Cutting Through the Cloud

Over the next few years, what happens to the several trillion dollars that businesses spend on technology will be decided by executives like Jeff Allen.
As big business hitches its computer systems to the latest technology wave, Mr. Allen and others will have the tricky job of ensuring that old systems work with the many new systems finding their way into his company.
“A lot of normal companies are struggling to stitch together lots of different software” from different technology providers, said Mr. Allen, a marketing vice president at Standard Register, a specialty publishing and communications company in Dayton, Ohio. Eventually, he said, he will have to choose from only three or four big suppliers.
Eventually. But not right now.
Corporate technology buyers are looking at a menu of new and old technologies and names both familiar and obscure. Old-guard companies like Microsoft, Oracle, Dell and Hewlett-Packard have been joined by new names like Salesforce.com, Workday and NetSuite. Google and Amazon now have corporate-computing services. And yet another group of upstarts is nipping at that newer generation’s heels, ready to provide easy-to-use apps like the ones consumers download to their smartphones.
It is a confusing number of choices with big stakes: Who will you entrust with your most precious asset — data about you and your customers?
“There is a changing of the guard,” said Paul Daugherty, chief technology officer at the consulting firm Accenture. “Some of the new guys will get big, and some of them will get acquired. Customers are trying to structure things to take advantage of the changes, but it’s hard.”
The biggest driver of this change is cloud computing, where the software is based somewhere else and retrieved over the Internet. With cloud computing, upfront costs are usually much less and new versions of software appear as easily as an update on a smartphone, so the product is never out of date.
Moving a company to cloud-computing services is also typically faster than old corporate software installations, which can take years and require the services of expensive consultants.
But there are risks with this shift. There are fears that the old tech suppliers don’t understand the new way of doing things and may be unable to help their customers enjoy the benefits of new technology, while the new companies may not have staying power. And making sense of it all and controlling this upgrade process can be confounding.
“We can do things a lot faster, because we aren’t bound by big software upgrades every two years, with lots of consultants,” said Douglas Menefee, who runs corporate technology at the Schumacher Group, a Lafayette, La., company that manages 3,000 emergency room physicians across the country. “There are lots of pain points, too, though — too many products from different providers.”
This shift to a new generation from the corporate technology suppliers that grew in the ’90s has been years in the making, but it has accelerated in recent months as companies like Dell, Hewlett-Packard and even Microsoft have struggled.
Just as consumers are moving away from buying music and movies toward monthly subscriptions, corporate tech buyers are moving away from owning the technology outright and are instead asking others to do it for them in return for a monthly or annual fee.
Amazon and Google have built enormous global clouds to capitalize on this change, and they are angling to pick up the computing loads companies used to do on their own servers, at a fraction of the cost. The most lasting legacy of Steven A. Ballmer, the chief executive of Microsoft, who recently announced his retirement, might be the cloud service built under his watch called Azure, to better compete in this new environment.
The worst hand right now seems to be held by hardware makers. More companies allow employees to bring in whatever smartphone, laptop or tablet they want, since they all connect to a cloud. “We have H.P. hardware, but it’s not a strategic priority,” said Mr. Allen, who uses a Samsung smartphone and an Apple iPad.
Nokia, which could not compete with Apple and Google in smartphones, sold its handset unit to Microsoft last month for $7.2 billion. On Friday, BlackBerry, another device company in trouble, announced that it would lay off 4,500 employees.
It is unlikely that many of the big companies will go away soon, of course. They still have deep pockets that allow them to buy into the new wave of corporate computing.
 
By Quentin Hardy
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