Demand for cloud-based services and delivery platforms has grown exponentially in the last few years. Thanks in no small part to the demands of innovative start-ups, app developers, content providers and established software players. This ban of old and new have turned to the cloud in unison for the same reason – seeking a cost-effective, scalable platform on which to build services and delivery mechanisms.
Take for example the high-profile music streaming service Spotify. As the series has grown from its initial beginnings in 2008 as a start-up in Sweden, the service today has more than 75 million active users across over 50 countries. It’s serving over 30 million tracks to those users, delivering content via a range of web interfaces, dedicated mobile and desktop apps as well as embedded appliances such as smart TVs and streaming boxes.
It requires a significant amount of scalability, flexibility and resilience to ensure it meets the always-on expectation of users and to cope with spokes in demand, such as around the launch of an album from a high-profile artist.
To meet demand, Spotify recently chose the Google Cloud Platform to host some of its infrastructure. Doing so is interesting in that Google has its own music streaming service, Google Play Music, that competes with Spotify. Nonetheless, the appeal of a cost-effective, scalable and reliable shared services platform can trump competitive considerations for both sides.
Not unrelated to this development is that the movie streaming service Netflix chose Amazon Web Services to power its operations. Netflix is the primary rival of Amazon Prime Video, yet the two businesses will effectively share the same cloud-based infrastructure. If ever there was a sign that the technology world is becoming more effective, then arch rivals sharing the same cloud platform would be it.
As companies like these grow, the demands for more storage, processing power and bandwidth will grow with them. Delivering these resources to services that need them to operate means creating new platforms of collaboration and innovation.
Microsoft has also identified the opportunity that shared cloud services platforms can offer. It has re-engineered its business around its cloud platforms in an attempt to wean itself away from its traditional bread-and-butter software business. Meanwhile, Google executives are predicting that by the end of this decade revenues from its Cloud operations could surpass revenues from advertising on its search engine.
These companies and many other like them are learning that it pays to tear down walls and embrace the Open Innovation movement. Minimising cost and accessing infrastructure that simply would not be viable to build in-house for one customer is a powerful motivator.
Today, rival firms consider renting space on the same cloud platform to be preferable to building out and maintaining their own infrastructure- something that can pull focus from the company’s core activity and soak up considerable cashflow. Using existing cloud space opens up room for that organisation to become more effective. It becomes faster, more responsive, and more profitable. And when these events occur, the company becomes more efficient as well.
Whereas in the days before shared cloud infrastructures, enterprises sought permanence in everything they did. Now, they seek how best to effectively complete a project or an iteration of a product or service, and move on to the next one. Being unencumbered with legacy hardware and even certain departments when you can instead depend on collaboration is now the prime mission of the best and most forward-looking companies.
Remember the days when outsourcing was a cure-all for a global corporation’s problems? The idea was that a company could hire a number of outsourcing specialists to oversee tasks and actually have them bid against each other in order to keep costs to a minimum. Then the company could, in theory, have the time and resources to concentrate on strategy where it counted – strategy that would remain firmly within the company’s grip. All in all, this corporate structure was focused on capturing the greatest possible efficiencies at every step of the process.
However, an interesting thing then happened: The Open Innovation movement suggested that a corporation would be better off if it were to seek to create platforms of engagement in which organisations of all kinds – established vendors, new market entrants, and even the competing outsourcers of old – could collaborate and find ways to contribute to making the enterprise more effective.
The more effective the enterprise became because of the all-inclusive platform, the more robust its operations would become. It could create even newer platforms to engage every organisation involved. In the end, those who measured value within an enterprise noticed that creating effectiveness around its core was more lucrative than gaining efficiencies here and there, often at the periphery of the business.
Benefits aside, we should not kid ourselves that the Open Innovation movement is perfect. It is not without its flaws. For example, when a man, Zach Brown, successfully raised $55,000 using a Kickstarter crowd funding campaign to buy potato salad ingredients, the stunt called into question the effectiveness and viability of cloud collaboration without controls.
However, it’s reasonable to suggest that potato salad fundraising is an anomaly and that such services have generally delivered on their shared objectives without the need for heavy regulation. There’s no doubt that platforms such as YouCaring and GoFundMe help people afford goods and services they otherwise wouldn’t have been able to without crowd-funding platforms.
Traditional banks, however, have been quick to roll out their own platforms in the same image as these services, spurred on by the cloud-based collaborative model. A recent report by Infosys found that established banks can be exceptionally good at rolling out new APIs and apps that are just as agile as those from younger members of the Open Source community.
Emboldened by their new platforms, banks are reinventing themselves as technology organisations, and are even shedding physical form such as branch networks and paying-in books in favour of an app-centric, cloud-hosted existence. They already have robust middleware that support their APIs and are adept at building strong partner ecosystems. Banks have been building multi-party platforms for generations, today’s cloud environment need not be any different.
By no means have traditional corporate rivalries waned. But they are now using each other’s talents and products on innovative platforms that not only serve as conduits to collaboration but also as new ways to disrupt markets and compete against each other.
Ganapathy Subramanian, VP & Solutions Head – Platforms, Infosys
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