BUSINESS WHITE PAPER Cloud computing means happier customers TABLE OF CONTENTS 1 About the cloud 2 Development of the cloud market 3 Cloud-based applications increase customer satisfaction 3 Better processes 4 More transparent IT portfolio 5 More agile applications 6 More flexible integration 6 The human touch: Technology alone is not enough 7 Summary About the author Joerg Klueckmann runs product marketing and business development for the ARIS cloud products at Software AG. He has written numerous articles about Business Process Management (BPM) and business innovation through cloud computing. About the cloud Cloud computing has been a hot topic for several years. But many enterprises are unsure how the cloud can be used to achieve business advantages. This white paper illustrates the benefits of cloud technology through the example of a corporate initiative to increase customer satisfaction. First of all, cloud computing is simply a new way to provide and use hardware and software. The cloud s pay-as-you-use model means software is paid for on an as-needed basis when it is used. Pricing takes into consideration such variables as number of users, functionality, amounts of data and/or transactions. There are different types of cloud computing models. The three-layer cloud computing stack has layers that can build on each other, although they do not have to. Infrastructure-as-a-Service (IaaS) represents the bottom layer in cloud computing. With it, users access fail-safe instances (virtual servers), most of which have a highly scalable setup. The instances can be added to as needed during peak loads, and then they can be shut down again. Users are responsible for their own instances starting at the operating system level. The world s leading provider of IaaS is Amazon Web Services (AWS) (http://aws.amazon.com). Platform-as-a-Service (PaaS) forms the basis for developing and integrating applications in the cloud. Users move their application logic to the cloud, which takes over the instantiation of the processors and distribution and integration of the data to be processed. Examples of application PaaS are webmethods AgileApps Cloud from Software AG or Force.com from Salesforce.com. A typical cloud-based integration PaaS is webmethods Integration Cloud from Software AG. Software-as-a-Service (SaaS) makes it possible to use applications made available to third parties via the cloud. Users don t have to concern themselves with IT infrastructure, scaling, data management or software upgrades. IaaS and PaaS are the basis for SaaS. But users do not deal with them directly. Cloud applications are typically modular, service-oriented, highly scalable, distributed and multi-tenant capable. ARIS Cloud and Alfabet Cloud from Software AG are typical examples of SaaS.
Like the cloud computing stack, cloud organization takes several forms. Each organizational form has specific use cases. A private cloud is operated for a single organization only and can be managed/hosted internally or by a third party. Data protection and IT security are the main drivers for this model. Public cloud is for public offerings from third-party suppliers who make their products available via the Internet. Well-known offerings include Google Docs and Microsoft Office 365. Fast project starts, dynamic scaling, global distribution, low TCO, and maximum flexibility are the main reasons for using the public cloud. Hybrid cloud is a combination of the first two approaches. Selected services from public providers are used via the Internet. Applications requiring greater data security, and their data, remain within the enterprise, however. The on-premises usage model for computer programs is distinct from the various forms of cloud organization. In this model, an enterprise buys an application and runs it on its own hardware, paying licensing and usually maintenance fees. If the supplier updates the software, the update must be installed on the user s servers. Development of the cloud market The cloud market is constantly growing. According to Forrester Research, enterprises around the world this year are investing $72 billion in cloud infrastructure resources and software/services from the cloud. In 2013 that figure was $58 billion. If development continues at this pace, the market researchers expect cloud revenues of $191 billion in 2020. This market volume would exceed Forrester Research s original prognosis by 20 percent. With all the concerns about IT security, strong growth rates have also been recorded in Germany. According to Cloud Monitor 2014 of the German Association for Information Technology, Telecommunications, and New Media (BITKOM), cloud usage in Germany grew by 3 percent over the previous year to a total of 40 percent. It is clear that the advantages of cloud computing are outweighing security concerns more and more. Small and medium-size enterprises, in particular, are increasingly recognizing that data is usually even safer in professional cloud applications than it is in an internal data center, which is often based on inadequate or outdated security models. Cloud computing also offers new opportunities for IT agility. If seasonal demand for products rises, enterprises naturally hire additional resources so they can satisfy the demand. If the demand falls, resources are assigned to other areas and/or let go. This basic economic principle is finally reaching the IT world. IT resources (IaaS) can be made available in real-time to suit users needs. When resources are no longer needed, access to them is shut down. This way, enterprises pay only for what they actually use, thereby saving the cost of additional investments in hardware and its operation as well as associated maintenance, energy and housing costs. Investments become operating costs. The same applies to PaaS and SaaS offerings. Only those services that are actually used must be paid for. Instead of the usual license fees for locally installed software, enterprises pay a fee per user and month. The number of users can be adapted to the current need. IT itself doesn t offer a competitive advantage; it s what you do with it. Analysts assume that 70 percent of the cost of traditional on-premises computing centers and software installations goes toward maintaining the status quo (keeping the lights on), and 30 percent goes to providing new services. These figures could be described as relatively optimistic. Cloud computing can help reverse this ratio: 30 percent of costs go toward managing the IT infrastructure and maintaining existing software, while 70 percent can be used to improve customer satisfaction through innovative services. IT can use the resources freed up by cloud computing to move from a position of maintaining/defending the status quo to driving innovation. It is obvious that, in the medium term, enterprises that rely in certain divisions on the power and agility of the cloud will displace their competitors who remain exclusively in the on-premises world. 2
Cloud-based applications increase customer satisfaction You ve got to start with the customer experience and work back towards the technology not the other way around. Steve Jobs at the World Wide Developers Conference, May 1997 Better processes Products are becoming more and more similar. One way that enterprises are reacting to this is by investing in their public image. Other parameters include additional customer services and/ or price advantages. No matter which strategy is pursued, customer satisfaction is always the main influence behind purchasing decisions or extending a service contract. More and more enterprises are initiating strategic programs to become customer-centered organizations. A first step in such an initiative is often to identify customer touch points through which customers can interact with the enterprise. Follow-up processes, for which managers and KPIs are designated, are identified on the basis of these touch points. Each process that has a customer interface becomes a core process. It is essential here that the processes are adopted and optimized end-to-end on the basis of the respective interaction. It is pointless for initial contact with the enterprise to be a perfect customer experience if all subsequent interactions are disasters. Customer journey maps are another important component. These maps trace the customer s steps before and, as needed, after the purchase, in the form of a process, with a focus on consistent customer experience management across all steps and channels. ARIS Cloud: Social process improvement Making an enterprise s processes more customer-oriented requires the right technology to take actual processes and improve them collaboratively. An SaaS solution like ARIS Cloud (www.ariscloud.com) lends itself to taking advantage of the benefits of cloud computing mentioned earlier. ARIS Cloud allows employees, customers and partners to work together to design optimized processes in the cloud. This collaborative approach increases acceptance of process changes, which simplifies change management considerably. Involving the best customers is a way to help make the customer experience more customer-oriented and specialized. 3
ARIS Cloud uses the IaaS from AWS, which is continually checked and certified for security by independent organizations. Each certification confirms that the respective security controls are present and function as intended. For more information, go to http://aws.amazon.com/de/ compliance. The software can be run in a private cloud or the public cloud. Process improvement involves project participants examining workflows for new, innovative services that will have a positive effect on the customer experience and increase customer satisfaction. Customers should also be actively included in this step. After the services have been described in ARIS Cloud, they must be translated to the IT system using technical capabilities. More transparent IT portfolio Innovative services that set themselves apart from the competition can provide an enterprise with a strategic competitive advantage. After technical input on such services is collected in the process improvement project phase, it is time to identify whether IT systems with the necessary capabilities are available to implement them. Enterprises need professional IT portfolio management in order to be able to perform such analyses on their entire IT portfolio. That s where an SaaS offering such as Alfabet Cloud (www.alfabetcloud.com) comes in. Alfabet Cloud combines IT portfolio management with modern cloud technology, making the expertise needed to manage an IT portfolio available at the click of a mouse. All the popular portfolio analysis methods are covered. Simple processes for collecting, importing, refining and maintaining data allow users to describe an IT portfolio quickly. Alfabet Cloud can be run in a private cloud as well as the public cloud. Alfabet Cloud: IT portfolio management in the cloud Using data analyses and reports, the existing IT portfolio can be searched for the necessary capabilities that the new services can provide. Preconfigured KPIs and views for frequently needed analyses of the IT landscape simplify this task. If appropriate capabilities are present, they can be used to build corresponding solutions at a later stage. These capabilities and the corresponding IT systems are given a high priority in the IT portfolio and are assigned relevant policies. If the same capabilities are made available redundantly, they can be consolidated to cut costs. If the necessary capabilities do not exist, they must be added to the IT portfolio. 4
Also in this project phase, the advantages of SaaS can be tapped to develop a customer-centered organization. An IT portfolio management project can be started immediately with a low TCO. Licenses can be procured or removed depending upon current need. Access to the portfolio management system includes all employees as needed. More agile applications The previous sections describe how new services were assembled in the process improvement phase. In the IT portfolio management phase, the existing IT landscape was analyzed to determine whether the necessary capabilities are already provided by the IT systems. If not, these capabilities must be developed. Using an application PaaS offering such as webmethods AgileApps Cloud (www.agileappscloud.com) makes sense here. webmethods AgileApps Cloud can be used for agile development of process and database applications or case management applications (for insurance companies, for instance). The software can run in a private or public cloud as well as on-premises. webmethods AgileApps Cloud: Case management application in action webmethods AgileApps Cloud is based on ready-made components and templates that can be configured at the click of a mouse. Features include access via mobile end devices, reporting functions and dashboards for key performance metrics, external communication via email, integration of social media, document exchange, forms and task lists. In addition, applications can be customized and expanded without writing code. Departmental experts and IT developers need just a few days to configure new capabilities instead of several months required if they were writing code. Thus, the services defined in the process phase can be converted into concrete applications quickly, while a consistent customer experience is guaranteed across all channels. For example, a bank used webmethods AgileApps Cloud to integrate its formerly separate lending services (forms, payment schedules, loan tracking, etc.) into a single loan-management application. The new application contains dashboards for analyzing various business processes, leading to better customer care and fewer errors in lending. Customer requirements are always increasing, changing with ever-greater speed. The competition never sleeps and tries to copy innovative services to lessen the competition advantage. Enterprises must be able to create new services or extend existing ones in a quick, agile fashion in order to respond to these developments. webmethods AgileApps Cloud offers the agility they need. At the same time, the application is so simple to use that subject matter experts in an organization can continuously keep the applications relevant and useful and respond to any changing customer need or competitive requirement. 5
More flexible integration The preceding sections explained how a suitable cloud-based solution can be used for each phase of the project when an enterprise is becoming customer-centered. This best-of-breed approach offers completely new options for departments. But there will be an IT integration problem in the medium term. Cloud integration is important here. It can be expected that a mix of various models will sprout in enterprises. Conventional local IT operation will run in parallel with applications in a private and/or public cloud. The point is to find best-of-breed solutions and to merge them together. How deeply should they be integrated? How can data be managed so that conflicting information is not stored in multiple locations? These kinds of issues are growing more and more important. The key to success is a cloud-based integration PaaS such as webmethods Integration Cloud. With webmethods Integration Cloud (www.webmethodscloud.com), experts from the departments and/or IT staff can connect isolated systems and integrate applications in public or private clouds and on-premises applications. This service-based integration accelerates the development and implementation of the solution. On-premises ESB implementations can be linked seamlessly with cloud-based SaaS applications. As is typical for cloud applications, webmethods Integration Cloud can be adapted flexibly to current usage needs. webmethods Integration Cloud allows enterprises to offer the best customer service by ensuring that the correct information is available at the right time to perfect the customer experience. webmethods Integration Cloud plays an important role in consolidating all the applications used in the enterprise. The human touch: Technology alone is not enough To establish a customer-centered organization, business operations must be developed around the best customers. Big data and real-time analytics technologies, such as Software AG s Intelligent Business Operations (IBO) portfolio, help enterprises understand customer behavior and identify the most valuable customers based on Customer Lifetime Value (CLV). All activities should focus on these customers, and they should be included in a project to increase customer satisfaction. At the end of the day, people will always be the deciding factor that makes a difference in customer service. An enterprise can have the best technologies in the world. But if employee thinking and behavior is not customer-oriented, the enterprise will not be successful. That s why it is necessary to develop a customer-centered corporate culture. It helps here to have employees walk in the customers shoes through the processes they are responsible for. Training courses and target systems must provide appropriate qualifications and/or provide guidelines for action. Summary Software AG Cloud has appropriate technologies for every use case to support enterprises with their transformation into a customer-centered organization whether public cloud, private cloud, hybrid cloud or on-premises. Software AG Cloud products help enterprises to design customer-oriented processes (ARIS Cloud), manage IT portfolios (Alfabet Cloud), develop agile new applications (webmethods AgileApps Cloud) and integrate IT systems quickly and easily (webmethods Integration Cloud) in short, everything to put optimal customer service into practice. Technology alone is not enough for this, however. In order to offer to customers optimal services, processes and services must be designed from the customer perspective to deliver real value and stock must be taken continuously of what is most important to customers. It is especially important to work constantly on innovations that increase customer satisfaction and keep the competition at bay. But the most important thing is to establish a customer-centered corporate culture that is responsive, accessible, agile and delivers great with one goal: happy customers. 6
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Find out how to power up your Digital Enterprise at www.softwareag.com ABOUT SOFTWARE AG Software AG helps organizations achieve their business objectives faster. The company s big data, integration and business process technologies enable customers to drive operational efficiency, modernize their systems and optimize processes for smarter decisions and better service. Building on over 40 years of customer-centric innovation, the company is ranked as a leader in 14 market categories, fueled by core product families Adabas-Natural, Alfabet, Apama, ARIS, Terracotta and webmethods. Learn more at www.softwareag.com. 2014 Software AG. All rights reserved. Software AG and all Software AG products are either trademarks or registered trademarks of Software AG. Other product and company names mentioned herein may be the trademarks of their respective owners. SAG_Cloud_Computing_8PG_WP_Sep14