IT firms struggle when it comes to making cloud transition

A new study has found established high-tech companies face challenges keeping pace with new cloud-based business models.

Based on research carried out by systems integrator Accenture among 40 senior executives from software-as-a-service (SaaS), platform-as-a-service (SaaS) or infrastructure-as-a-service (IaaS) based businesses, the study characterised a lack of preparedness to cope the disruption of cloud computing.

Managing the move away from traditional business models of shipping hardware products or packaged software to more complex business models of IT services delivery emerged as the leading challenge.

Mitch Cline, global managing director with Accenture’s electronics & high-tech group, stated that growing cloud businesses was a hugely strategic undertaking.

“[High-tech] companies face enormous operational challenges in determining how to support these new models and deliver the world-class experience demanded by enterprise customers, in particular,” he said.

The study called on the senior leaders of these firms to develop a clearer understanding of the impact of more complex cloud-based business models on operations across every functional area. Without it, they also face the prospect of missing out on revenue the research found was increasingly likely to be generated from such cloud businesses.

Gartner forecast last summer that the market for applications, application infrastructure and systems infrastructure delivered as public cloud services will reach $43 billion (£26.7bn) alone in 2015.

It also recommended reviewing existing and prospective, new cloud-based business models, as well as building up the resource and governance capability required for cloud services delivery, resource allocation and other mission-critical requirements. And it suggested that a segmented operating model would help providers differentiate on price and customer service.

Cline added that chief operating officers (COOs) in particular needed to take more responsibility for forward-looking strategic planning and to develop necessary new capabilities and skills.

"High-tech companies need a coherent blueprint to make a successful shift to a services-centric business and to compete more nimbly with new cloud competitors," he concluded.