November 4, 2016 | Written by: Paul St. Germain
Categorized: Supply Networks
This is the ninth blog in a series of blogs revolving around Facing the Forces of Change®: Navigating the Seas of Disruption, published by the National Association of Wholesaler-Distributors (NAW) — the only major research study analyzing the future of wholesale distribution within multiple lines of trade. Find a shortlist of the other blogs in the series at the bottom of this post.
The amount of data being produced today is increasing exponentially, and technology is allowing companies to analyze massive amounts of that data to garner new insights about customers and themselves. In many cases, the analysis and insights can be used to generate new forms of differentiation that can be used to disrupt existing markets, and cloud computing is enabling these capabilities.
Cloud computing solutions are quickly becoming popular IT options for companies of all sizes, due mainly to their ability for companies to access the most up-to-date programs and services more cost-effectively. At a basic level, cloud computing is the ability to use centralized data centers to deliver IT applications for use over a network. Such services are driving greater access to better systems and programs for small companies in particular, many of which lack the capital and personnel to upgrade and implement new technologies regularly. At its core, cloud computing enables companies of all sizes to carry out their digital commerce strategies as well as collect, store, and analyze the vast amounts of data they generate every day.
The Basics of Cloud Computing
There are several possible configurations of cloud-based systems, including private, hybrid, community, and public clouds. Both on-premise and off-premise solutions are available, and they can be set up as public or private systems. A key difference is the security that is applied. In private clouds, the network is dedicated to a single company, while a public cloud is shared. Most companies may be willing to move some of their less confidential systems to a public cloud; however, they would be hesitant to put their confidential information into a public cloud. This has led to the growth of the hybrid cloud model, which allows companies to leverage the cost benefits of a public cloud, but securing application in a private cloud where needed.
Cloud computing is increasingly becoming a good option as wholesaler-distributors look to technology to provide competitive differentiation while reducing costs. The ability to share processing resources while being able to scale on demand provides significant cost savings. Because the cloud is hosted at a data center, it allows a company to have information available all over the world at the touch of a button to all of its employees—a distinct advantage in the global economy in which most distributors find themselves operating. While a company’s initial reason to move to the cloud is likely to decrease costs, increasingly firms are able to use cloud platforms to become more agile.
Leading IT vendors all provide more than just servers to run applications. They provide platforms that can change the way IT solutions are designed, developed, and deployed. For example, an American foodservice distributor modernized its enterprise social-software solution with advanced social, instant-messaging, online-meetings, and e-mail capabilities with the implementation of a cloud-based solution. Not only did the distributor improve company collaboration by doing so, but it lowered its total cost of ownership and improved its disaster-recovery capability as well.
The foodservice distributor now uses instant messaging, online document editing, web conferencing, file sharing, and social-business services and is expanding the cloud-based solution into various lines of business, including human resources, marketing, corporate communication, IT, and sales. What’s more, with a cloud-based solution, this distributor can access up-to-date versions of software components. Besides transforming itself into a social business, the distributor has gained complete disaster recovery by using the technology—a standard service with most business-based cloud computing programs, giving companies peace of mind that their data is protected and backed up by an external system.
The Benefits of the Cloud
Wholesaler-distributors, large or small, should consider cloud computing solutions for their cost-reduction capabilities, as well as for overall IT improvements. The cloud enables economies of scale by using shared processing power that can be ramped up or down quickly based on need, providing a pay-per-use delivery model that can shift capital expenditures to operating expenditures. With the ability to allocate and release resources based on demand, distributors can shift costs from fixed to variable, paying as you go. This ability to allocate resources based on demand supports rapid prototyping and innovation to speed bringing new products and service offerings to market. It also permits distributors to focus their attention on business processes that are differentiating, moving the infrastructure and support processes outside the business, where they can be efficiently operated and managed by an entity that specializes in that capacity.
In the upcoming edition of Facing the Forces of Change®: Navigating the Seas of Disruption, published by the National Association of Wholesaler-Distributors (NAW), you will find much more detail on all of these topics, including strategies and examples from leading distributors, along with suggested actions to understand and minimize the effect of disruption on a business, or present the opportunity to become a disrupter.
Stay tuned for upcoming blogs on other topics examined and discussed in the book.
Facing the Forces of Change®: Navigating the Seas of Disruption is available for purchase from NAW at: http://www.naw.org/ftf16, and will be available in November, 2016.
Previous blogs in the series:
Wholesale Distribution at a Watershed Moment
Unpacking the 6 Disruptive Forces in Wholesale Distribution
Branding and image: Distributors as service providers
Leveraging Relationships in a Customer-Centric World
Using Mergers and Acquisitions as a Disruptive Force
Leveraging the Changing Workforce
Technology Trends — Digital Commerce for the Wholesaler-Distributor
Technology Trends — Analytics for the Wholesaler-Distributor