Evolving Technology - Most chemicals companies still are at an early stage in their adoption and usage of cloud computing, but the industry's structure and prevailing trends mean it is well-positioned to leverage major benefits from this emerging technology. With cost pressures increasing due to high and volatile commodity prices, and intensifying global competition driving a need for greater operational excellence, chemicals businesses need to achieve a fundamental reduction in their underlying cost base.

At the same time, challenges such as ongoing globalization of both manufacturing and research and development (R&D), industry consolidation and the rise of the sustainability agenda are demanding new approaches to operating models. These pressures are compounded by the need to manage and mitigate supply chain risks more effectively in a globalized world, and to respond to customers' demand for shorter lead times and more specialized formulations.

To help chemicals industry decision makers make the right choices about cloud computing, Accenture has identified six key questions that we think they should ask about this still new phenomenon.

1. What is cloud computing, and how does it work?

Accenture defines cloud computing as the "the dynamic provisioning of IT capabilities, whether hardware, software or services, via the Internet." In general, a cloud-based model provides rapid acquisition, low to no capital investment, relatively low operating costs and variable pricing tied directly to use. As a result, cloud technologies allow IT to respond faster and more effectively to the changing needs of the business, creating new services and opening new markets, thereby helping to achieve high performance.

Clouds can take two forms: private and public. Private clouds are built within a company's data center and are designed to provision and distribute virtual application, infrastructure and communications services for internal business users. In contrast, public clouds extend the data center's capabilities by enabling the provision of IT services from third-party providers over a network.

The choice between private and public clouds represents a trade-off between security and flexibility. A company using a private cloud gains the perceived benefits of lower risk and higher data security, since it owns and holds the cloud data and services within its own infrastructure, an approach that is sometimes required by regulators. A public cloud is seen as involving higher risk, since the user's data is held externally alongside that of other businesses, but it also tends to offer greater flexibility and scalability than a private cloud.

2. What benefits can clouds bring to my organization?

The three top benefits of cloud computing most commonly talked about today are cost, flexibility and speed to market. However, forward-looking companies are already thinking about how cloud technologies will fundamentally change the face of their operations in the longer term.

Cost
Low prices on cloud services are a big part of their allure. For example, a major pharmaceuticals group was reported to have paid Amazon Web Services only $89 to analyze data on a drug under development - a job that would have required its researchers to buy 25 servers to perform in-house. Using clouds also shaved three months off the IT budget and approval process, resulting in faster time to market and $1 billion in opportunity costs avoided. Add the savings from eliminating the cost of servers, software licenses, maintenance fees, data center space, electricity and IT labor, and the benefits of replacing a large up-front capital expense with a low, pay-for-use operating expense, and the financial appeal of cloud computing is obvious.

Flexibility
Clouds offer extraordinarily flexible resources: They can be summoned quickly when needed, grow by assigning more servers to a job, then shrink or disappear when no longer needed. That makes clouds well-suited for sporadic, seasonal or temporary work, for finishing tasks at lightning speed and processing vast amounts of data, and for software development and testing projects. Clouds can also supplement conventional systems when demand for computing exceeds supply. And since they are an operational expense, cloud services can often bypass the capital-expense approval process, and be quicker to procure than conventional systems.

Speed
With cloud computing, additional infrastructure required for activities such as new product developments can be added more quickly and easily to the existing IT environment. This means that if additional development or testing platforms are required, there is no need to buy or lease the required hardware. More generally, the inherent flexibility and scalability of cloud solutions can help organizations become more agile and responsive, as well as increasing their ability to impose a standard set of applications or processes enterprise wide.
For applications that require a great deal of IT infrastructure (servers and storage), cloud computing can help significantly shorten the lead time to procure, deliver and install the service. Overall, properly implemented cloud architecture can mean the time and costs of provisioning an innovative IT service have never been lower.

A further benefit is that as industry consolidation continues, use of cloud computing boosts the speed at which IT systems can be integrated in the wake of a mergers and acquisitions deal. Similarly, in the event of a disposal, the unit that has been sold off can be "unplugged" from the IT organization more quickly and cleanly.