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Cloud Computing Turns Virtual Teams Into a Competitive Advantage

Collaboration in the cloud will fundamentally change the business ecosystem

The rise of modern information systems represented a major change to the business environment and increased the importance of collaboration. Companies as diverse as Toyota, Wal-Mart, and Dell Computer demonstrated the power of collaboration to improve the efficiency of the supply chain, at least at a massive scale. By electronically linking their factories, stores, and suppliers, these manufacturers used collaboration to achieve cost and service advantages over their competitors with just-in-time manufacturing and a build-to-order business model. Their collaboration took the form of ERP, EDI, and supply-chain management, and largely consisted of teaching computers to talk with one another.

Yet while collaboration during this time period proved a critical, sometimes determining, factor in business success, collaboration remained a large-scale process. Just-in-time manufacturing and cross-docking made sense for giants like Toyota and Wal-Mart, but it was hard to see their relevance for small businesses.

Paradoxically, it took the Internet Age - founded on teaching computers to talk with one another - to make collaboration personal again. The Internet places communications and coordination within the affordable reach of every business. No longer do you need a complex (and expensive) network of leased lines and dedicated hardware to integrate with your supplier. Instead, anyone with a computer can connect and communicate with anyone else. With the rise of cloud computing, you can even rent that computing power from the likes of Amazon.

Before the Internet age, stitching together a multinational operation required millions of dollars in capital equipment, thousands a month in telecom expenditures, and a massive IT staff to oversee that infrastructure. Today, you can hire developers in Bangalore (oDesk.com), a call center in Manila (LiveOps.com), and a warehouse in Memphis (Shipwire.com) with a few clicks of the mouse without ever leaving your office or even picking up the phone.

But while making it dramatically easier to bring people together around a common task, the Internet magnifies the challenge of coordinating and managing those people and organizations.

The first attempts to build virtual corporations back in the 1990s failed, largely because of this very challenge. People in organizations don't just conduct simple transactions. They collaborate to solve problems, to meet customer demands, to respond to competitors, to design new products. The hundreds of decisions that they make every day - even in a small business - impact other people and organizations, often in unanticipated ways. A successful virtual corporation must not only reduce the cost of virtual interaction, it must address the unstructured, dynamic, and creative aspects of much real-world business interactions and the management of those interactions.

Today, for the first time ever, Web 2.0 and cloud computing make it possible to solve the final challenge of coordination and management.

If Web 1.0 was about making the Web "World Wide," Web 2.0 has been about making the Web "personal," and cloud computing is about making the Web "ubiquitous."

The two keys to solving the coordination challenge are semi-structured data and ubiquitous access in the cloud.

Semi-structured data provides an online replacement for the tacit knowledge and implicit agreements that are so essential in a traditional business. Think about how much of what every business does is based on the unwritten rules and institutional knowledge that live in the heads of individual professionals. This operational know-how, often varying based on circumstances, and transmitted in the hallways and conference rooms as well as around the lunch table, was missing from the last generation of virtual corporations.

Web 2.0 services like blogs and wikis provide an online outlet for this kind of semi-structured information. Blogs and blog comments are a substitute for traditional informal interaction, while wikis can record the operational knowhow that used to be passed on during informal face-to-face meetings and working together.

At the same time, the ubiquity of the cloud helps overcome the previous need to house all the members of the team under one roof (or within one firewall). Virtual private networks impose too much friction on those attempting to connect from the outside, and generate far too many security concerns. Cloud solutions can place every member of the team on an equal footing and allow members to collaborate across geographic and organizational boundaries.

Yet while Web 2.0 and cloud computing have made virtual corporation possible, they are technologies, not applications. Businesses and teams need to learn how best to apply these technologies to generate real business gains, especially in the current economic environment.

How Does Collaboration Help Me Do More With Less?
While collaboration in the cloud has many soft benefits like allowing greater geographic diversity and encouraging a participatory culture, during these tough times, the hard benefits of collaboration take center stage. The bottom line is that collaboration helps you do more with less, and by definition, virtual companies and teams are all about less. Less time. Less money. Less inefficiency. Less employees.

Here are four practical ways that collaboration in the cloud enables businesses (virtual and otherwise) to do more with less:

  1. Ditch your servers
  2. Cut down on travel
  3. Enable outsourcing and offshoring
  4. Improve knowledge worker productivity

1. Ditch Your Servers
RMC Vanguard Mortgage is an established company in a traditional industry that's turned to collaboration and virtual company tactics to survive and thrive during turbulent times.

Few industries have been hit harder by the credit crunch than the mortgage industry. Yet through it all, RMC Vanguard (an independent mortgage company based in Houston that serves customers in over 25 states) has continued to grow. Its network of loan officers, most of whom work from their homes, acts like virtual company. It's critical that RMC's underwriters be able to serve the needs of those loan officers while still keeping up to speed on the rapidly changing rules and regulations of the mortgage industry.

RMC CTO Teo Mayes had been using a shared server to store and distribute this constantly changing information, but found that (1) it was hard to give access to geographically dispersed loan officers who sat outside the corporate infrastructure and had to log into a terminal access port to reach the server; (2) frustrated loan officers would simply call the underwriters instead of keeping up to speed, bogging down those valuable employees; and (3) the technical team was spending time and money maintaining the hardware and network.

More Stories By Chris Yeh

Chris Yeh is Vice President of Enterprise Marketing, PBwiki.

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