The cloud is a powerful tool for business. Many company leaders are still debating whether or not to even use the cloud, without envisioning how the cloud can shape their long term strategy. This article aims to help resolve this debate by identifying the different stages of the cloud and the objectives that are attainable with each one.
The first phase of cloud use is Optimization. During this period, a company uses the cloud to incrementally improve their internal operations as well as their customer facing value propositions. Currently, this is the stage that many companies are still stuck at as they debate whether or not to even use the cloud in their day to day operations. Many business leaders defer the decision to their IT departments, and many IT departments are approaching the decision with a view that is limited to envisioning how the cloud can improve existing processes. While this is desirable, and necessary for later stages, this approach restricts a company to merely keeping up with current trends instead of embedding the cloud into the companies' long term strategic growth.
Business-minded leaders need to be involved in the cloud strategy to reach the next phase: Innovation. During this stage, cloud technologies are used to create new, reliable revenue streams that improve the company's value proposition by tapping into the business enablers that cloud offers such as business scalability, cost flexibility and masked complexity.
Disruption is the evolution of the second phase where new customer needs emerge in response to improvements and a new value chain is created to meet them. The drivers for these changes include experiences that are defined by the end user using a network of inter-system devices that allow a faster time to market. A company at this stage is now positioned to gain the "first mover" advantage that allows it to outperform competitors who are still at the innovation or optimization stage.
Every company has a different approach to its strategy. It needs to be aware of its core competencies, but it also needs to be aware of how new technologies in the industry affect their current competencies in the long run. If competitors are starting to use the cloud to present their offerings, and customers embrace the new medium, a business will have no choice but to adopt the cloud. Adopting a compliant mentality that merely optimizes operations as the industry adopts them will allow a company to survive in the short run, but they risk falling behind if a competitor suddenly leaps ahead with a new innovation solution or a disruptive one.
The cloud is not merely an IT solution. It is already mainstream, and not just in the largest enterprises. Only a minority of companies are thinking about how to use the cloud for ambitious innovations. These forward thinking companies are already focusing on cloud to create competitive advantages such as new channels, delivery markets and revenue streams rather than restricting themselves to internal efficiency.
To reap the benefits of the cloud enabled enterprise, a senior business leader needs to work with the senior IT leader to ensure that cloud remains a priority. The organization needs to move between the boundaries that could exist between IT and the other departments, and most importantly between the boundaries that exist between the organization and the customers.
A strategy needs to be thought out: is optimization or innovation enough, or is disruption the long term goal? How long will it take to get to each stage, and what are the other costs and risks involved?
Cloud is now mainstream, but its potential remains untapped. Access to unlimited computing resources, over any device at affordable prices and instant connection with customers offers the potential for every company to redefine itself in its industry. The companies that will triumph in the future are the ones that use the cloud most effectively to differentiate themselves with their business value.
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