Under cloud cover: How leaders are accelerating competitive differentiation

© 2013 IBM Corporation

October 2013

Under cloud cover:How leaders are accelerating competitive differentiation


Respondent distribution (spanning 13 countries and 24 industries)

To learn how cloud is impacting organizations, we surveyed more than 800cloud decision makers and users from around the world

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*Growth markets surveyed: Brazil, China, India, Poland, South Africa, Australia, Singapore. Mature markets surveyed: Canada, France, Germany, Japan, UKand USA. To smooth possible geographic distortions, responses were weighted based on an IBM assessment of each country’s total IT spend.Source: IBM Center for Applied Insights Under cloud cover: How leaders are accelerating competitive differentiationFor more info, visit: ibm.com/ibmcai/globalcloudstudy

CIO

Other IT

Geo

40%

60%

Growthmarkets*

Maturemarkets

28%

22%38%

12%

Other LOB

Role

C-Level LOB 21%

15%19%

26%

19%

Organization size(# of employees)

2,500-4,999

5,000-9,999

10,000+<1,000

1,000-2,499


Pacesetters say they’re gaining competitive advantage through cloudcomputing, according to 2013 IBM Global Cloud Study

Think cloud is just an IT obsession? Business leaders disagree. Line of business’ (LOB)strategic interest in cloud will soon surpass IT’s.

Pacesetters are using cloud to build competitive advantage – through strategic reinvention,better decisions and deeper collaboration.

They have the business results to show for it.

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136% more likely to usecloud to reinventcustomer relationships

170% more likely to useanalytics extensively viacloud to derive insights

79% more likely to rely oncloud to locate andleverage expertiseanywhere in ecosystem

Strategic reinvention Better decisions Deeper collaboration

Pacesetters

Chasers

Pacesetters

Chasers

Pacesetters

Chasers 34%

61%

25%

59%

20%

54%

Source: IBM Center for Applied Insights Under cloud cover: How leaders are accelerating competitive differentiation that surveyed 802 cloud decisionmakers and users, spanning 13 countries and 24 industries.For more info, visit: ibm.com/ibmcai/globalcloudstudy


Think cloud is just an IT obsession? Business leaders disagree

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Cloud is extremely important to overall business successLOB’s strategic interest in cloud will soon surpass IT’s and it spans virtually every area of the business(finance, operations, sales and marketing, product development).

“Cloud” was defined as encompassing application, platform or infrastructure as a service as well as private, public or hybrid delivery models.Source: IBM Center for Applied Insights Under cloud cover: How leaders are accelerating competitive differentiationFor more info, visit: ibm.com/ibmcai/globalcloudstudy

IT 18% increase

Today In three years

LOB 112% increase58%

49%

72%

34%


Not only do business leaders believe cloud is crucial – they’re gettinghands-on with their organization’s cloud initiatives

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Who manages cloud services in your organization?

Source: IBM Center for Applied Insights Under cloud cover: How leaders are accelerating competitive differentiationFor more info, visit: ibm.com/ibmcai/globalcloudstudy

IT IT/LOBpartnership

Line of business Other

52%

45% 16% 36% 3%

© 2013 IBM CorporationSource: IBM Center for Applied Insights Under cloud cover: How leaders are accelerating competitive differentiationFor more info, visit: ibm.com/ibmcai/globalcloudstudy

As cloud aspirations grow, pacesetting enterprises are out ahead drivingcompetitive advantage, not just efficiency

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Pacesetters have deployed cloud on a broad scaleand are gaining competitive advantage through cloud.Top cloud driver: Market responsiveness

Challengers are on par with Pacesetters in achievinggreater efficiency through cloud, but still lag ondifferentiation and market responsiveness.Top cloud driver: Collaboration

Chasers are more cautious about cloud. They’re inearly stages of adoption and are not yet using cloud todrive competitive advantage.Top cloud driver: Workflow optimization

Pacesetters18%

Highagreement

High

Low

Adop

tion

leve

l

Lowagreement

Gaining competitive advantage through cloud

Challengers51%

Chasers31%


The competitive advantage Pacesetters are gaining through cloudcorrelates with stronger business results

7Source: IBM Center for Applied Insights Under cloud cover: How leaders are accelerating competitive differentiationFor more info, visit: ibm.com/ibmcai/globalcloudstudy

Gross profit2009-12 CAGR

Revenue2009-12 CAGR

2.4x

Pacesetters

Chasers

Challengers

12.7%

6.6%

6.8%

12.7%

9.5%

6.4%

15.3%

1.9xPacesetters vs.Chasers


Pacesetters use cloud to differentiate – through strategic reinvention, betterdecisions and smarter engagement

Source: IBM Center for Applied Insights Under cloud cover: How leaders are accelerating competitive differentiationFor more info, visit: ibm.com/ibmcai/globalcloudstudy8

Strategicreinvention

But what's different about their cloud approach?

Competitive advantage through cloud(% using cloud to achieve)

Chasers Challengers Pacesetters % Pacesetterssurpass Chasers

Collaborate across organizationand ecosystem

46%

51%

44%

44%

51%

49%

45%

Reinvent customer relationships

Innovate products/services rapidly

Build new/improved business models

Betterdecisions

Use analytics extensively to derive insightsfrom big data

Share data seamlessly acrossapplications

Make data-driven, evidence-baseddecisions

Deepercollaboration

Make it easier to locate and leverageknowledge of experts anywhere inecosystem

Improve integration between developmentand operations

+136%

+70%

+73%

+71%

+79%

+170%

25%

30%

30%

20%

34%

34%

34%

59%

52%

51%

54%

61%

59%

58%

62%30% 65%

+119%27% 51% 59%

+74%

+117%


Pacesetters are leading the charge toward enterprise-wide strategies –to guide experiments and increase agility

Source: IBM Center for Applied Insights Under cloud cover: How leaders are accelerating competitive differentiationFor more info, visit: ibm.com/ibmcai/globalcloudstudy

Differences in management approach and deployment

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Has enterprise-wide cloud strategy

Prioritizes open-source cloud platforms

Uses hybrid cloud

Encourages cloud experimentation through executive support

+270%

+83%

+176%

+39%

34%

40%

34%

57%

10%

21%

24%

38%

37%

58%

44%

53%

Chasers Challengers Pacesetters % Pacesetterssurpass Chasers


Through cloud strategies, Pacesetters are gluing together key technologiesand scaling up to do business in an entirely new way

Leveraging cloud for the integration and application of these strategic technologies


100%

100%

50%50%100%

50%

50%

100%

Mobile

Social business

Big dataAnalytics

Pacesetters

Chasers


Looking forward, how will Pacesetters continue to stay ahead?

Most valuable capabilities in “cloud of the future”


(Even bigger) big data:Access to – and management of –vast data stores they can’t get to now

Product/service building blocks:Easy-to-assemble industry or businessservice components they can use toconstruct new products or services

Industry-specific platforms:Cloud platforms with applicationsand computing environments designedspecifically for their industry

Pacesetters

Chasers 38%

60%

Pacesetters

Chasers 50%

59%

Pacesetters

Chasers 27%

57%


See how cloud can help you improve your competitive position


With prioritized differentiators and anenterprise cloud strategy, technologydecisions can be better aligned withbusiness needs.

Business objectives:Prioritize competitivedifferentiators to tacklevia cloud

Given your competitive positioning,consider where cloud could drivegreater differentiation.

• New business strategies?

• Faster product or serviceinnovation?

• Better ways of engagingcustomers?

• Changes to your business model?

• More informed strategic oroperational decisions?

• New or broader networks ofexpertise?

Cloud technology:Align platforms tobusiness objectives

The broader and more strategicyour cloud initiatives are, the morecritical it becomes to have anenterprise-wide strategy.

• How does your cloud strategyenable mobile, social and big datainitiatives?

• Are IT and LOB collaboratingeffectively to manage cloudservices and make investmentdecisions?

• Is senior management on board?What kind of governance structuredo you have in place?

• Which deployment aspects shouldbe more tightly controlled? Areteams given sufficient flexibility?

Cloud strategy:Drive enterpriseresponsiveness throughholistic strategy

• Which systems should be onopen-source platforms to gainspeed, scale and access?

• Do you have the right mix ofpublic and private cloud to meetyour requirements? Or will youneed the flexibility of integrated,hybrid cloud?

• Where might an industry-specificplatform supply tailoredfunctionality or fill an expertisegap?


To learn more about the study, please visit


ibm.com/ibmcai/globalcloudstudy

© 2013 IBM Corporation14

Additional detail on IBM and Cloud


IBM is on a similar journey with cloud – early results point to thestrategic transformation cloud can enable

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Strategic reinvention:Delivering innovationfaster

Deeper collaboration:Collaborating atIBM-scale

Situation: Testing backlog caused by provisioning challenges had become the singlebiggest factor delaying IBM’s new application deployments.

How cloud transformed:• IBM’s development and test cloud has virtually eliminated our testing backlog, speeding

new development and enabling applications to reach the market sooner• Development teams can more quickly build and manage their own dev/test environments

based on templates available via cloud – reducing provisioning time from 5 days to aslittle as 1 hour

Better decisions:Providing centralizedanalytics capabilities

Situation: Business Intelligence applications were being built separately by individualbusiness units, creating silos of information and massive duplication.

How cloud transformed:•Delivers analytics as a service, making the capability universally accessible•Supports 200K+ users globally, providing access to 100+ data warehouses and 500+analytic applications across all key business processes (Sales & Mktg, HR, Product Dev,Fulfillment, Finance and Sr Exec reporting)

•Added $300M+ in business value in past year•Exploits latest technologies to process queries up to 100X faster

Situation: Portfolio of siloed social and collaborative applications constrainedcollaboration. Needed ability to integrate >425,000 employees spread across 170countries, 40% of whom work remotely.

How cloud transformed:•IBM Connections social networking platform integrates and improves collaboration,helping employees identify and build networks of experts

•As of October 2012, had enabled 2.1M connections among employees, 127Kcommunities, 825K files shared & 24M downloads


Cloud computing is creating a sea change at IBM, not just in how ITis delivered, but in how the business does business

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“…All the emphasis (with cloud) is on cheaper and efficient ways to deliver IT. In reality, it’salso a way of delivering new industrial value – that’s the more exciting thing.”– Erich Clementi, IBM Sr Vice President Global Technology Services, IBM’s Hidden Cloud, Forbes.com

Business reinvention through cloud:

Helping IBM integrate information across the operation to improve problem response andmake smarter business decisions

Enabling work teams to tap into enterprise know-how, resources and applications that wereformerly unavailable to them economically, technically or geographically

Putting powerful analytics in the hands of sales, marketing, finance, HR and other IBMbusiness groups to solve business challenges, improve efficiency and exploit opportunitiesfor revenue and growth

Helping researchers accomplish in hours what used to take weeks: complex datacalculations and comparisons, modeling and simulations

Helping the business bring new and innovative solutions to market faster by facilitatingexperimentation, collaboration and social business.

© 2013 IBM Corporation17

© Copyright IBM Corporation 2013

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Produced in the United States of AmericaOctober 2013

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