Six Questions for Consumer Goods Executives to Ask About Cloud Computing doc

Six Questions for Consumer Goods
Executives to Ask About Cloud Computing
For Consumer Goods and Services executives wanting to
evaluate what cloud computing can do for their businesses,
asking the right questions is a good place to start.
Page 1
No leader in business today can afford to
ignore cloud computing
1
. As a platform
upon which innovation, flexibility and
speed-to-market can flourish, cloud com-
puting is shaping up to be a key enabler
of high performance, which Accenture
defines as a company’s ability to consis-
tently out-perform peers across industry
and economic cycles and generations of
leadership.
Many global organizations—including
Starbucks, Citigroup, a major pharmaceuti-
cals group, and major retailers (both online
and off-line)—are already using “the cloud”
to analyze data, provide applications to
employees and run special projects
2
. Media
giants are reported to be working on a
cloud-like service that will enable content
to be delivered dynamically in multiple
formats and on a variety of devices
3

. And
more cloud services will soon be available,
as established IT and telecom providers
including Accenture, Microsoft, Fujitsu,
KDDI, China Mobile and SingTel join cloud
pioneers like Google, Amazon and sales-
force.com.
4
Given the momentum behind cloud
computing across so many industries, it is
not surprising that consumer goods and
services executives are beginning to evalu-
ate its potential for their organizations.
As they look to capitalize on the benefits
associated with the cloud, we encourage
them to ask six key questions:
• Whatiscloudcomputing,andhowdoes
it work?
• Whatbenefitscanitbringtomy
company?
• Howcanithelpmeaddressthespecific
challenges my company faces?
• CanIdependoncloudstosavemy
organization money?
• Howwillcloudsaffectthewaymy
company operates in the future?
• Whataboutassuranceofsecurityand
data privacy?
Looking for the answers to such questions
isprudent.However,executivesshouldrec-

ognize that while cloud computing promises
to deliver a wide and powerful range of
distinctive capabilities, the technology’s dis-
ruptive and pervasive impact makes it hard
to evaluate its longer-term costs and risks.
Likewise, its potential uses are exceptionally
broad and difficult to foretell.
Whatisclearisthatcloudwillaffecthow
computing strategies are developed and
managed, how information is controlled,
and how new technology cost models
are applied. It is also clear that the cloud
is poised to drive significant operational
change and lasting business value. For
that reason, we encourage business and
IT executives to collaborate in making the
cloud-related decisions that will best move
their organization forward.
Accenture defines cloud computing as the
dynamic provisioning of IT capabilities—
whether hardware, software or services—
from third parties over a network.
Page 2
Consumer Goods and
Services: Poised to enter
the cloud, poised to
achieve high performance
Hard-to-replicatecapabilitiesareahall-
mark of high performance. The Accenture
HighPerformanceBusinessresearchhas

shown that two other characteristics are
equally important to long-term success
and competitive advantage. One is a
clearmarketfocusandposition.High-
performance consumer goods companies
know where and how to compete. They
apply rigorous portfolio management
practices to consistently win in high-
value/high-potential markets. The other
is what Accenture calls “performance
anatomy,” or the culture of continuous
renewal that enables top companies to
outperform their competitors again and
again. Among high-performance compa-
nies, performance anatomy is based on
flexibility, seamless execution and simple
operating models that embrace scalabil-
ity, collaboration and integration.
Together, market focus and position,
distinctive capabilities and performance
anatomy make up the building blocks of
high performance. Cloud computing is one
of those rare phenomena that can make
each of these building blocks stronger:
Market focus and position
Withthecloud’sunlimiteddatacapacity,
consumer goods companies can analyze
market and consumer behaviors to a
granular level. The detailed insights that
accompany those analyses, plus the low

upfront costs for virtually unlimited com-
puting power, enable companies to iden-
tify, penetrate and mobilize in lucrative
markets more quickly than ever before.
Distinctive capabilities
Withthecloud’sabilitytohostandprovi-
sion any number of applications and pro-
ductivity tools, companies can significantly
improve their operational performance and
create a global platform for collaboration.
Performance anatomy
Withthecloud’selasticity,computing
power is scaled up and down as needed.
This contributes to the flexibility for
which high-performance consumer goods
companies are known.
There is no reason consumer goods
companies can’t take advantage of what
the cloud has to offer. The industry has
proven it can successfully adopt innova-
tive technology solutions. To date, these
innovations have included mobile applica-
tions, advanced analytics and digital
receipts. In our view, cloud computing
represents the next step in this progres-
sion. The adoption of cloud computing will
be supported and accelerated by the per-
vasive global use of the Internet, higher
broadband penetration and steadily rising
bandwidth connectivity speeds. Together,

these trends are helping to ensure that
the Internet can serve as an enterprise-
grade platform.
Consumer goods and services companies
are already moving towards cloud-type
solutions—especially in the areas of
infrastructure and applications. Some, for
example, have established virtual private
network structures. In doing so, they’ve
taken a necessary step toward adopting
aninfrastructurecloudsolution.Basedon
our experience, companies that have not
virtualized their infrastructures or man-
aged outsourced hosting providers face
steep challenges when it comes to inte-
grating an infrastructure cloud service.
Other consumer goods companies have
entered the cloud cautiously and with
minimal risk by procuring raw computing
power for computation-intensive jobs like
data cleansing, for moving commodity
applications like e-mail and desktop
productivity tools into the cloud, or for
experimenting with “private” clouds.
These companies typically have central-
ized IT structures, as well as CIOs who
recognize the value of procuring non-core
infrastructure components and services
via the cloud.
Still other companies have opted to

engage with well-established software-
as-a-service (SaaS) providers. In many
cases, business units (rather than a
centralized IT department) contract with
cloud providers on a one-off basis to
manage transaction processes such as
procure-to-pay or payroll. Customer rela-
tionship management and supply chain
management are also initial preferred tar-
gets.Butthisisjustthestart.Examplesof
other processes being targeted for current
and future SaaS implementations include
collaboration, multi-channel order man-
agement and human resources. And when
retailers’ point-of-sale data and other
consumer information are accessible via
the cloud, dramatic improvements in mer-
chandising and sales execution processes,
as well as analytics usage, will occur.
Regardless of their point of entry into
the cloud, consumer goods companies
will surely shift from a “buy-and-own” to
“pay-as-you-go” model of IT provisioning.
This has broad implications for a host
of business activities. It also presents
a conundrum. As business units rapidly
procure lower-cost cloud services on their
own, they may do so at the expense of a
cohesive IT strategy and approach.
“Forrester expects that firms

that choose to compete on
price leadership will continue
to seek success through
standardization of everything
in the IT stack. But for
firms that pursue product
and service innovation or
customer intimacy, CIOs will
develop skills in orchestrating
services in cloud and
on-premise to support
colleagues in pushing the
boundary of process-based
differentiation.”
“Distributed Enterprise 2.0”
Forrester Research, Inc.
July 2009
Page 3
Barrierstocloudadoption
Recent industry-specific IDC research on cloud computing revealed that “reducing overall IT costs” (60.2
percent) was the top reason to adopt cloud computing, by far. Ironically, cost was also the top reason
(cited by 31.1 percent of respondents) why other consumer goods companies are choosing not to make
the move to the cloud. As the figure below depicts, the lack of technical expertise (30.9 percent), con-
cerns about data security (27 percent) and the inability to have highly customized applications (22.3 per-
cent) rounded out the top four reasons for slow cloud take-up.
Figure 1. Reasons for adopting—or not adopting—cloud computing
Why Organizations Adopt
4.5%
6.8%
0.4%

12.8%
5.6%
52.2%
17.8%
0.0%
3.8%
11.6%
2.5%
1.3%
20.6%
2.5%
7.1%
5.7%
15.4%
8.2%
39.3%
21.0%
60.2%
Service provider offers better,
cheaper and more reliable
applications
All respondents
Source: Current outsourcing percentages from The State of Logistics Outsourcing:
14
th
Annual 2009 Third Party Logistics Study. Projected 2012 outsourcing
percentages based on IDC Manufacturing Insights research estimates.
Reduced overall IT costs
Decreased application down-
time

Improves the ability to support
multiple offices and remote
employees
Responsibility of software
upgrades falls on the vendor
Lower cost of implementation
Based on open source
Consumer products Retail
Reasons that Slow Adoption
12.2%
45.7%
23.2%
21.7%
23.4%
27.5%
17.5%
21.4%
30.9%
31.1%
27.0%
15.3%
12.9%
17.8%
22.3%
17.2%
21.5%
40.7%
24.4%
15.8%
12.8%

19.8%
16.7%
30.0%
Lack of industry-specific
applications products
Inability to have highly custom-
ized apps
Concerns with service reliability
Lack of vendor flexibility, vendor
lock-in
Complexity of integration with
back-end systems
Data and information security
concerns
Cost-prohibitive
Source: Verticals Insights Survey, IDC, April 2009
Lack of technical expertise/
skilled personnel in house to
develop the Web applications
All respondents
Consumer products Retail
Page 4
1.
Whatiscloudcomputing,
and how does it work?
Accenture defines cloud computing as the
dynamic provisioning of IT capabilities—
whether hardware, software or services—
from third parties over a network. The
primary characteristics of cloud services

include:
• Littleornocapitalinvestment.
• Variablepricingbasedonconsumption.
• Rapidacquisitionanddeployment.
• Infinitescalability.
• Lowerongoingoperatingcosts.
Computing clouds are, in essence, online,
supersized data centers containing
hundreds of thousands of servers hosting
Webapplications.Cloudservices—from
raw infrastructure to complete business
processes—can be purchased through
Webinterfacesandturnedonandoffas
needed (See Figure 2).
For business people, cloud computing can
seem too good to be true: massive amounts
of computing power with no expensive IT
infrastructure. Cloud computing lets orga-
nizations bypass the expense and lead time
of buying, installing, operating, maintaining
and upgrading the networks and computers
found in data centers. Instead of licensing
software, users tap into a service when it’s
needed for as long as it’s needed. All that is
required is a broadband Internet connection
and a mobile device or personal computer
with a browser to access and activate
the cloud service. As with most utilities,
organizations pay by the kind and amount
of services used, plus any additional fees.

Once the cloud-based service has been
initiated, the data processing is done
on the back end in remote data centers.
Clouds are designed so that processing
power can be added simply by attaching
moreservers.Everythingisvirtualized
so software can be run on any available
server with excess capacity. And because
everything is hosted in the cloud, users
can run processes, build applications and
more without loading each and every tool
onto their computers.
Six key questions
As with most technologies, the significance of
cloud computing differs widely from industry
to industry. Accenture has identified six key
questions we encourage consumer goods and
services decision makers to ask about this still-
newphenomenon.Byfocusingonthesequestions,
executives can start to identify opportunities and
risks that will impact their own companies.
Page 5
Figure 2. The Cloud Stack
Process Cloud
End-to-endprocessenabledand
provided through the Cloud
Applications Cloud
Applications designed to be run
on Clouds—elastic, distributed and
modular

Platform Cloud
The ‘operating system’ of the Cloud
makes processing, storage and net-
working available as a utility
Infrastructure Cloud
Computers (servers), data centers,
networks
The basic technologies are well established
and can be duplicated by any organization.
This makes it possible for consumer goods
companies to potentially build “private
clouds”—restricted infrastructures that
use cloud computing technologies but are
only shared by approved organizations. The
advantage of this approach is that private
cloud users have more control over their
data. The disadvantage is that they need
to not only make various cloud services
available on their own internal infrastruc-
tures, but also shoulder the significant
infrastructure setup and maintenance costs.
Private clouds can be used within single
companies or possibly be shared with busi-
ness partners. Clouds the size of those run
by Microsoft, Amazon and Google require
warehouse-scale computers so they can
support many millions of users around the
world without becoming sluggish.
5

The specific challenges that con-
sumer goods companies face around using
retailer, consumer and point-of-sale data
to drive product innovations, supply chain
efficiencies and sales make establishing
a common, secure infrastructure for pro-
cessing this information a critical require-
ment. In addition, unique cloud services
and applications specific to consumer
goods are beginning to emerge. These are
”rented” on a capacity or per-usage basis
and range from merchandise financial
planning applications to customer analytic
business process outsourcing services.
This description barely touches the
underlyingcomplexities.Butforbusiness
leaders, it gets at the crucial point: with
cloud computing, the provision of IT power
typically becomes someone else’s problem.
Cloud computing opens the door to new
and distinctive capabilities that can enable
high performance. And it makes available
new business processes and application
solutions that are industry-specific and at
a price point that is remarkably lower than
traditional solutions implemented only one
or two years ago.
Page 6
2.
Whatbenefitscancloud

bring to my company?
As illustrated in Figure 3, cloud computing
presents a number of potential uses for
the consumer goods industry. Forward-
looking companies are already thinking
about how cloud technologies and the
uses outlined below might change the face
of their operations (see question 5).
Of course, each use of cloud computing
will generate a unique set of benefits for
the organization. There are, however, gen-
eral benefits that all cloud services deliver.
Among consumer goods companies, these
benefits fall into four categories: cost,
flexibility, innovation and speed.
Cost
Low prices on cloud services are a big part
of their allure. Lower IT capital outlays
and improved asset utilization combine
to create an irresistible value proposition.
Add the savings from eliminating the cost
of servers, software licenses, maintenance
fees, data center space, electricity and IT
labor—along with 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.Whilecostisanimportant
driver for all consumer goods companies,
it is perhaps most relevant for smaller

companies that historically could not
afford sophisticated IT solutions. For them,
the cost advantage of the cloud can level
the playing field.
Flexibility
Clouds enable consumer goods companies
to create highly elastic IT environments.
They can be summoned quickly when
needed and, as demand grows, scale up
easily. Conversely, when demand eases,
they can just as quickly scale down and,
if necessary, exit the market entirely with
minimum loss of time and capital. That
flexibility makes clouds well suited for
sporadic, seasonal or temporary work,
for processing vast amounts of data, and
for software development and testing
projects. Clouds can also supplement
conventional systems when demand for
computing exceeds supply, ensuring that
companies are able to make the most of
theiron-premiseERPsolutions.
“Cloud computing enables a
higher level of innovation and
discoveries by dismantling
data silos and providing
greater capabilities in data
mining and data analytics.”

— Participant, Cloud Computing

Session, World Economic Forum
Annual Meeting 2010
Page 7
Accenture has identified many different possible uses for cloud computing
Ease of Implementation
Value to the Enterprise
Legacy
• Specific existing
infrastructure
• Complex legacy
systems
Sensitive Applications
• Mission critical applications
• Regulation-protected data
(HIPAA, SOX, PCI )
Desktop Productivity
• Web 2.0 applications
• Workgroup applications
• Office suites
• Email and calendaring
Business Continuity
(Storage)
• Extensive storage
• Backup and recovery
New Business
• Provide IT support for new ventures
Peak Load Demands
• New business activities
• Applications with peak-loads
• Seasonal websites

• Applications with scalability needs
Geographic Expansion
• Replicate standard processes
in new locations and branches
Software Development and Testing
• Software development and testing environment
• Performance Testing
• Non production projects
• R&D activities
• Reduced time to market
Batch and Data Intensive Applications
• One-off applications that don't rely on real-time responses
• Data and high performance intensive applications
(financial riks, modeling, simulation, data compression,
graphics rendering )
• New back-office applications
Easy
Hard
High Value
Figure 3. Initial opportunities for using clouds
Innovation
Leaders of consumer goods companies
increasingly recognize that the tradi-
tional closed innovation model is no longer
adequate to keep up with the rapid pace of
today’smarket.Byusingcloud-basedsolu-
tions, they are able to open up innovation
to more employees, customers, partners
and even consumers around the globe. This
means they can harvest better ideas faster.

And with those ideas, they can unleash the
potential to launch new products and busi-
nesses in new markets quickly.
Speed
In general, cloud computing acts as an
accelerator for businesses, enabling them
to innovate and compete more effectively
and tap new revenue streams more quickly.
Withlow-costdevelopmenttoolsand
theoretically unlimited IT resources on tap,
consumer goods companies can introduce
new IT capabilities across their organiza-
tions, improve their responsiveness to
changing business demands and quickly
enter new markets or launch new products
or services in existing markets. Importantly,
the cloud’s ability to accelerate IT develop-
ment is not just a benefit for mature
organizationsindevelopedmarkets.By
providing more immediate and affordable
access to next-generation applications,
tools and infrastructure, companies in
emerging economies may leapfrog to higher
levels of technological development.
TheongoingAccentureHighPerformance
Businessresearchprogramhasrevealed
that cost containment, flexibility, new
product innovation and speed to market
are distinctive capabilities shared by nearly
all leading consumer goods companies.

That cloud computing can strengthen each
of these capabilities is a testament to its
importance as a tool to position consumer
goods companies for long-term success
and sustainable competitive advantage.
Page 8
Achieving high performance with IT
service management
IT organizations are realizing that the emergence
of cloud services represents a significant departure
from existing IT practice, and carries far-reaching
implications for IT providers and users alike.
Specifically, the cloud makes a centralized IT ser-
vice management function exceedingly important.
WhilewebelievetheITdepartmentsofconsumer
goods companies will continue to supply the
majority of IT services—especially those enabling
core business functions—we also know more busi-
ness units will turn directly to SaaS and other
cloud-based solutions to meet their infrastructure
and application needs. As a result, the IT group’s
role will likely transform from being the builder
and provider of IT to being the manager of inte-
grated IT services, regardless of whether those ser-
vices come from on-premise systems, third-party
providers, or private or public clouds. In other
words, the responsibility for coordinating all these
services and ensuring that they effectively align to
business objectives falls to the IT group.
Our research suggests that this move toward

service management will ultimately make the IT
organization an even more valuable resource to
theenterprise.High-performancebusinessesknow
exactly what they have in terms of IT, where it’s
running in the business and how to adequately
protect their businesses from the risks inherent
withcloudcomputing.What’smore,theyarecon-
tinually ensuring that these applications continue
to add value. Cloud computing is now jump-start-
ing such an IT transition for many consumer goods
companies and, in the process, creating an IT port-
folio management capability that can enable high
performance.
3.
Howcancloudcomput-
ing help address the
specific challenges my
company faces?
The consumer goods industry has faced
tremendous change in recent years. Some
of this change—which is reflected in
evolving buying values, brand preferences
and purchasing habits across multiple
sales channels—is due to the emergence of
a new breed of consumer. They are better
informed, more demanding and highly
connected. They want satisfying customer
experiences at every turn. And they expect
to be treated as a “market of one.” Some
of the change is also due to globalization

and the emergence of a multi-polar world
with multiple centers of economic power.
As companies look to expand their opera-
tions, they recognize the need for scalable
and flexible capabilities that will keep
their cost of entry low. And then there is
the unrelenting push for continued cost
reduction.Withincreasingpricepressures
and commodity costs, margins have
become razor thin. The pay-as-you-go
model of cloud computing provides an
attractive option for the many companies
wanting to delay, reduce or eliminate their
capital spending.
As companies adjust to the new business
environment to survive and thrive in what
has become a truly multi-channel, multi-
polar world, they are challenged to create
the distinctive capabilities that will enable
highperformance.TheAccentureHigh
PerformanceBusinessresearchprogram
has revealed that these capabilities include:
• Brandandcategoryleadership.
• Customerandconsumerintimacy.
• Insight-drivenmarketing.
• Channelmanagementexcellence.
• Organizationalflexibility.
• Newproductinnovation.
• Point-of-salesavailability.
• Simpleoperatingmodelsthatlever-

age scalability, collaboration and
integration.
Cloud computing has the attributes to
help companies in the consumer goods
industry strengthen these capabilities in
many ways.
For example, the cloud can help consumer
goods companies know more than they ever
thought possible about their customers and
consumers. The basis for strengthening both
retailer and consumer relationships lies in
gathering, analyzing and using vast amounts
of consumer, point-of-sale, promotional and
supply chain data—activities for which the
cloud, with its infinite data capacity, is ide-
ally suited. The insights from such analyses
can be used for a variety of purposes, from
creating meaningful and targeted customer
experiences to driving improvements across
the product development and sales cycles.
Digital sources of data are also available,
enabling companies to track things like
navigation patterns and purchases on
websites and via mobile devices.
Page 9
Cloud services can also address supply
chain challenges, including the difficulty
associated with accurately predicting
demand for products and then ensuring
that those products are available at the

right time, and in the right place. The
cloud provides a robust channel through
which consumer goods companies can tap
new supply chain processes, technologies
and emerging business models to improve
supply/demandorchestration.Bylinking
factory information systems to those of
suppliers, distributors and customers, the
cloud also makes it possible for companies
to minimize supply disruptions by creating
a demand signal, which drives a truly inte-
grated and automated supply chain. Finally,
cloud computing provides comprehensive
and complimentary business applications,
which can be used by entities across the
value chain to drive efficiencies and cost
savings in key areas such as load planning,
consolidation, stock returns and shipping.
For consumer goods companies looking to
enter new markets, cloud computing can
make such expansion much easier. One
of the reasons is that the cloud enables
simple operating models that integrate
centralized global, back-office capabilities
with a strong local presence for activities
such as customer relationship management,
production, sales and product delivery. This
global/local operating model is particularly
important for companies looking to break
into emerging markets. Consider the

unique challenges facing consumer goods
companies looking to grow in the Asia
Pacific region, which is home to some 20
million retail outlets. Currently, the largest
consumer goods players are only present in
four million of these outlets. To effectively
penetrate this untapped market, companies
need to identify, distinguish and target
“modern” supermarket trade channels and
smaller, “general”-trade channels that
are common in Southeast Asia, India and
China. They also need to collect and make
sense of highly detailed information about
each outlet’s operations—from whether
the outlet has electricity to whether it has
space to store products. The cloud can
provide this level of information, enabling
consumer goods companies to better serve
their customer segments and extend their
distribution networks beyond tier one cities.
Whileglobalexpansioncansignificantly
boost revenues, it can present a signifi-
cant management challenge. The cloud
can help by enabling disparate, global
teams to be more productive and work
together much more effectively. Coca-
ColaEnterprisesprovidesbutoneexample.
Withmorethan72,000employeesaround
the world, the company wanted to boost
employee collaboration, improve the flow

of information through the enterprise,
and free its resources to spend more time
with customers. To achieve these goals,
Coca-Cola implemented a Microsoft-based
hostedworldwideintranet.Withmessag-
ing, online meeting and collaboration tools
now available on any device for employees
across time zones and geographies, the
company has reduced its travel expenses
and improved its workforce’s productivity.
6

Fully hosted productivity tools are now
widelyavailableinthecloud.E-mail,
videoconferencing, instant messaging and
calendars are among the most common.
Others include any number of file sharing
and management solutions, as well as
salesleadtrackingapplications.Whatthey
have in common is that they make it pos-
sible for workforces to generate actionable
insights and collaborate more seamlessly
than ever. Nowhere is collaboration more
important than in consumer goods
companies’ globally dispersed research and
developmentorganizations.Havingteams
in multiple countries allows R&D organiza-
tions to maintain local expertise to meet
the product demands from consumers in
specific geographies, while also taking

optimal advantage of the cross-border
mergers and acquisitions that have taken
placeintheindustryinrecentyears.With
scattered R&D teams, however, consumer
goods companies run the risk of creating
knowledge “silos” with limited collabora-
tion among personnel. Cloud computing
can mitigate this risk by providing a
low-cost collaborative environment that
enables distant team members to cross-
feed and leverage each other’s insights
in a way not possible with current infra-
structure. Additionally, the cloud makes it
easier and more cost effective to improve
the flow of information between R&D and
other functional areas of the company
such as sales and marketing.
The Canadian arm of GS1—a
global nonprofit organization
dedicated to improving
supply chain efficiencies—is
developing, in conjunction
with HP Labs, a cloud-
based recall service. The
GS1 Canada Product Recall
service will run on the HP
cloud computing platform
for manufacturing and allow
consumer goods companies
to trace and remove

potentially harmful food
products from the supply
chain. It is expected that
the new service will enable
consumer goods companies
to reduce errors, decrease
the time it takes to respond
to a recall, and reduce recall-
related costs.
— “HP Develops Cloud Service
with GS1,”
Consumer Goods Technology
August 2009
Page 10
4.
Can I depend on clouds
to save my organization
money?
Over the last few years, the consumer
goods industry has been significantly
affected by lower consumer spending, a
difficult and volatile economic climate,
and raw material price increases. At the
same time, higher private label penetra-
tion means retailers now compete with
branded goods makers, challenging market
share with low-priced house brands and
creating intense cost pressure on consum-
er goods supply chains. These factors have
made cost control a strategic imperative

for high-performance consumer goods
companies. These factors have also made
cloud computing an appealing option.
Clearly, executives in any industry should
not take the promises and projections of
cloud savings at face value. The articles
about companies that have saved money
rarely explain how these savings were
calculated, and several apparently rigor-
ous analyses of cloud savings have been
attacked as unrealistic.
7
In our experience,
even where US-based firms move their
internal applications to the cloud, they
usually decide to retain a number of
services in-house because the costs of
hosting a server internally—whether in
an optimized data center located in the
United States or in a captive facility off-
shore—are lower than that of an external
cloud service.
Weencourageconsumergoodsleaders,
therefore, to look closely into the costs of
cloud computing for their organizations.
They can do so by seeking rigorous ROI
case studies based on actual cloud usage,
rather than estimates of anticipated
savings.Hardware,afterall,isarelatively
small component of data center costs.

Hiddenmanagement,transitionandusage
costs tend to reveal themselves only
when organizations start to work with the
technology.Evaluatingthepricingmodels
of different kinds of cloud services might
be helpful. So is working with the finance
department to develop a consistent
and acceptable approach to measuring
the costs and return from clouds. Such
efforts, we believe, would help them reli-
ably estimate the savings.
For consumer goods companies that believe
the cloud offers real savings opportunities,
our experience reveals things they can do
to maximize the possible cost benefits:
• Adoptcommonstandardsthatmake
sharing applications and information
easier.
• Usestandard,fit-for-purposeservice
levels as often as possible.
• Applysecurityanddataprivacyrestric-
tions appropriately and standardize the
number and types of different security
levels as much as possible.
• Overcomeanydepartmentalownership
issues so as much work as possible can
be moved to the shared cloud.
• Takecaretomaintainflexibilityaround
procurement to avoid being locked into
specific supplier arrangements.

”The biggest financial benefit of cloud computing, particularly in these capital-constrained times,
is avoiding taking on debt and keeping cash in the company longer. If a project uses a cloud-
based service provider, then the CFO avoids writing a big check upfront. Instead, checks are
written monthly or quarterly, in alignment with the return.”
— “Talking To Your CFO About Cloud Computing”
Forrester Research
October 2008
Page 11
Page 12
5.
Howwillcloudsaffect
the way my company
operates in the future?
The future of cloud computing is bright.
Only 1 percent of respondents to a
recent Accenture survey felt that cloud
computing held no potential for their
organizations (See Figure 4). It’s easy to
understand the optimism. Companies that
have built massive clouds are already
transforming the nature of competition.
Google’s advertising-supported search
engine and tools and Amazon’s online
retail operations are all made possible
by the computing clouds created by
those companies. Cloud-based consumer
applications such as Facebook and iPhone
applets are driving innovation in unpre-
dictable ways.
Figure4.Whatdoyouseeascloudcomputing’sgreatestpotentialforyourorganizationin

the next five years?
Total Responses: 673
Source:GlobalCloudComputingSurvey,AccentureInstituteforHighPerformance,2010
Potential %
Enablespeed,flexibilityandresponsiveness 59%
Permanently and significantly lower operating costs 53%
Enablenew,innovativeprocesses 46%
Support product/service innovation 40%
Improve decision making 34%
Expandoperationstonewmarkets 32%
Other 1%
Cloud computing has no potential for our organization 1%
Page 13
For the consumer goods industry, oppor-
tunities are taking shape in a number of
areas, including product safety, media
management, global trade and logistics
management, business intelligence and
carbonfootprintreduction.Webelieve
some of the more innovative potential
uses for cloud computing will be found in:
Sales and marketing
For consumer goods companies, the
name of the game is customer intimacy.
This opinion is supported by Accenture’s
research, which confirms that customer
insights and connectivity can spell the
difference between mediocrity and high
performance. The cloud may ultimately be
used to help consumer goods companies

improve planning and merchandising
processes to engage directly with the
consumer, improve store-level sales per-
formance and boost sales force produc-
tivity. Underpinning these advances will
be an infinite capacity for data mining
and analytics.
Retail point-of-sale data, trade
promotion management systems, and
customer-identified loyalty transactions
are becoming available via the cloud.
Digital merchandising, which combines
merchandising data models and analytics
engines, is also gaining ground. It enables
the tracking of what people want and
how they want it, and can integrate social
media to generate insights that lead to
highly targeted marketing promotions,
rewards and incentives. Related to this is
the emergence of smartphone-centered
services that track consumers’ movements
in a given venue and encourage them to
visit others. Shopkick takes the location-
based opportunity one step farther. It is
an application that rewards users with
discount coupons when they check in to
specific retail outlets and scan certain
products. Stickybits is another application
that offers users the chance to win prizes
when they scan product bar codes while

shopping.
8
Once they attach digital infor-
mation such as reviews or a picture of the
shelf display, it’s easy to imagine they can
become “consumer agents” and important
extensions of a consumer goods company’s
marketing team.
Product lifecycle management
Consumer goods companies typically take
a siloed approach to product lifecycle
management. That is likely to change.
The cloud will ultimately provide a
low-cost product lifecycle management
delivery model that allows all lifecycle
processes—from conception, through
design and manufacture, to service and
retirement—to be managed as a highly
efficient, integrated and end-to-end
process. Such a delivery model will be
particularly appealing to consumer goods
companies with widely dispersed design
and manufacturing teams.
Evenwithanintegratedproduct
lifecycle approach, high performance
will be dictated largely by how quickly
companies can introduce new products
that will appeal to consumers. Developing
breakthrough ideas, recipe formulations
and product prototypes typically requires

many data-intensive iterations, complex
computing capabilities and significant
investments. Cloud technologies can help
speed the innovation cycle in several key
ways. For example, the cloud provides a
low-cost platform for developing, testing
and honing ideas. It offers a channel
through which external stakeholders—
most notably, consumers—can become
involved in idea development and testing
through the relatively new phenomenon
known as “crowd-sourcing.” It makes it
possible for IT departments to keep pace
with the rapidly growing demands from
R&D departments for computing power.
And, when coupled with powerful product
lifecycle management applications, it can
significantly reduce the time needed to
process data and develop the prototypes
of what might become a company’s new
billion-dollar brand.
Product traceability
Product recalls in the consumer goods
industry are currently managed with
unwieldy and slow serial processes for
tracing products. A recall database resid-
ing in the cloud could help eliminate data
latencies and provide quick and accurate
informationtochannelpartners.With
the right application in place, consumer

goods companies could use the cloud
to standardize the way they identify
products, their points of creation, and all
physical locations the products travel on
their route to market. This would not only
facilitate the recall process, but also help
distinguish real products from counterfeit
“knockoffs” that are commonly found in
emerging markets.
Specifications management
To drive safety and security improvements
across the supply chain, consumer goods
companies need strong formula and
specifications management capabilities.
As with R&D, cloud computing can offer
a platform for the type of collaboration
that is critical to maintaining operational
effectiveness and production efficien-
cies. Deployment models in the cloud
can accommodate vast amounts of
specification data, as well as approval
work flows, proactive translations and
process definitions. Collaboration tools
procured from the cloud enable remote
work environments and form the basis for
more efficient team communication. Such
cloud-based tools also allow individuals
within and outside the organization to
share documentation and high volumes
of information more easily and effec-

tively than would be possible through
on-premise infrastructures.
As with benefits, it is difficult to fully
gauge all of the ways in which the
cloud will change how consumer goods
companieswilloperateinthefuture.We
recommend decision makers perform a
thorough assessment to understand how
clouds can help them chart a course
toward high performance. In particular,
strategists might investigate what new
services to pursue using cloud computing,
while CIOs may opt to track the evolution
of the technology and the market for
cloud services to ensure that strategic
ambitions do not outrun the capabilities
ofthetechnology.WealsosuggestCIOs
strengthen and upgrade their systems
management and operations tools and
processes to seamlessly manage the
heterogeneous traditional (non-cloud)
and cloud environments, which need to
co-exist in the future.
Page 14
6.
Whataboutassurance
of security and data
privacy?
Varioussurveystellusthatsecurityand
data privacy remain prime concerns for

cloud implementers in the consumer goods
sector. The fear of their data being “in the
cloud” is often the single greatest hurdle
that leaders must overcome to build
trust and gain the benefits from cloud
computing. CIOs are concerned that their
data could be stolen or compromised by
hackers, mixed with data from their cloud
providers’ other customers, or released by
mistake. Any of the above could expose
companies to compensation claims,
public embarrassment, lawsuits and brand
damage.
Many companies today have very specific
challenges in areas of security and data
privacy. Their existing IT estates consist of
highly fragmented landscapes of security
and data privacy approaches and policies
taken across different departments. This,
in turn, carries a lot of risk and cost. Using
the move to cloud computing to drive
more consistency and automation in secu-
rity and data privacy may actually provide
a catalyst for driving greater security and
reduced costs.
Wesuggestconsumergoodscompanies
adopt a very practical approach to think-
ing about security and data privacy in the
cloud. Data comes with different levels
of sensitivity, from low level (published

widely and no restrictions) to ultra secure
(highly confidential customer financial
information). Companies can design their
cloud to have similar and appropriate
security built in. So, for example, low-level
data and access may well be suitable to go
onto a public cloud infrastructure service
with simple password access, whereas
ultra secure data may require dedicated
secure servers housed in ultra secure
data centers with strong authentication
required for access. There will be several
different levels of security in between.
Buildingandmanagingasecureand
flexible infrastructure cloud using a com-
bination of private and public services will
set the stage for companies to gain the
enormous benefits that cloud computing
can provide.
As companies choose cloud service
providers, we encourage them to include
security and data privacy capabilities as
amajorpartoftheselectioncriteria.We
recommend that consumer goods compa-
nies take the following actions:
• Workwithproviderstodeterminetheir
attention to security, privacy, and com-
pliance with data laws in all relevant
jurisdictions.
• Makesuretheprovidercanmatch(or

exceed) the levels of security, privacy
and compliance you have today.
• Rememberthatthesecurityofthecloud
should meet the security requirements
of the most risky client that is serviced
by the provider.
• Requirecloudcomputingpartnersto
provide their risk assessments, as well
as explanations of how they would
mitigate any issues found.
• Determinewhetherthecloudprovider
has a seasoned privacy officer and
a client-facing chief security officer,
chief information security officer or
equivalent security role. If it doesn’t, it
is a sign that the provider doesn’t take
security seriously enough.
• Schedulemandatorymonthlydiscus-
sions with the cloud provider’s top
privacy and security people. This
discussion should flow both ways with
no hidden items.
• Makesurethecloudproviderhasthe
ability to map its policy and procedures
to any security mandate or security/
privacy/compliance-driven contractual
obligation that is in effect.
• Payattentiontothecloudprovider’s
adherence to secure coding practices.
The key to understanding security in cloud

computing is to realize that the technol-
ogy is not a break with the past. Instead,
it represents the logical next step in the
outsourcing of commodity services to
many of the same trusted IT providers that
have been leaders in the field for years.
“Cloud computing may
multiply the benefits of the
Internet by a factor of 10…
but we may also face 10
times the challenges.”
— Participant
Accenture and World Economic
Forum Cloud Workshop, 2009
Page 15
Taking the first steps
As we highlighted at the start of this
paper, cloud computing is too important a
technology to leave entirely to technolo-
gists. Its potentially significant business
benefits call for the involvement of
businessleaders.Weofferthefollowing
suggestions for executives contemplating
a move to the cloud:
Ask hard questions and demand data-
based analyses regarding cost savings.
Don’t assume automatic and substantive
cost savings. Do an ROI analysis. Consider
conversion and ongoing costs, as well as
savings. Don’t be intimidated by the jar-

gon.Experimentorpilotonlow-hanging
fruit such as workgroup applications, or
on a non-mission critical, non-integrated
application. Then be ready to scale once
you’ve proven the benefits are worth it.
Start small, then scale.
Beginbypilotinglow-riskcloudsolu-
tions and services such as e-mail or
workforce productivity applications, or by
experimenting on non-mission critical or
non-integrated applications. Then be ready
to scale once the benefits are clear.
Establish a clear governance structure
for cloud computing.
Many organizations have rules and
structures in place that govern how IT
decisions are shared between departmen-
tal leaders and IT executives. Use them
(and if they don’t exist, create them) to
decide with whom to engage, both inside
and outside the IT organization, regarding
decisions on cloud computing, and what
decision-making rights and responsibili-
ties they have.
Keep cloud efforts on track.
Make sure cloud computing receives the
focused thinking, planning and follow-up it
requires. Use the answers to these six ques-
tions to identify and address both immedi-
ate and longer-term business needs and

opportunities that lend themselves to cloud
computing, to develop a plan for using
public and perhaps private clouds, and to
gain the capabilities the plan requires.
Set the standards for success.
Make sure goals and deliverables are well
understood, and projects are well aligned
with business needs. Clarify how the value
from cloud computing is to be determined:
Whichquantitativeandqualitativeben-
efitsaresought?Whatconstitutessuccess
besides value achieved and projects
completed? Don’t overlook the value of
skills developed, partnerships established
and risks addressed.
Provide the necessary support.
Besidesfinancialresourcesandtechnical
talent, support other activities that will
underpin the success of cloud initiatives.
For example, organizations may benefit
from a community of practice or a cloud
program office to develop the skills and
share the experiences of people engaged
in cloud projects.
Buy cautiously, appraise frequently.
It’s too early to predict who the major
cloud providers will be in a few years,
what capabilities they will deliver, when
they will deliver them, and how well. So
when selecting cloud providers, carefully

consider whether they have the potential
to be a desirable partner in the future.
Evenaftertheyarechosen,evaluateyour
partners on their financial stability, as well
as their ability to improve functionality
and service levels, to integrate data across
different technology platforms and cloud
services, and to deliver on their promises.
Page 16
The consumer goods indus-
try’s migration to cloud:
not a question of “if”, but
“when”
Many executives are still grappling with
cloud’s risks and the cost of writing off
currentITinvestments.However,forsev-
eral companies, the transition to a cloud
environment is already under way. These
companies recognize that the capabilities
and potential savings from cloud comput-
ing are too great to ignore. They are striv-
ing for first-mover advantage. And they
are looking to use the cloud as an enabler
of high performance.
At Accenture, we believe that the barriers
to cloud computing are quickly falling
away.Whileitstillmaytaketimeforcom-
panies to transition to the cloud, there are
things they can start doing now—or start
doing differently—to prepare.

The critical issue isn’t whether cloud
computing will become a fundamental
technology in the next decade. It is how
successfully companies will profit from
the capabilities it offers.
Page 17
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Page 18
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