Using cloud to achieve competitive advantage

Why should you care about cloud?  Because your competitors probably aren’t paying any attention to it.

Cloud is about reducing costs, right?

If you talk with the CTOs and CEOs of many businesses, you will hear a similar story despite the industry they compete in.  “Our products look similar to our competitors’, and now we are being force to focus on cost to expand into new markets.”  Product differentiation takes investment and can be hard to measure, yet costs are easy to measure and savings can be immediate.  It’s no wonder that most discussions about cloud focus on reducing costs by outsourcing IT.

Cloud is about product innovation.

What type of response would you expect if you asked Clay Christensen, author of the Innovator’s Dilemma, what he thought about cloud computing?  In case you aren’t familiar with Christensen or his book, the premise is perplexingly simple:  If your innovation doesn’t make your current products obsolete, your competitors’ innovation will.

Christensen would probably say that technology companies who figure out how to use the capabilities of cloud to disrupt their current market will be successful.  The companies that struggle to embrace cloud will fail.  If you think that sounds too fluffy to be useful, consider that Andy Grove invited Christensen to Intel for a 20 minute discussion that lead to Intel’s creation of the Celeron processor.

I expect that Christensen and Randy Bias (CEO of Cloudscaling) would get along well.  In a recent interview with the Windows Azure Blog, Bias summed up the opportunity in cloud computing perfectly:

“If we just continue doing IT the way we already do it today, I think we’re going to miss the greater opportunity. On the other hand, you ask your developers, “What can you do for the business if I give you an infinite amount of compute, storage, and network that you can turn on for as little as five minutes at a time?” That’s really the opportunity.”

I encourage you to read the whole thought provoking piece.

But my product is different . . .

If you are like most of the CTOs out there, you are probably struggling to imagine a new product offering that leverages cloud.  You might even be convinced that your product is different – that there are no good opportunities for your customers.

You are not different.

To prove Randy’s case, let’s look at Netflix.  Years ago, Netflix revolutionized the DVD rental business by attacking the DVD warehousing business, which was previously composed of local stores that had to maintain large inventories conveniently located in high-cost real estate. Netflix replaced the expensive store fronts with a website and some cheap warehouses.

If you went back in time two years ago to become the CEO of Netflix, what opportunity would you see in cloud computing?  A business mailing DVDs through the mail doesn’t seem like a good fit for cloud computing at first glance.  The obvious fit seems like you could focus on trying to lower the costs of running your website.

Or you could destroy your current product by creating a better product.  That is exactly what Netflix did by introducing a streaming service powered by cloud computing.  And shortly after launching the service, Netflix customers now receive more movies through their streaming service than through the mail.

Opportunity is knocking

When disruptive technologies like cloud computing come along, you can try to wait out the storm or you can ride the wave.  If you are struggling to find a good fit for cloud computing in your product portfolio, why not reach out to our specialized consultants who can help?  Dell OEM Solutions is helping our customers learn about emerging technologies and plan their newest products in just about every industry you can imagine, including your own.

Get started here today.

About the Author: Josh Neland