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Cloud may help during an economic recession, but…

publicado por Alfredo Saad

Figura - Cloud may help during an economic recession, but...As largely discussed, the implementation of cloud solutions is making possible the achievement, by organizations of any size, of relevant benefits, such as:

  • An immediate handling of an elastic demand of IT resources
  • A replacement of capital expenses in favour of operational expenses
  • An access to applications from a broad range of devices and independently of the user geo location
  • An automatic charging adjustment according to demand fluctuations

As we have discussed in previous posts, such benefits are not “automatic” outcomes of the adoption of a cloud solution in an organization. Actually, the intended benefits result from the definition of an adequate strategy and a correct implementation of each step of the process, through the identification and treatment of their inherent risks. Such benefits will then support the business drivers which initially motivated the cloud adoption decision, among which we can mention:

  • A market-share increase through a competitive advantage achievement
  • A time-to-market decrease of its products and services, through innovative processes
  • An increase of operations efficiency and productivity , through the optimization of costs, schedules and resources

All of these potential benefits resulting from the cloud adoption enable us to conclude that such adoption can relevantly contribute to a national economy during an economic crisis.

The analysis which will follow applies to the current Brazilian scenario, which shows a deterioration trend of the economic indicators such as inflation, unemployment, industry and commerce activity, credit shortage and lack of investment capacity, among others.

Any other country can be the object of a similar analysis, as long as their respective data are considered.

How the concepts presented above reflect over the current Brazilian scenario?

No doubt that, in theory, a massive cloud adoption may help and support the Brazilian economy to overcome the current crisis, but …

… there is an additional barrier to be surpassed to assure the effectiveness of such massive cloud adoption in Brazil: the inadequacy and inefficiency of the available technological infrastructure, as we can infer from the analysis of the annual reports published by the World Economic Forum. The most recent of these reports, published in April 15th, 2015, which reflects the 2014 picture, may be seen on the link http://www.weforum.org/reports/global-information-technology-report-2015.

This report, published annually since 2004, defines an index, namely Network Readiness Index (NRI), which reflects, for 143 countries, the capability of their national economies to leverage the Information and Communications Technology (ICT) in favour of their competitiveness. NRI aims at subsidizing the definition of national policies by identifying the evolution of their potentialities and scarcities along the last 10 years. NRI defines 4 sub-indexes (Environment, Readiness, Usage and Impacts) which are subdivided into 10 pillars which consolidate 54 indicators.

If we consider that the Brazilian economy is the 7th biggest economy in the world, it should be reasonable to suppose that the indicators concerning its technological and communications infrastructure indicators were compatible with such weight in the global economy. However this is not what the numbers of the last WEF report show. Some of these numbers are highlighted below:

– The consolidated NRI index degraded between 2004 (when Brazil was 46th among 104 reported countries) and 2014 (when Brazil appears as 84th among 143 reported countries)

– If we compare the last two reports, which reflect 2013 and 2014 scenarios, we see a decline in three of the four sub-indexes reported, as follows:

  • Readiness: from 76th (2013) to 91th (2014)
    • Among the 3 pillars of this sub-index, we may emphasize the Skills pillar, which showed a decline from 91th (2013) to 108th (2014).
  • Usage: from 47th (2013) to 60th (2014)
    • Two of the 3 pillars of this sub-index should be emphasized: Business Usage, from 41th (2013) to 52th (2014) and Government Usage, from 54th (2013) to 71th (2014)
  • Impacts: from 57th (2013) to 75th (2014)
    • Both pillars of this sub-index declined: Social Impacts, from 58th (2013) to 73th (2014) and Economic Impacts, from 64th (2013) to 76th (2014)

– Only one of the four sub-indexes showed an improvement:

  • Environment: from 116th (2013) to 111th (2014)
    • Actually an improvement was shown for one of the pillars (Business and Innovation Environment), from 135th (2013) to 121th (2014) and a decline for the other pillar (Political and Regulatory Environment), from 78th (2013) to 95th (2014)

It should also be emphasized that, independently of a specific pillar decline or improvement, the observed rank in each of the 10 pillars, both in 2013 and 2014, are not compatible with the fact that Brazil has the 7th biggest economy of the world. As shown above, the country’s best performing pillar, for instance, Brazil was 41th in 2013 and 52th in 2014 (Business Usage).

Such facts show that, although cloud massive implementation, could conceptually bring the benefits shown above, the organizations should evaluate, case-by-case, if the available technological and communications infrastructure, as denoted by the sub-indexes, pillars and indicators, won’t become an obstacle to their achievement.

Do you agree with the concepts here discussed? Enrich the discussion with your comments.

Please access the previous articles to get additional information on cloud and outsourcing.

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Autor

Alfredo Saad has been acting on IT area since 1970, taught more than 100 lectures in Brazil and abroad (USA, France, Portugal, Chile, Argentina & Uruguay). He has been acting on IT Strategic Outsourcing Services area since 1997. He negotiated and managed, as Varig's IT Technology Manager, the contract signed with IBM (1997-2004). In 2006 he published the book "IT Services Outsourcing" (Brasport Publishing House). He managed (2006-2009), as an IBM Project Executive, the South American section of Michelin's global outsourcing contract. Risk Manager of all IBM Strategic Outsourcing contracts in Brazil (2009-2014). From March 2014 on, he has been acting as an independent consultant, lecturer and writer on IT Outsourcing as the principal of his own company, Saad Consulting.

Alfredo Saad

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