PeroxyChem’'s Cloud Computing Formula ala Cece roxyChem is a leading global supplier of hydrogen peroxide and related ubstances for electronics, paper production, and household medical products. The company is headquartered in Philadelphia, Pennsylvania and has about 500 employees; generates over $400 million in revenue; and op- erates research, sales, and manufacturing facilities in North America, Europe, and Asia In February 2014 PeroxyChem was divested from its parent company and had just one year to take over management of its business systems. It would have to create its own IT infrastructure and IT department, all while keep- ing day-to-day business systems and operations running smoothly. As part of a large corporation, PeroxyChem had not been responsible for maintaining and managing its own IT systems but suddenly had to become self-sufficient. The company was understandably reluctant at that point to take on the cost or risk of pro- 0 curing its own hardware, setting up a data center on premises, and maintaining a large in-house IT department, nor did it have the inchouse expertise to do so. According to PeroxyChem CIO Jim Curley, management didn’t want to change any of its applications, but it did want to transition to a cloud infrastructure where the computer hardware and software f running a firm's systems are available as on-demand services in remote computing centers accessed via the Internet. The goal was for PeroxyChem IT personnel to spend only 40 percent of their time on operational tasks to keep the company running and 60 percent on strategic projects designed to grow the business. PeroxyChem also lacked the time and resources to hire and train new personnel to run day-to-day operations. PeroxyChem worked with IBM to migrate its existing systems to IBM's SoftLay ture in which IBM, as a trusted and experienced third party, manages the or- ganization’s core competencies, IBM also helped implement enterprise and business intel- ‘gence applications from SAP, configuring the systems to meet PeroxyChem's business requirements. The new infrastructure was rigorously tested and was able to go live in four and a half months with no disruptions to PeroxyChem's existing IT operations yer cloud computing infrastructure. This is a managed cloud infrastruc- cloud computing activities, freeing the organization to focus on its 163164 fart Two Information Technology Infrastructure PeroxyChem can run and extend its enterprise business systems with a lean in-house team. ‘The managed IBM Cloud hosting solution has made it possible for PeroxyChem’s IT staff to spend less time on routine maintenance and more time on leveraging its core competencies and developing innova- tive products for specialty industries such as food safety and electronics. Using a cloud infrastructure has reduced costs and risk by avoiding large up-front capital investment for new hardware, software, and a data center, as well as the expense of maintaining a large in-house IT team. The infrastruc- ture is scalable and can expand computing capacity if the company grows or has peaking workloads, or reduce computing resources (and expenses) if the company has fewer users or less computing work. The company can eas- ily add more users without purchasing additional computing, storage, and networking resources of its own, PeroxyChem's cloud infrastructure is op- erational around the clock, making it easier to for this global company to do business. Sources: David Slovensky, “PeroryChem Builds a Whole New IT Infrastructure in Less ‘Than Five Months," wiw.ibm.com, January 17, 2017; “PeroxyChem LLC." wwe 03bm, com, accessed February 20, 2018; Ken Murphy, *PeroxyChem Starts a Cloud Reaction," ‘SAP Insider Profiles, December 12, 2016; and www.peroxychem.cam, accessed February 20, 2018, the experience of PeroxyChem illustrates the importance of information technology infrastructure in running a business today. The right technol- ogy at the right price will improve organizational performance. After dives- titure from its parent corporation, PeroxyChem was left to manage its own information systems. The company would have been overwhelmed with set- ting up its own IT department and learning how to run its own systems, with no time for developing systems to support its strategy and future. growth. PeroxyChem would be prevented from operating as efficiently and effectively as it could have. ‘The chapter-opening case diagram calls attention to important points raised by this case and this chapter. Divestiture left PeroxyChem with limited resources and a short time frame to set up and run its essential business infor- mation systems and data center. Using cloud computing for its IT infrastruc- ture enabled PeroxyChem to quickly delegate the operation and management of its IT’ systems to outside specialists, to maintain a very small in-house IT staff, and to use that staff to support innovation rather than day-to-day opera- tions. The company pays for only the computing capacity it actually uses on an as-needed basis, and did not have to make extensive and costly up-front IT investments, Here are some questions to think about: What were the business benefits for PeroxyChem of using a cloud computing infrastructure? What role did divesti- ture play in PeroxyChem's choice of a solution?