As recent surveys are showing around 80 percent of all start-ups globally are using cloud-based services for their IT requirements, should established businesses look to speed up their own adoption plans for cloud based services? Firstly let’s take a look at what the main reasons are why start-ups are using cloud over traditional services.
Costs are always a big consideration for any new business and the first thing that cloud allows is the removal of capital expenditure, but quite a few of the established software as a service (SaaS) vendors are increasingly wanting yearly rental charges in advance. So what does this mean? Yes there’s no capital outlay but it does require businesses to fully investigate the options available and ensure that a true pay as you go/grow pay plan is available.
Business focus is a major priority for a new business and cloud allows a business to focus on its core competences; its go to market strategy and ultimately becoming a successful business. This is achieved without the costs and distractions that building and managing their own infrastructure brings, let alone the costs and time to deploy the application sets a new business require.
One of the major advantages a new business has is its ability to change and adapt, this agility is a major factor in determining how quickly a new business will grow. No matter how well a business is planned if it can’t adapt to the unknowns that will emerge, especially during the first 18 months as it establishes its self, it’s not likely to survive or, at best, it won’t perform how the business owners and investors had planned.
This is why cloud is now so important for start-ups as it allows them to operate in a true agile manner, changing products, processes, access models as well as flexibilities within cost plans to allow agility with budgets.
These three core attributes are allowing modern start-ups to start, grow and operate with a much lower cost base, which is under-pinned with agility. This will, in turn, allow them to be very aggressive in their go-to-market strategies, beating established business not just with price but also delivery timescales, project agility and focus.
So, where does this leave established business? I believe we are rapidly approaching a crossroads, where established businesses need to not only start creating a cloud strategy but also implementing it. When you look at the three main reasons I’ve discussed that start-ups are choosing cloud services and what they bring them, I see three areas that are just as important, if not more important, for established businesses.
As the current batch of start-ups become established over then next two to three years, if an existing business hasn’t embraced the same technology, service models, cost models and the agility they bring, I believe we will see quite a few established businesses being over taken by these newer agile organisations.
Over the last few months I’ve seen quite a few established businesses looking at implementing new products or upgrading their existing systems with non-cloud based technologies and expecting these to last them at least another five years. The reality is that, even though these technologies will physically last, the business will have made changes before the five years are up. These changes will bring many challenges due to the timelines they will need to be implemented by, as well as the increased costs that changes like this bring.
CEOs and CIOs with established businesses have to start planning now for the changes that are coming, not in two or three years’ time, else it could easily be too late. We are now at the beginning of the true wave of change around cloud computing, it’s now the method of choice for start-up companies and it’s rapidly establishing itself as the “factory of the 21st century”, as more and more companies embrace it.
Like all true disruptive technologies there are people, and businesses, that either won’t embrace it or will choose a slow tactical approach to the change, thinking that it’s not really going to affect them. Therefore, I don’t think we have seen our last ‘Kodak moment’ type of failure.
By Julian Box, Posted 5th June 2012.