The cloud offers a variety of benefits to organizations, from flexibility to cost savings. For electronics OEMs, it's the latest supply chain used by customers to get the servers and storage they need to run their businesses — a fundamental shift in how organizations buy IT.
“Cloud is the next-generation of supply chain for IT,” said Richard Scannell, executive vice president of corporate development at the cloud migration software provider RiverMeadow. “In many cases, you spend in capital, as well as weeks and months spent implementing the hardware and software on a two- to three-year depreciation schedule, and 25% of the useful life is gone before the end of the project.” With the cloud, “in five or six clicks, you can make servers and storage available.”
For large computer hardware OEMs, this is changing customer buying patterns. “Big OEM manufacturers, whether it's Cisco, HP, or Dell, are finding that their customers are no longer buying in the same way,” said Scannell. “These companies are looking to build out private clouds or move to the public cloud.”
IHS growth predictions bear out the interest. “Global business spending for infrastructure and services related to the cloud will reach an estimated $174.2 billion this year, up a hefty 20% from $145.2 billion in 2013,” the research firm said in a press release. “By 2017, enterprise spending on the cloud will amount to a projected $235.1 billion, triple the $78.2 billion in 2011.”
Today, organizations making the move to the cloud face a number of challenges:
- Legacy systems : “Generally, there are servers that are older or are running an older operating system and have a lot of tribal knowledge attached to them,” said Scannell. “Usually, they are stuck with this stuff until the organization stops using it and it can be retired.”
- Security : Organizations need to focus on ensuring that neither its applications nor its data will be at risk.
- Seamless migration : “You want to be able to migrate in a seamless and unobtrusive way for users,” he said. Further, organizations need to be able to move data easily.
At the same time, the cloud offers some compelling advantages. Organizations are quick to understand some of the more obvious ones, like not having to invest in capital equipment and being able to get additional capacity quickly and easily. Further, and perhaps less obviously, cloud-based services often offer better reporting capabilities and a greater degree of resilience, he said.
Let's talk about how changes in technology adoption are changing the business of computer hardware OEMs. Should these companies be worried? Where do you see the biggest shifts?
— Hailey Lynne McKeefry, Editor in Chief, EBN