Competing with Cloud-Based Businesses

Accenture, a global management consulting, outsourcing and technology company that has a presence in over 120 countries (and a staff of over 246,000 people) recently released a report titled ‘Where the Cloud Meets Reality: Scaling to Succeed in New Business Models’.

The report was based on phone and in-person interviews with 40 IT executives, operations executives, and business unit executives in 30 high-tech industry companies. All the businesses interviewed are Infrastructure-as-a-Service, Software-as-a-Service and Platform-as-a-Service cloud-based businesses. The Interviews started in May 2011 and ended in November 2011.

According to the research findings in ‘Where the Cloud Meets Reality: Scaling to Succeed in New Business Models’, high-tech companies are having a hard time transforming their traditional business models of shipping packaged software or hardware products to business models that provide new services based on cloud computing, the latter being more complex. The goal of this research was to come up with insights that will help companies that are interested in cloud-based business models.

According to the research findings, senior management executives in most companies lack the understanding of how the complexity of cloud-based business models impact operations in almost all functions of their establishments. The disconnect is significant since the interviewed companies intend to adopt over 5 business models for revenue generation by 2015 and it is likely that most of these models will be based around cloud computing. The companies interviewed had an average of 2 to 3 models today, adding a lack of security to the outlook of these companies.

Tech companies that use the old models are having a hard time competing with those that have already adopted cloud-based computing/services. Theses companies are being faced with operational challenges as they try to figure out how to support the new models and to deliver the experience that enterprise customers are demanding. These companies are having a hard time coping with the disruption that the change is causing.

According to the Accenture research, there are several steps that companies that are changing to cloud-based computing/services can take. They need to determine the exact business models they need so that they do not invest money in the wrong place. They must identify and create the distinctive capabilities that are needed in the delivery of business in the cloud.

Accenture also added that these businesses also need to develop segmented operation models to deliver the service capabilities and to save money whilst enhancing the customer experience. They also need to design governance model that will help in the making of such critical decisions as decisions on resource allocation.

What are you thoughts on these movements in business operations and resource allocation? Provide your comments below.