The transformation of IT into the cloud was mooted for years, however, it was not until Amazon released its Elastic Compute Cloud in 2006 that the idea of the cloud was truly popularised. Whilst it has taken time to fully develop the idea and build trust, the cloud is now a fully-fledged technology. We all use it every day without even realizing it, whether using social media or watching a film. The cloud has been transformative to the world around us .
Before we look at how and why the cloud will continue to play such an integral part in the future, we first need to look back at lessons of the past. It may come as a surprise, but the cloud-enabled enterprise of today can learn a lot from Henry Ford in the 1900’s and the dotcom companies almost 90 years later.
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Henry Ford: making manufacturing dynamic
Before electricity, the factory setup was vastly different. Power was generated by steam engines that produced mechanical power which was then distributed throughout the factory via a belt drive. The advent of electricity, saw steam engines replaced by local electricity plants. However, efficiency did not immediately improve, and costs increased. This was because, while the source of power had changed, the factory itself had not transformed.
Henry Ford was the true catalyst to change. His breakthrough was to reimagine the factory utilizing electricity, where power was transmitted by cables directly to machines utilizing electric motors.
Manufacturing became dynamic. The car was moved around the factory on a production line, with successive workers performing repetitive tasks utilizing powered tools to build the car. This led to massive increases in productivity and lower costs to the consumer. Factories were able to produce cars in the millions.
The dotcom boom: disruptive visionaries
A similar trick was repeated 90 years later. Technology advances on their own are not enough. You need to reimagine how you can consume and utilize the change. The early internet pioneers saw that adding a website to an existing business seemed only to increase costs with little immediate benefit. What visionaries such as Amazon and others were able to do to their advantage was reimagine the enterprise so that the internet was the business. From supply chains to delivery models and in-depth understanding of the consumer, they were able to transform and dominate industries. Realizing massive competitive advantage, whole industries were transformed. We even invented a new term to describe it: disruptive technologies.
In many ways, Amazon is the Ford of the dot-com boom. Further, it has continued to develop the model and remained innovative, expanding into home entertainment with Amazon Prime and grasping the concept of a smart home built upon the Internet of Things with Alexa. It is dominating whole industries that seemed totally disconnected from its early business of selling books. The key has been to apply the underlying business model to all forms of retail; a physical shop presence has been replaced by logistics centers and a front-end website.
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The digital companies not constrained by their legacy
Ford and Amazon both pulled off the same trick. Rather than being constrained by the past, they were able to reimagine the enterprise by grasping the potential of new technology at their fingertips.
The internet in its current form went ‘live’ in 1991, with the dot-com boom happening around 10 years later. While the market got ahead of itself, the early predictions were correct. Dotcom companies have gone on to transform whole industries.
In many ways, cloud finds itself in a similar position. References to cloud computing first appeared in 1996, but it has taken time to fully develop and build trust in the marketplace. Today, the cloud is a fully-fledged technology and is transforming the world in which we live. We all use it every day without realizing, whether using social media or watching a film. The success of the cloud has been most notable thus far in the consumer market, where newer companies in the digital age were early adopters, not constrained by their legacy.
It has enabled new industries to grow rapidly without large capital costs, expanding their IT footprint bit by bit as demand increased, utilizing utility pricing as they went. The market has changed so much that the worlds of gaming, e-commerce, social media, and entertainment are all now predominantly cloud-based.
The need for right to left thinking
Whilst cloud computing has dominated industries in the consumer realm, the corporate market has been somewhat slow to embrace it – until now. There is often a natural in-built conservatism that is difficult to shift. The option of ‘doing it the old way’ no longer exists for the corporate market. Change has become inevitable.
But just how far are we along the journey? In comparison to the industries explored above, it’s fair to say that the cloud is still in its growth phase. However, market maturity is fast approaching. Today, the conversation on the cloud journey is all about how we get there, not what we will do when we arrive. The thinking is predominantly left to right, not right to left. Left to right thinking is about becoming good at migrating to the cloud, testing the waters, proof of concepts. Right to left reimagines the IT function and the enterprise in a cloud-based world and then works out how to get there.
Few will disagree that the future is cloud-based. Resistance is futile. Laggards from the corporate market are now playing catch-up. They are on a steep learning curve that will necessitate changes in how they operate. Not just their IT function, but their entire business. It will not be in vain. After all, businesses that grasp these opportunities in the right way will be the ones to benefit both for themselves and their customers.
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Adrian Davey, IT strategy consultant, Agilisys