Cloud

How cloud is helping reimagine traditional business models

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In previous blogs, I discussed the importance of viewing cloud as a journey rather than a destination. Today, I’m going to discuss why this change in attitude is so important. I’m also going to reveal how cloud is being used by some innovators to redirect their focus to create new business models, new relationships and new ecosystems that enable them to innovate and monetize their data. In doing so, they’re becoming the disruptors rather than the disrupted. And isn’t that what every IT leader prefers to be as well?

A formidable task

IT executives are under tremendous pressure to make complex decisions about the technology they use. With the advent of cloud, IoT and cognitive computing, they now have immense responsibility and accountability for technology that impacts virtually every facet of their operations. In effect, their position has transitioned from one of providing tools that assist other departments, to driving initiatives that transform business processes and business models, and that potentially alter the very future of the organization.

I think of this challenge in terms of the three C’s: cloud, cognitive and complexity. These are the forces that are presenting tremendous challenges but also unprecedented opportunities.

Cloud: Potential or peril?

When organizations first moved to cloud, it was an intelligent decision based on the economics of architecture. The infinite scalability and unlimited access it provided was supplemented by the additional benefit of cost efficiency. As technology improved, the initial issues around security were minimized, and the cloud became a viable solution for even the most sensitive data. The misnomer that on-prem is more secure than cloud is just that today — a misnomer! So what could possibly go wrong?

Well, some organizations gave their data away. In their rush to the cloud, they didn’t ensure that they retained ownership of all their information and whatever insights were gleaned from it. Not all cloud providers believe as strongly in the sovereignty of data as we do at IBM.

I say this to our clients and potential clients all the time: Your data is your data. It shouldn’t be shared with anyone else and neither should your insights. I urge all IT leaders to re-examine their current cloud environment. If their provider is exposing their intellectual property to others (and this includes current and future competitors), they need to find an alternative resource. Immediately!

Yes, every organization must most assuredly be on the cloud, but they mustn’t let democratization become commoditization that can threaten their organization’s future.

One excellent example of a business that has used its cloud-based proprietary information to achieve outstanding results is the relatively new airline, Etihad. Using microservices and APIs that they were able to build using cloud technology, they created customer-centric enhancements that completely transformed their product.

Today, Etihad doesn’t simply provide transportation. They identify their customers’ needs to create individual travel experiences that are unlike any in the industry. Anyone who wants to know how different they are should book an Etihad flight. But you should be forewarned: it could forever change your attitude toward airlines, and you may not want to fly with anyone else.

Cognitive computing: Think about its impact on the business model

At IBM, we speak in terms of augmented intelligence. That is, we believe that cognitive computing serves a monumental role in helping humans make better decisions. Because cognitive systems have the ability to ingest volumes of data in a split second, analyze it and then present insights, cognitive tools enable organizations to become cognitive innovators.

What does that mean? It means that organizations that add cognitive resources can really get to know their customers and suppliers, and use that knowledge to truly, deeply connect with them.

The automotive industry has long had challenges connecting with their end customers — decisions made over the hundred-year history of the industry relegated that task to dealerships. But thanks to cognitive computing, that reputation is falling by the wayside. Now, practically all manufacturers are using cognitive insights to create improved products that better serve their individual users. They’re appealing to a mass market of one individual at a time by providing connected cars that make driving safer, better for the environment, and far less stressful. Companies like Tesla are truly disrupting customer intimacy.

Pharmaceutical companies also have effectively used the power of cognitive technology to improve processes. One client we work with applied AI to process improvement and realized a $100 million sales gain.

Chances are that almost every IT leader could optimize processes to extract more profit from their operations.

Complexity: It’s a difficult decision

Thanks to cloud and cognitive computing, transformative new technologies have become available to help you drive innovation. Approaches such as blockchain are no longer visions of the future, but are well in place with many organizations, and contributing to more trustful relationships between business partners and consumers. Its value is not only being realized in terms of financial transactions but also for visibility throughout the supply chain. For example, a Fortune 500 retail client is using blockchain to ensure the safety of food products they import from China.

While there’s a myriad of digital tools to choose from, capitalizing on them can be a complicated endeavor. Which ones should organizations choose? And how are they going to manage them? They need new expertise to create new business models, and skilled talent can be hard to find. But it’s up to every IT executive to investigate these issues and to pave the way so that their organization can benefit from the advantages now made possible.

Leveraging data

All IT professionals are well aware of the immeasurable value of data. Finally, their peers have discovered it too. In every boardroom I visit, executives ask, “How can we monetize information in our organization?” The role of their IT team is to help them do that. Ours, at IBM, is to walk beside that team and serve as their partner.

Please visit our web pages for more information about cloud, cognitive computing, the complexity that surrounds them, and the astounding ways data can be transformed into disruptive differentiators.

If you have any questions, I would like to hear from you. Feel free to leave a comment below or schedule time with me or someone on my team. We’d be happy to discuss how you can make your IT department become a driver of the future of your organization.

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