Competition has never been as fierce as it is in the digital age. Local markets are expanding to the national level and national markets are expanding to the global level. The one thing all markets across all industries share is that they are in a constant state of disruption. Take for instance the licensed taxicab trade in New York City. The city, being limited in space and population, distributed a capped supply of licenses—sort of a badge in the form of a medallion—to cab owners, which permitted them to accept fares. At least, that’s how it was done. Then in 2018, 950 NYC taxicab owners filed for bankruptcy as they watched the value of their medallion plummet from $1.3 million in 2014 to $160 thousand within four years.
How did this happen? Enter Uber and Lyft rideshare services: visionary startups with a disruptive business model, a strong cloud-based infrastructure, and excellent management. The taxicab market, first in NYC and then pretty much anywhere else, did not stand a chance. While much emphasis is placed on the innovative concept itself as well as the business model, the unsung hero of digital disruption is obvious when one peers behind the magic curtain: that’s right, it’s the cloud.
While many debate, few disrupt
The reality is consistent across every industry: everything is getting digitalized—from the end product to the engineering, manufacturing, supply chain and support services or some other aspect of the underlying activity. There are no exceptions to this trend and transformation is inevitable. However, this is not yet the entire present-day reality. Still today, most disruptions across industries are being led either by high-tech or technology-enabled startups. They are the trailblazers of the digital age.
The concept of digital disruption is discussed in greater detail in Trasers reports on Product-Service Innovation. The relevant thing here is that each disruption exhibits certain common features:
- A reimagining of an existing value proposition or the creation of a new one
- Interfaces that facilitate digital interactions with users of products or services during installation, usage and support
- Extensive use of data from telematics and other sources, which enables experience innovation and enhancement
- Use of agile engineering cycles and cloud infrastructures
As members of leadership at traditional companies and large incumbents ask themselves why they are getting disrupted or debate amongst themselves the value provided by the cloud, disruptors from the high-tech industry as well as startup newcomers go full steam ahead with cloud as a given. Trasers data shows that in the high-tech industry, cloud development and support infrastructure is given the green light by the finance department in 90% of cases—without debate.
As the Cloud Adoption Quadrant shows, extreme adoption of the Cloud delivers not just lower infrastructure costs but also faster product development cycles for the high-tech industry.
How exactly does the cloud enable or defend against disruption?
Every product-service delivered to customers, and/or the underlying experience associated with them, is now being powered by technology. While a lot of focus is put on the cost savings of cloud adoption, one must also look at the savings in terms of cycle time. Compared to traditional infrastructure and engineering models, cloud and agile deliver the following at best-in-class companies:
- Infrastructure procurement and provisioning is reduced from 2-3 months with on-prem models to 8 minutes on the cloud.
- Agile software development cycles reduce the cycle time from 6-9 months to 4-5 months.
So, what do high-tech teams do with all that time they save? Naturally, they spend it on engaging with the business and with their customers. In the development cycle illustrated, note that 3 out of the 5 major activities involve either the business or customers themselves.
The process of engaging with customers and the time spent there has one unappreciated impact: the product or application in development becomes almost entirely customer-driven. Thus, the probability that it will be endorsed, adopted and accepted by customers is much higher. It is also during these engagement cycles that new ideas of “value” emerge, which is the birthplace of disruption.
Cloud-enabled companies gain not just elasticity and flexibility, but also better time-to-market and an improved product success probability. When established companies move beyond the financial ROI of the cloud and focus instead on the disruption ROI, they enable their teams to leverage their history, experience and IP in order to stand toe-to-toe with modern disruptors. Only then does it become a fair fight, with the spirit of competition driving innovation even further and faster.