February 22, 2017 | Written by: Lynn Kesterson-Townes
Categorized: Hybrid | Industry
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What if you could redefine your competitive position by enhancing your products or services? What if you had access to unlimited computing resources to scale your business? What if you could invent a new customer need and own a new market?
Cloud is the enabler that makes these scenarios possible.
Five years ago, only a third of senior business leaders in our study “The Power of Cloud” said they had a solid plan for adopting cloud computing. In 2016, more than three-fourths of the executives we spoke with for our ”Tailoring Hybrid Cloud” study describe their cloud initiatives as part of a coordinated program or fully integrated as part of an overall strategic transformation.
In “The Power of Cloud,” we developed a “cloud enablement framework” which characterizes the impact of an organization’s cloud-enabled business strategy. This framework revealed three archetypes that represent how organizations can use cloud to improve their customer value proposition while adapting their company and industry value chains:
Optimizers use cloud to incrementally enhance customer experiences and improve organizational efficiency. They tend to deepen customer relationships without risking the potential failure that comes with radical new business models. While optimizers can expand the value they offer through improved products and services, enhanced customer experiences, and augmented channel delivery options, they tend to bring about lower revenue and market share gains than innovators or disruptors.
Innovators significantly improve customer experiences through cloud adoption, resulting in new revenue streams. This alters their role within an existing industry ecosystem. In doing so, they transform the organization’s role within an industry or enter an adjacent market or industry space. By extending and transforming, innovators can reconfigure elements of their value chains and value propositions to gain competitive advantage.
Disruptors wield cloud to invent radically new customer experiences, generating new customer needs and segments while creating new industry value chains. They provide customers with products or services they didn’t even know they wanted. They capture a unique competitive advantage by creating a new market or disrupting an existing industry. By taking risks, disruptors can gain a “first-mover” advantage that confers higher rewards.
Whether companies choose to become cloud-enabled optimizers, innovators or disruptors depends on a variety of factors, including how much risk they are willing to take and their current competitive context. Business leaders should carefully assess their organizations to determine which archetype they most closely match today, as well as which one they aspire to be. Only then can they determine how cloud can help them create new business models that promote long-term growth and profit.
You can start these three initiatives today to begin capturing value from cloud-enabled business models:
- Establish shared responsibility for cloud adoption across line-of-business executives and IT management to help ensure cloud strategy and governance permeates business objectives.
- Look within and beyond the organization’s borders and ecosystem boundaries to envision the optimal value that can come from cloud adoption.
- Determine whether the organization seeks to be an optimizer, innovator or disruptor, and use cloud to reconstruct the business model to realize that potential.
Will your organization become a cloud optimizer, innovator or disruptor?
For more on what it takes to become a cloud optimizer, innovator or disruptor, including more steps to get started, please read “The Power of Cloud: Driving Business Model Innovation.”
For more on how hybrid cloud can answer an enterprise’s unique needs, please read “Tailoring Hybrid Cloud: Designing the Right Mix for Innovation, Efficiency and Growth.”