Grassroots in the Enterprise: Industry Clouds Forming

Cloud computing has infiltrated the enterprise, accelerating innovation and disrupting industries worldwide. Although businesses broadly understand that cloud technologies deliver agility and unlock efficiencies, the process of digital transformation can be an intimidating and complex process for an individual company to undertake. For organizations interested in adopting cloud technologies but uncertain about the best way forward, a new option has recently emerged: industry clouds.

What Is an Industry Cloud?

Industry clouds are formed when like-minded, but typically non-competitive, organizations coordinate among themselves to adopt and share cloud resources. Companies with mutual business challenges come together to share both the costs and benefits of cloud technologies. These grassroots phenomena, also referred to as vertical clouds, are unique collaborations designed to meet distinct industry requirements, such as the need to legally protect data or adhere to specific financial regulations. And for organizations new to cloud technologies, industry clouds offer a turnkey option to migrate to the cloud.

One example of an industry cloud is Europe’s Cloud Collaborative Manufacturing Networks (C2NET), a consortium of small and medium-sized manufacturers who collaborate to optimize manufacturing and logistic supply chains. As part of its industry cloud, C2NET has developed four pilot programs around automotive manufacturing, dermo-cosmetics, industrial parks, and hydraulic and lubrication. The pilot programs offer a way for organizations to share cloud costs, learnings, and resources, and to better address common problems.

Industry clouds aren’t exclusive to specific sectors or geographic regions and have emerged organically in other verticals, including healthcare and education. For instance, IlliniCloud is a nonprofit cooperative that began in Bloomington, Illinois, as a low-risk way for school districts to share costs and adopt cloud technologies. This industry cloud, distinct to the needs of education, has not only spread to school districts across the state but to several other states, as well.

Why Industry Clouds?

Several business considerations are driving the development of industry clouds: the search for new revenue streams, the need to remediate risk, the pursuit of effective digital transformation strategies, and the necessity to innovate faster and increase agility. Cloud technologies address all of these business needs, but for companies unsure of how to capture the value of the cloud, an industry cloud offers a low-risk option.

For many organizations, the adoption of cloud technologies is similar to the implementation of an Enterprise Resource Planning (ERP) system. Typically, a business will buy an off-the-shelf ERP system and then spend significant time and resources customizing that basic system to meet the specific needs of the business.

In a similar way, especially for industries with compliance or regulatory requirements, collaborating on the creation of an industry cloud offers a way for companies to share customization costs, establish domain expertise, and address unique industry needs without the same level of capital and operational expenditure. Industry clouds allow companies to share risks and costs that don’t directly impact competitive advantage, such as regulatory compliance.

What Are the Advantages of an Industry Cloud?

Industry clouds enable companies to share compute, data, and storage resources that have been customized for the needs of a specific sector. For instance, organizations collaborating on the C2NET industry cloud share real-time data analytics and supply chain management information from mobile devices such as PCs, tablets, and smartphones. The aggregated data in an industry cloud enables more accurate measurement and decision-making for all participating organizations. The companies share best practices and collaborate on security, as well.

Industry clouds also reduce IT spending and minimize risk by sharing both across multiple organizations. For example, all healthcare companies in the United States must comply with the Health Insurance Portability and Accountability Act of 1996 (HIPPA) to protect patient medical data, banks are subject to regulatory compliance, and educational institutions must protect the data of minors. Industry clouds are designed to address these types of specific, vertical challenges while offering the benefits of mutual cooperation.

What Is the Future of Industry Clouds?

As companies continue on the journey to digital transformation, industry clouds offer a shared-cost, low-risk engagement with cloud technologies. Within a highly dynamic cloud market, industry clouds provide a straightforward solution for organizations looking for turnkey cloud solutions.