New groundbreaking global survey findings demonstrate the true value of cloud computing to the business. While it is understood in the industry that cloud computing provides clear cost benefits, CIOs are having difficulty getting a true fix on the business value that cloud might offer beyond cost reduction. These survey results reveal a direct link between cloud computing and business agility—how business outcomes are associated with agility, the role of IT for agile companies and the importance of cloud computing to business leaders.

Rebalancing the IT Equation

What drives IT in your organization—cost or agility? In economics, it is a supply-and-demand equation. Within the IT organization, it is a cost-agility equation with most discussions today focused on cost controls rather than the greater potential benefit—business agility. We hear “How much capital and operational expense can I cut with cloud?” more often than we hear “How will cloud improve revenue or my company’s competitiveness?” Yet business decision makers outside of the IT organization have a different perspective.

Agility Critical to Achieving Key Business Outcomes

In February 2011, 600 corporate decision makers participated in a business-agility survey conducted for VMware® by independent market-research firm AbsolutData . The majority of respondents (67 percent) came from companies with more than 5,000 employees, while 30 percent had more than 30,000 employees. The respondents participated from around the world—37 percent from the United States, 27 percent from Europe and 36 percent from Asia—and from 18 different industries. Sixty-two percent of those surveyed were in business management and 38 percent in IT management.

The survey results show:

  • More than 80 percent of respondents agree that agility is moderately or more than moderately linked to improving corporate revenue, cost and risk profiles, with 66 percent identifying business agility as a priority.
  • “Extremely agile,” companies outperform others across all business-agility dimensions, particularly “recognizing shifts in customer trends/demand,“ “launching new products or functionalities,” “managing the execution of programs” and “scaling resources in order to meet demand.”

Cloud Economics

With business agility established as the primary business driver, the other half of the IT equation is cost. Virtualization—the foundation for cloud—is well-documented to provide IT cost savings. Funds can be redirected to IT innovation that accelerates business, such as cloud.

Today, the availability of on-demand, inexpensive, self-service computing capacity via public clouds is creating new competition for internal IT organizations. Public cloud providers provide a pay-per-use model for IT and publish upfront rate cards on using compute and storage resources. The cloud industry rate card is so attractive that it is driving IT organizations to try to improve services and service level agreements (SLAs) at lower costs than those at which they offer IT services today.

In a sense, the public cloud has been a wake-up call for IT organizations. They must now consider the variety of cloud models—public, private and hybrid—with different cost savings.

More than Economics: The Value of Hybrid Cloud

If you remember, not long ago IT decision makers had to choose between deploying applications on an intranet or extranet, and then most applications just ran on the internet. In three years, the distinction between private and public clouds will slowly dissipate, and the two will complement each other in a way that leverages the best of both worlds—a hybrid cloud that may simply be called the cloud. But the need for both will remain, because there is so much investment in legacy environments within the datacenter. That is not going away. It would be nice to have it just run better and be more cost-effective in someone else’s datacenter, but if that could happen, everyone would have outsourced IT by now.

Why VMware for Your Cloud?

By allowing enterprise IT to intelligently and dynamically anticipate and respond to business needs, cloud computing creates competitive advantage. If your business is thinking about building for the cloud, why not build for your cloud? Although true cloud computing is a standardized approach, the way every individual business approaches cloud computing is not. VMware is here to help you move beyond the limitations of a one-cloudfits-all approach.

To read full download the whitepaper:
Business Agility and the True Economics of Cloud Computing

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