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Survey Shows Correlation between Cloud Use, Better Decision-Making

A new survey from IBM links financial performance with use of cloud computing for competitive advantage.

What’s the “secret source of differentiation” that one in five organizations has discovered?  What allows these enterprises to “serve customers in new ways and reimagine their business models”?   According to a survey commissioned by the IBM Center for Applied Insights (in collaboration with Oxford Economics) of 802 cloud decision makers and users, it’s cloud computing.  Although the survey addresses general business benefits such as collaboration and “strategic reinvention,” there’s plenty of insight for BI users.

The survey grouped respondents’ organizations into three categories. Pacesetters (18 percent of respondents) have “deployed cloud on a broad scale and are gaining competitive advantage over their rivals through cloud.”  Challengers (51 percent) are more efficient thanks to cloud but “still lad on differentiation and market responsiveness.”  Chasers (31 percent) are in the “early stages of cloud adoption and aren’t yet using cloud to drive competitive advantage.” 

These categories close corresponded with financial performance.  For example, the Pacesetters fared better in terms of financial growth: they had, on average, “higher revenue [at 12.7 percent] and gross profit growth [15.3%] than their peers.”  Revenue growth for Pacesetters was 1.9 times that of Chasers and gross profit growth was 2.4 times as great as Chasers.

“Cloud sits at the center of [Pacesetters’] transformation tool set -- mobile, social, analytics, and big data. ... Cloud is not just about cutting costs and driving efficiency; cloud fuels growth.” 

Cloud use is also reflected in respondents’ ability to make “better decisions.”  For example, only 20 percent of Chasers and 44 percent of Challengers get a competitive advantage through the cloud by using “analytics extensively to derive insights from big data.”  For Pacesetters, the figure is 54 percent.  Furthermore, 65 percent of Pacesetters make data-driven, evidence-based decisions, compared to 62 percent for Challengers but just 30 percent for Chasers.

In part this is because respondents say they can feed their analytics solution more raw data and that cloud gives them the capacity for “more expansive analysis.”  IBM cites its own business analytics cloud, Blue Insight, as being able to tap into “hundreds of information sources -- more than a petabyte of data that previously sat in silos across the sales, marketing, and development communities.”

We asked Ric Telford, vice president of IBM Cloud Services, if there were any surprises in the results.  He told us the study brought forth a few interesting insights.

For example, “There was a clear correlation between financial results of the pacesetters’ businesses versus the others. The study does not imply that it is a causal correlation, but most likely a statement that those who aggressively adopt new IT capabilities to help their business are seeing it in the bottom line.

“The study also found greater affinity with the use of cloud and the other emergent SMAC (social, mobile, analytics, cloud) technologies.

“Finally, there were some interesting ‘habits of highly effective’ cloud adopters, including the use of an enterprisewide cloud strategy, leveraging of hybrid cloud technologies, and use of open source cloud technologies.”

We wondered if IBM could draw any other conclusions about cloud use, such as how cloud adoption and use will rise?

According to Telford, “This is the first time we've done this study, so we have no longitudinal data to share.  However, all indicators are that cloud adoption will continue to rise.  The recently released IBM Tech Trends Dashboard (based on the most recent IBM Tech Trends Study) highlights overall adoption and investment rates for cloud computing: 39 percent of enterprises report having already deployed cloud, 19 percent are piloting cloud, and another 26 percent say they'll adopt it by 2014.

“The strategic importance of cloud computing to the business success of the enterprise is already high and projected to rise over the next three years. This holds true for both IT and business respondents. We found that line-of-business’s strategic interest in cloud will surpass that of IT -- and it spans nearly every area of the business, including finance, operations, sales and marketing, and product development.”  Highlights from that cloud study are available at ‪

What will it take for Chasers to move more aggressively in their use of cloud?  What’s standing in their way?

Telford noted that the Chasers “are more cautious about cloud; they’re in early stages of adoption and are not yet using cloud to drive competitive advantage. We found that the technical and organizational obstacles to cloud adoption don't vary in any notable way across the segments, which leads us to believe the cautiousness of the Chasers has more to do with their strategic motivations for using cloud. 

“That's where Pacesetters and Chasers differ:  The top cloud driver of the Chasers is workflow optimization -- they’re still focused on the low-hanging fruit of cloud, using it to drive organizational efficiency. In contrast, the top cloud driver of the Pacesetters is market responsiveness -- many have already achieved high organizational efficiency through cloud and are now highly externally focused, using cloud to rapidly respond to changing customer needs and market shifts.”

The study also looks at differences between the three groups in their collaboration, rapid innovation in products and services, and frequency of having enterprisewide cloud strategies.  The results are available here. No registration is required for access.

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