I’ve talked before about the idea that cloud is not yet being used to its full potential, and in some ways I think that this will always be the case. Cloud computing has opened up a whole world of possible industry disruption – allowing start-ups and SMEs to compete successfully with long-established enterprises. For as long as entrepreneurs can re-invent business models the capacity of the cloud will continue to surprise us.
Netflix is often, and deservedly, cited as one of the best examples of using the cloud to disrupt the industry. While competitors such as Blockbuster and HMV poured time and effort into working out the best way to sell DVDs via the internet, Netflix rewrote the question, asking ‘how can we use the internet to help people watch movies?’ Although its initial service was built on a traditional datacentre platform with no capacity for scaling up and down, it was the company’s decision to migrate to a public cloud that allowed such rapid growth – allowing Netflix to quickly expand its customer base and scale the business upwards while keeping expenditure to a minimum. As they say, the proof of the pudding is in the eating: last year Netflix reported revenues of $4.37bn and added 2.3 million new U.S. subscribers between October and December last year alone.
On a smaller scale there are businesses such as Transics, a SaaS provider which helps logistics companies to keep track of their trucks, drivers and deliveries. Cloud computing plays an integral role in the organisation’s business model; allowing it to offer a reliable and, most importantly, real-time overview that would be impossible on a typical physical on-site server farm. And because Transics itself is based on a cloud infrastructure it can offer its service to customers in the most attractive way where costs can be managed based on current needs and business demands: keeping overheads low in an industry which is currently battling through a low-margin economic climate.
While organisations have been previously forced to base their business models on the IT that is available (often with the priority placed on cost), the rise of hybrid IT solutions – which span across both traditional private data centres and the public cloud – mean that almost any business model can now be put into practice. Now, start-ups can potentially access the same level of IT sophistication as any enterprise – and with the ease of outsourcing, can ignore most of the operational issues and focus on improving the core product or using IT to open up new revenue opportunities. Meanwhile, the enterprises which invest in a cloud platform are able to re-discover the level of flexibility they enjoyed back in their day as a small business. In both instances, obstacles to growth have been removed.
What the examples of Netflix and Transics prove is that business agility is the key factor in success. Cloud computing does not offer a straightforward victory but instead it eliminates (or at least reduces) the cost of failure and offers a way of future-proofing your business. Are you unsure of your business’ growth potential this year? Not to worry, you can scale infrastructure up or down as your business requires. Want to use the latest software? That’s not a problem; software delivered via the cloud can be updated on a daily basis.
For the first time we’re seeing a truly level playing field, with SMEs competing against larger enterprises. Cloud is also paving the way for far greater differentiation in the marketplace, allowing businesses the freedom to concentrate on their own product and outsource anything which does not distinguish them from competitors. Organisations are also able to experiment with new delivery models. For example, with the agility of cloud infrastructure it’s not hard to imagine a world where insurance companies offer single-day car insurance, purchased via the vehicle’s dashboard and with prices set daily and based on any number of factors (from weather conditions to location or traffic levels).
In the last few years every trend that we’ve seen (from BYOD, mobile working and big data through to business intelligence and analytics) has all been made possible thanks to the flexible and reliable environments offered through resilient clouds. The cloud represents a fundamental shift in the way businesses have to operate and it’s something that every organisation must embrace in order to stay competitive.
By Keith Tilley Executive Vice President, EMEA & APAC at Sungard Availability Services
