Although adopting cloud technology is well-known for optimizing cost and delivering scalability, few companies have fully explored the cloud’s potential to enable innovation. In fact, a common trap companies fall into is allowing their initiatives on cloud-enabled innovation to become initiatives on optimization – reducing CapEx spikes, minimizing cost around infrastructure and app maintenance, and enabling rapid scalability. While these are certainly useful value propositions, cloud-enabled innovation is about how the cloud can drive top-line growth. The truly transformative potential of the cloud isn’t about doing the same thing faster, cheaper, and at scale; it’s about harnessing cloud to explore unchartered opportunities.
Businesses that are looking to the cloud as a vehicle for innovation should approach it in the following ways:
Fundamentally, these approaches draw on the plug-and-play nature of cloud native technology, which enables business to reduce the risk and cycle time for exploring, creating, and validating new opportunities – whether they be technologies, partnerships, or business models.
Starting up a new, separate cloud native business is one of the key strategies traditional businesses can leverage. With a landscape consisting of legacy technology and processes, heritage businesses are limited in their ability to accelerate at the same pace as cloud native competitors. Traditional businesses predictably saw this when they first encountered cloud native entrants that could quickly evolve their products and experiences. Those brands that could effectively compete with new entrants in this stage had to quickly establish their own cloud native businesses as well.
However, becoming your cloud native competitor doesn’t necessarily mean spinning off a cloud native replica of your business. It also means being able to intelligently manage expansion by quickly testing how core capabilities can perform as the foundation for investments in business adjacencies or by launching simpler, more accessible versions of complex products. As cloud native technologies have proliferated, businesses are more empowered to execute a new venture in which all core business functions and customer-facing systems are delivered through plug-and-play components. By starting a new separate, cloud native business, organizations can quickly compete and not be shackled by their legacy environments.
Another strategy businesses can employ for cloud innovation is to establish an ecosystem or play a radically different role in another ecosystem. The interoperability of cloud native technologies and standard integration via APIs and microservices has enabled businesses to create new joint ventures through which partners can be one or many third-party companies, public sector bodies, or the nebulous hoard known as “the crowd” (i.e. crowdsourcing). Being able to rapidly create and operate in these ecosystems has enabled organizations to deliver value to millions. The cloud fosters unexpected partnerships by encouraging co-experimentation with radical new technologies, giving businesses and their partners the opportunity to learn what they need to build without having place large bets on whether certain solutions will pan out. This is cloud innovation, experimenting to find a product or solution that can deliver value and quickly bringing it to market as technically and commercially viable, robust offering. Businesses can play a role in facilitating this experimentation by providing an ecosystem for collaboration, or by leveraging their existing assets to enter an existing ecosystem and partner with other organizations to learn how those assets can be used to extend or redefine experiences.
The final cloud innovation approach is for businesses to use cloud technology to create previously impossible experiences or products. The major cloud service providers (CSPs) are innovators in their own rights in this area. For example, AWS offers an in integration with Amazon DeepLens so that developers have access to a deep-learning enabled video camera with which they can build solutions that process images and videos. Google Cloud Platform’s Dialogflow accelerates the development of AI-enabled voice/text conversational interfaces. Microsoft Azure stresses the cloud’s role in making its augmented reality HoloLens feasible. All of these offerings take cutting edge technologies and deploy them into innovative offerings that organizations can adapt for their own business needs.
For businesses, the easiest thing they can do with these and other innovative plug-and-play offerings is leverage them to optimize existing experiences. What isn’t easy, however, is understanding how unique offerings and other emerging technologies can be applied to create something truly different. It’s a challenge that requires organizations to define the unknown, but the best way to forge a path to defining disruption is to continuously and cross-functionally explore and ideate how these technologies can be relevant to new use cases.
To realize innovation on the cloud, businesses need to direct investment towards innovation, not just optimization. For a long time, the cloud has been just infrastructure, and innovation in the traditional sense has really been about finding newer ways to optimize capabilities such as capacity, availability, and service levels (back to faster, cheaper, at scale). To truly innovate, businesses need to enable a future that is blind to optimization – this means having the right stakeholders that drive an innovation mindset. Next time you’re in a cloud strategy meeting, look around the room: How many people are pure infrastructure? Is anyone from the customer experience team there? What about product development or corporate strategy? If you can manage to get a team with this level of diversity, now you’re ready to springboard your vision for cloud-enabled innovation.
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In 2023, enterprises face a daunting task: Controlling costs and, at the same time, deriving greater value from existing cloud investments.
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