Shift to the Cloud Part II

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Digital Transformation

187 ratings

BCG

Digital Transformation

187 ratings

Digital transformation is a hot topic--but what exactly is it and what does it mean for companies? In this course, we talk about digital transformation in two ways. First we discuss the pace of change and the imperative it creates for businesses. Next we provide the context for this transformation and what it takes to win in the digital age. Then we walk through BCG's proprietary framework, which helps you identify key areas to digitize, including strategy, core processes, and technology. By the end of this course, you'll be able to: --describe the underlying economics of innovation, technology, and market disruptions --weigh the pros and cons of current digital technologies driving advancement --utilize BCG's digital transformation framework as a ""how-to"" for digitizing your organization

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Digital Trends Past and Future

Change as a constant has never been truer than with digital transformations. This week we will look at the key drivers of digital transformation, opportunities they have already established and the challenges they bring. Then we will explore emerging trends and technologies, what is possible/likely in the future, and currently what we're seeing in practice.

Week 3 Introduction3:08

Big Data Part I6:20

Big Data Part II6:20

Interview with John Rose on Trust11:21

Shift to the Cloud Part I5:57

Shift to the Cloud Part II5:58

Conheça os instrutores

Michael Lenox
Senior Associate Dean and Chief Strategy Officer
Darden School of Business
Amane Dannouni
Principal at The Boston Consulting Group, Singapore
Sonja Rueger
Project Leader, The Boston Consulting Group
Ching Fong Ong
Senior Partner and Managing Director, The Boston Consulting Group

There are three general benefits for companies using Cloud services.

Performance, agility, and cost reduction.

Let's look at these three benefits in more details.

Performance. Cloud services can be more reliable

building disaster recovery mechanisms that many businesses forget or under-invest in.

They can also give access to peak capacity

that would not be economically viable if built in-house.

Agility. Not only can Cloud services be set up quickly,

they can also be scaled as the business grows.

They allow seamless upgrade and are device diagnostic.

Cost reduction is a tricky one.

In theory, we know that running

a Cloud service especially on the lower layers is a scale business.

If we discard other migration and regulatory cost,

you can derive two types of cost benefits from the Cloud.

First, using Cloud services can reduce

a company's upfront investments, the capital expenditure.

This is especially important if there is

high uncertainty on how much capacity is actually needed over time.

Therefore, opting for a pay-per-use model

can reduce the risk of over-investing at the start.

Second, Cloud services can reduce the total cost of

ownership of your hardware or your software,

and even the people needed to run the application.

It is important here to look at the total cost.

I have seen many times IT or

procurement department led to the wrong decision because they have forgotten

the factor of maintenance or upgrade cost

or any other type of hidden cost in comparing multiple solutions.

Of course, the magnitude of cost reduction will vary

widely depending on the business needs and the starting position.

For a typical company,

the Cloud drives dramatically lower spending on a like for like basis.

This can result in

anywhere between 20 to 50 percent savings on IT cost.

Now, what does a company need to keep in mind when using Cloud services?

We talked about the need to look closely at the economics and pay

close attention to the total cost of ownership before triggering the migration.

But from a technology perspective,

hyperscale ability is the key for successful Cloud solution.

Hyperscale is the definition of

an architecture that can scale appropriately with increased demand.

Why is this important?

Let me tell you a story. One of our clients,

a telecommunication company was starting to outsource

its customer relationship management system to a Cloud service provider.

Reliability but also customization of the solution were extremely important.

Therefore, they purchased a highly advanced, very personalized service.

As our client acquired another company,

they needed to scale up the solution very quickly in order to add new stores.

However, they realized that scaling up their Cloud was costly and

took a long time due to the level of customization.

This caused serious problems and delays in the post-merger integration.

This is why hyperscaleable solutions already make up 20 percent of data center market,

and they are becoming more and more pervasive.

Let's review the key takeaways from this lesson.

The shift to the Cloud is here to stay.

It is driven by fundamental shift in technology economics.

There are different possibilities to leverage Cloud services

from infrastructure to platform to software,

all the way to business processes as a service.

A company should choose wisely,

balancing the business benefits with the

capability needs and the economics of any solution.

Among all those benefits of using Cloud services,

cost reduction is the trickiest.

Before any Cloud migration,

a company needs to carefully estimate its total cost of ownership including maintenance,

upgrades, and maybe even re-migration.

Hyperscaleability is key.

If you design an architecture with a limitation in mind,

remember that you are more likely to underestimates than overestimate your future needs.

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