Using Cloud as a Market Disruption Agent
By Larry Walsh
Cloud computing is often spoke of as a disruption force to the conventional IT paradigm and a transformative agent to automate and optimize legacy computing systems. From a technology perspective, cloud computing is a means for doing more with less in data centers, endpoints and mobile devices.
What isn’t spoken of often is how cloud computing can be a disruptive force to competitive markets and business models. Just as PCs and the Internet changed the way business is conducted, cloud computing also has the power to change the business operations and competitive postures. The difference with cloud computing compared to these previous models is the change is radical and extremely disruptive to laggards.
In a new study published by IBM, “The Power of Cloud: Driving Business Model Innovation,” cloud computing is positioned not as a technology change agent but rather a distributive force to business models that is transforming the very nature of business operations, go-to-market strategies and value propositions.
“Cloud business enablers are already driving innovation across customer value propositions and company and industry value chains. Enterprises are applying cloud to generate additional revenue streams by enhancing, extending and inventing new customer value propositions. And cloud is being used to improve, transform and create new organization and industry value chains. This has resulted in shifts in who creates value, as well as how it is created, delivered and captured,” the report authors wrote.
Cloud-savvy enterprises are leveraging cloud computing benefits to their advantage, the report found. The six key attributes of this transformation are cost flexibility, business scalability, market adaptability, simplifying business processes (masked complexity), context-driven variability and ecosystem connectivity. These factors aren’t remarkable, but they are more actionable in the cloud era. They can all be boiled down to the cloud giving enterprises the ability to react to market demands with agility and a low cost.
What IBM discovered is three distinct bans of enterprises in the cloud era: optimizers, businesses that use the cloud to incrementally improve their operational efficiency; innovators, enterprises that use the cloud to extend value to customers; and disruptors, enterprises using cloud to radically change value propositions by generating new customer needs and establishing a competitive advantage.
“Companies worldwide are beginning to recognize cloud’s capabilities to generate new business models and promote sustainable competitive advantage. Whether they choose to become optimizers, innovators or disruptors, successful organizations will leverage cloud as a key point of differentiation in driving business value and success,” the report states.
What the IBM study reveals is something the “disruptors” have already discovered: the cloud computing isn’t about changing technology. Rather it’s about relegating technology to a subordinate position in the enterprise and using technology tools to attain greater business outcomes. As the report states, this goes way beyond optimizing legacy systems; it’s about using clouds to create products, services and, ultimately, value propositions that are new and unique.