|By Ian Khan||
|March 17, 2016 11:00 AM EDT||
Cloud computing can get confusing sometimes. For IT professionals who have been part of technology for the last few years sometimes new terminology is just a way to redefine things that were done in the past. "We've done that since 1995," or "We used to do that in the '80s," is not an uncommon response that we sometimes hear when we speak about new things.
Cloud computing is one such area that has its roots in the 1970s when the remote job entry system did somewhat of what today's cloud computing technology does, but at a very small, miniature scale.
Today I wanted to simplify cloud computing with the example of a legacy technology that we have come across at some stage or the other. It's an older legacy technology that actually may have paved the way for the technology revolution today.
Hardware in House Is Becoming a Thing of the Past
The need to invest in hardware that supports your business needs has changed. With cloud there are clear benefits to not having infrastructure at your premises. Some of the clear advantages of this are cost savings on real estate and savings on infrastructure investment. This also includes saving investments on maintaining this hardware, and focusing resources on maintenance rather than on other core areas of your business that drive more value. According to Gartner, "worldwide IT spending is forecast to total $3.54 trillion dollars in 2016, just a 0.6 percent increase over 2015 spending of $3.52 trillion dollars."
That's how much IT is spending on everything they do, with hardware investments, people and training taking a major chunk of the spending.
Changing Business Models
As cloud-powered recurring revenue business models go mainstream, let's also realize that recurring revenues are not a thing of the past. Yearly maintenance or renewals can also be compared to a recurring business model but just on a longer deferred payment duration. Today you are able to monetize your business offering based on yearly, monthly, weekly or daily consumption values. Every heard about pay-per-use? A close cousin of the recurring model, pay-per-use becomes a recurring model if the customer keeps on coming back to you for more services at regular intervals. How the revenue is booked is a different way of categorization though. The cloud is the biggest reason for recurring revenues to become mainstream. A problem with legacy IT was the pain associated with yearly renewal contracts, which are still rampant and the norm in a majority of businesses, limiting cash flow to certain months of the year, thus adding an aspect of not-needed slower seasonality. This model is the new business model powered by the cloud and is here to stay.
Unlock Ultimate Value
As IT hardware costs continue to go down and it becomes more viable to have more for the same price, there is tremendous value being generated through the cloud, especially for customers who can enjoy a greater spread of services and solutions for the same or less cost than they previously paid. According to Pingdom "It took 51 years before hard disk drives reached the size of 1TB (terabyte, i.e., 1,000 GB). This happened in 2007. In 2009, the first hard drive with 2TB of storage arrived. So while it took 51 years to reach the first terabyte, it took just two years to reach the second." This trend continues as hardware innovation complements what is happening in software and SaaS and how together these two are unlocking value. Services such as fax have crossed the chasm and on the cloud side of things is able to offer much more than document transmission from one location to the other. Legacy technologies such as fax now include complementary document management, e-signatures, and more value-added things such as DIDs and unlimited users.
Cloud technologies are moving faster than anticipated. Innovation is hitting us harder than we planned for. IT infrastructure, software and hardware are undergoing transformation every single day, thanks to the advances in cloud. The days of legacy applications are numbered and it's time for us to look at options that offer a much more rewarding business experience both in terms of unlocking value for our customers and also generating revenues and profitability. If you are struggling to say the final goodbye to your legacy applications, hardware and software, you're not alone. The guy next door is probably in the same position as they try to move workloads to the cloud. Stay strong and committed. Start your journey today if you have not started yet and help bring clarity to the industry if you already have moved to the other side.
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