benefits that cloud frameworks can provide:

  • Lower cost of ownership – Few technologies have affected the IT industry as profoundly as cloud computing, which delivers computing as a service or utility. As a result there is no longer a need to heavily invest and manage IT infrastructure.
  • Productivity anytime and anywhere – With the notion of always being on, there is an improved access to applications in the cloud and responsive design from desktop and  mobility; simply ease of access that traditional software can’t provide.
  • Off-site data storage – Improved data storage capabilities and security for managing how to house data and more easily manage changes in global data management requirements (e.g., changes Safe Harbor requirements between Europe and the U.S.).
  • Access to / deployment of innovation – Cloud frameworks can provide quicker access to innovation without long upgrade projects, giving adopters early access to new and improved functionality.
  • Reliability / scalability – Relying on third-party infrastructures such as AWS, Microsoft or Rackspace improve reliability and allows business IT to more easily scale, focusing on managing business, not IT hardware infrastructure.
  • Options using the cloud  – The proliferation of cloud offerings including SaaS, Iaas and PaaS give IT professionals an array of options of cloud frameworks that could generate an increased interest. This goes even further with the notion of Public, Private and Hybrid models for those looking at different options for how data is shared within a cloud infrastructure.
  • Improved access and interoperability of technology platforms – In the cloud it is much more flexible and the standardization is not as important, making it easier and more powerful to integrate (i.e., API). Moreover, social / mobile trends in the cloud are changing the game in how people are expecting to engage with applications and technology – these trends have been inspirational in the development of business technology and business networks.

Given these benefits of reduced capex and maintenance, and improved flexibility and increased reliability, many procurement organizations have already fully embraced the use of cloud applications. However, as more IT departments are willing to accept the cloud as their core IT operating framework, Procurement, as a function, is faced with taking a deeper look at the impact cloud applications will have on them, the enterprise and on the wider supply base.

How should Procurement plan to deploy procurement technology in the future? Is using a cloud technology suite the only answer?  With improved flexibility and interoperability in the cloud, can you still take a best-of-breed approach and use the features that only make sense for your enterprise in the cloud? Whether it’s managing against data security requirements, assessing the ability to meet regulatory compliance or addressing the needs of strategic suppliers, understanding the dynamic and evolution of cloud computing has become more critical than ever for Procurement and IT professionals.

Considering that companies of all sizes are introducing cloud applications into their enterprises, addressing the topic of cloud computing for Procurement is something that we at Determine are keen on doing during our next webinar, Understanding the Dynamics of Cloud Computing for Procurement.

During a 60-min. session, we will be joined by a guest panel of experts, including Mihir Nanavati, (SVP, Products) of Tradeshift, and Julien Nadaud, Chief Product Officer of Determine, to discuss the innovations of cloud computing and the impact it’s having on enterprises today.

Hope you can join us!