EXPERT OPINION The cloud is now a business imperative
Roughly a decade ago, the first commercial cloud computing services began. At first they were viewed as a curiosity; then as solely relevant to cash-strapped startups; then as a means for enterprises to reduce IT costs; and then as a way to increase agility.
While all of these perspectives remain true, they often obscure the fact that cloud has become an imperative for businesses of all sizes and across all verticals, not just for cost reduction but also for revenue growth, margin expansion, and ultimately, enhanced customer experience, satisfaction and loyalty.
Why? Because cloud computing is inextricably interwoven with digital transformation, with today’s mobile and digital lifestyles, and with innovation, collaboration and customer experience.
The configuration of these drivers and opportunities will vary by firm, competitive environment and customer preferences and values. In Digital Disciplines, I explore how today’s cloud-centric approaches can create unparalleled customer value by exploring the impact of digital on the three traditional “Value Disciplines” – operational excellence, product leadership and customer intimacy – and how these concepts are evolving in an environment of disruptive information technology.
Operational excellence is becoming information excellence, where companies use the cloud, big data and connected mobile assets to improve operational metrics that impact customers and other stakeholders. For example, by optimizing pickup and delivery routes and recalculating them as stops are added or removed, a logistics company can improve sustainability, reduce operating costs and improve labor productivity. Thanks to the power of cloud, these route calculations now incorporate not only customer requests but also real-time traffic congestion data, weather forecasts and the like, improving forecasted delivery times and enhancing customer experience.
Product leadership is evolving into solution leadership, where formerly standalone products or services combine and connect to create networks of smart, digital, product-service solutions that use the cloud to integrate portfolio elements, enable platforms, connect to ecosystems, power new business models and create superior customer experiences and transformations.
For example, a scale is no longer just a device for measuring your weight, but connects to an ecosystem that might include athletic shoes with accelerometers to measure the intensity of activity, smartphone apps, gym equipment and heartrate monitors. Cloud-resident software can not only monitor long-term trends, but also can personalize training and coaching applications to accelerate athletic progress. This is an example of how the emerging Experience Economy enables a climb up the value hierarchy, from commodities, products and services to experiences and transformations.
Customer intimacy traditionally involved many one-to-one, human, physical relationships at limited scale. An example: the corner video store clerk who knew your name and gave you movie suggestions based on personal knowledge of other movies you had rented or that the clerk had seen.
Today, cloud-based IT enables collective intimacy, which is virtual, hyperscale and delivered by algorithms that can serve millions of customers simultaneously. Rather than many independent one-to-one relationships, insights derived from all customers are collectively used to enhance the experience of each customer. Strong inferences can be developed from weak signals and amplified by big data collected from all customers to predict, say, that people who liked The King’s Speech will also, surprisingly, enjoy the new Star Wars movie.
The knowledgeable video store clerk is now a cloud-based algorithm fed by trillions of data points on customer attitudes, behaviors, contexts and social graphs, as well as traditional demographics, all complemented by external data. Cloud-based capabilities drive revenue growth through upsell/ cross-sell or improve customer satisfaction and retention, reducing churn and enhancing referral marketing.
The cloud accelerates innovation in many ways. Online innovation networks, idea markets and contests and challenges enable enterprises to expand beyond their employee base and the four walls of their corporation to tap the knowledge of millions of experts and entrepreneurs. These external resources exist not just in digital technologies but in any arena, such as biochemistry or mechanical engineering. Emerging digital collaboration platforms enable far-flung groups of suppliers, employees, partners and customers to share ideas, model designs, conduct A/B testing and walk through virtual reality environments to evaluate concepts and designs.
Increasingly, machines will help us innovate: Game-playing software has already conquered strategy games like chess and Go. Less well-known is that machines are also designing quantum physics experiments and generating medical hypotheses in the cloud. In fact, leading digital innovations such as artificial intelligence, big data tools and quantum computers are becoming available to early adopters through the cloud, often at no cost.
The cloud, then, is not merely an interesting technology for the IT department to understand, configure and operate. It is a strategic imperative for any enterprise to pursue and exploit to create differentiated customer value, experiences and unassailable loyalty.
Joe Weinman is a frequent global keynote speaker and the author of Digital Disciplines: Attaining Market Leadership via the Cloud, Big Data, Social, Mobile and the Internet of Things. He also is the author of the seminal Cloudonomics: The Business Value of Cloud Computing and a contributor to Regulating the Cloud. He was the founding chair of the IEEE Intercloud Testbed Executive Committee, is the Cloud Economics editor for IEEE Cloud Computing magazine, and has been named a “Top 10 Cloud Computing Leader,” among other accolades.
For more information, visit www.joeweinman.com