Cloud Computing Can Drive Business Innovation

Cloud is an enabler of new business models, but too many companies are just experimenting or improving existing processes and not taking full advantage of the technology, says IBM.
Netflix migrated its movie and video streaming service out of its own data centers and into the Amazon public cloud because it could better cope with "large surges of capacity at peak times," allowing the company to grow its customer base without being constrained by its data center capacity, the study observed.

Xerox introduced Xerox Cloud Print, a service that allows a user to print a document with a nearby printer, wherever they might be. Accomplishing the task would be complicated for users to solve on their own, but Cloud Print can mask the required data management and temporary file storage behind an easy-to-use interface. By masking complexity, "a company can expand its product and service sophistication without also increasing the level of user knowledge necessary to utilize or maintain the product," the study concluded.

Cloud computing also allows businesses to adapt products and services to "context driven variability," or changes in the nature of the service due to the user's location and activity. Apple iPhone's Siri uses artificial intelligence to learn about the user and his or her contacts to understand what a user is saying, then come up with an appropriate response. Things it can do include sending messages, scheduling meetings, placing phone calls, and finding restaurants. It leverages cloud resources and applies them to an individual context, allowing Apple to invent new uses of the smartphone, it concluded.

Businesses that understand cloud platforms that can bring together disparate business stakeholders and get them to collaborate may also expand their business models. HealthHiway is an example of a healthcare ecosystem that brings together providers, patients, payers, practitioners, and third-party administrators to create a new ecosystem that functions more effectively. It connects 1,100 hospitals and 10,000 doctors, who employ information sharing to deliver better service, the study concluded.

As more businesses adopt cloud computing, they will find they have a choice of tweaking existing goods and services to improve the business; developing new operating capabilities that transform the business; or disrupting existing patterns in their own operations and their competitors to create new value chains, changing their industry's economics.

"I'm a strategy guy," said Berman, rejecting the first two options. "With cloud there may be many possibilities to create an entirely new offering" instead of just incrementally improving an existing business, he said.

Most business managers are thinking of cloud computing as simply a variation on traditional IT services. "There's a broader opportunity here for business model innovation," he said.

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