Friday, June 3

Creativity and Cloud Economics

For reasons which I won't go into here, I often find myself rabbiting on about the relationship between "innovation" and "cloud". 

This isn't just some pun on "Blue-Sky Thinking", but rather a serious point about the impact that cloud computing could have on the prospects for new business ideas.

So what's the link?

Cloud computing is the provision of IT and business services as a utility:  That's to say, under arrangements where the consumer pays per unit, and can consume as much or as little as is needed in any given period.   The more the consumer "turns the tap", the higher the monthly bill.

This all sounds terribly simple, and of course it is simple at a conceptual level.   Making a successful transition to that model though is a venture not to be undertaken lightly - or at least not without careful planning and thorough modelling of the projected benefits.

But perhaps it's worth the time and trouble, especially for organisations in competitive sectors ...

Picture the scene:  Your team has just conceived the most promising new business idea in years.  It centres on a new product, but is likely to bring at least a million new customers in the UK, and might allow you to move into new markets too.  Your company is uniquely well-placed to launch the product so hopes to get first-mover advantage, but others are sure to be close behind.

The design is simple, as with all great ideas, so the prototypes are ready in days, and your marketing team have rallied round magnificently.

But hang on ... your web server platforms are at capacity, and you don't have the CRM system which is critical to the sales strategy.  You're also struggling with business case approval because there's a sunk Capex cost in excess of £5M before you can kick-off, and your worst-case revenue estimates are only £4M.  Ooops.

This is where "cloud" comes in:  If you're in the cloud (or ready to move there) then you'll only have to wait a few hours to get the IT you need.  If not, we'll be talking weeks or months.

Better still, because of the per-pay-use billing model, you only need to pay for what you need.  Your business case now shows less than £1M of up-front investment.   All the other costs are only incurred if you actually make the sales you're hoping for.

So Cloud has the potential to shake-up our industries, wherever they're constrained by traditional IT.  Just buy units of "compute" immediately, when you need them, and focus on what differentiates your business instead.

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