Time to consider what type of business you are: Cloud strategies for today’s organizations
Where companies choose to direct their cloud initiatives depends on a variety of factors, which take into account businesses goals and strategies, how much risk is willing to be assumed, current competitive context and customer needs. As more and more businesses continue embracing cloud, establishing which cloud strategy will drive your enterprise transformation is more important in today’s advanced cloud society than ever, offering a wealth of positive impact and efficiencies.
IBM, who offers private, public and hybrid offerings, providing the global scale businesses need to support innovation across industries, has identified a three-tiered framework organizations can use to improve operations:
1. Optimizers – What does an Optimizer look like?
Optimizers are chiefly focused on improving operations to provide greater customer value, focusing on increasing overall efficiency and reducing costs. Since they largely focus on incremental improvement, they don’t tend to grow revenue and market share as substantially as successful innovators and disruptors. Today’s optimizers are using cloud initiatives to attain business outcomes such as bringing more personalized products and services to market faster, achieving tighter business integration with ecosystem partnering and attaining incremental revenue growth. Additionally, they are also looking to reduce operating costs while lowering capital investment and develop a more efficient, business-focused IT organization.
2. Innovators – What does an Innovator look like?
Innovators leverage cloud to create new products and services and incorporate new channels or payment options into their business models. Cloud allows innovators to develop new operating capabilities by rearranging their ecosystems to shift industry economics in their favour. One of the major risks faced by innovators is the possibility of a “fast follower” competitor applying the power of cloud to improve upon an innovator’s original innovation. According to a recent IBM report, 71 per cent of U.S organizations are classified as innovators because they are using cloud to generate new sources of business by redefining customer engagement, targeting customers in different industries and/or geographies, as well as expanding their portfolios of products and services. They generate additional revenue streams from new and existing customers, products and markets.
3. Disruptors – What does a Disruptor look like?
Disruptors wield cloud to invent a new customer need by creating a revolutionary value proposition. A disruptor’s unique ability to satiate the need they have created confers a first-mover advantage and the disruptor “owns” the market, at least for a time. Disruptors take on the most risk since their cloud-nouveau business models may not succeed. And when they do, cloud-enabled fast followers may learn from disruptive first movers and eclipse the trailblazers. Organizations that are disruptors invent new customer needs and define entirely new markets, disrupt legacy competitors while creating new ecosystems, and create sustainable competitive dominance across a new value chain.
So, how should you decide which type of business you are or should be?
To determine where your organization should sit on the framework, business leaders can start by considering the following areas:
- Study cloud-enabled competitors, ecosystem partners and other organization to generate viable alternative approaches to using cloud to achieve relevant business goals;
- Choose an aspirational cloud archetype that is a “best fit” given your strategic goals, culture, resources and capabilities, industry economics and dynamics, customer obligations and organizational risk tolerance;
- Understand which archetype most closely resembles your enterprise today to inform a gap analysis between your current cloud archetype and your intended one;
- Test the achievability of your intended position on the framework by developing an action plan that details the financial realities of resources and capabilities required, and the actions necessary to mitigate potential risks.
While the cloud enablement framework is intended for organizations to optimize their cloud strategy, the framework is not a progression model, and can be fluid in terms of shifting from one phase to another. Many large organizations, particularly in regulated industries, initially gravitated to being an optimizer, while other companies “born in the cloud” enter the framework as innovators or even disruptors. In most cases, optimizers and disruptors may find themselves moving to the innovation area of the framework for their second acts.
In today’s competitive landscape, more organizations need to decide which cloud strategy they want to adopt to increase business value, and do so in a way that best lines up with their organizational goals. The conversation around this has evolved significantly, and is no longer a matter of ‘if’ and ‘when’ cloud should be implemented, but rather ‘how.’
By Frank Attaie, Vice President Cloud, IBM Canada.
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