Like many technologies, the real value of cloud lies not in the technology itself but in the operational changes it enables. Here are just a few ways that businesses can use the cloud to achieve competitive advantage:
- IT staff can be freed from routine maintenance to focus on more strategic projects.
- Businesses can quickly launch new applications in areas such as predictive analytics and customer relationship management that improve revenue-per-customer and point-of-sale upsell opportunities without lengthy installation and configuration processes.
- The cloud provides a data integration layer that eliminates labor-intensive extract, transfer and load (ETL) procedures and enables analytics to be applied quickly across multiple data sources. Specialized cloud providers can pull data from a company’s on-premise systems and combine it with public and proprietary data sources to yield new insights. This capability would be almost impossible for many smaller businesses to achieve without the cloud.
- Companies can use cloud services to add functionality to their ecommerce sites and call centers to yield rapid benefits. A simple example: the ability for customers to sign up for a mailing list or to pay with Bitcoin. More advanced examples include the addition of customer ratings, configurators or recommendation engines that suggest related products for a customer to buy.
- Services can be exposed through APIs to enable business partners and customers to plug into a company’s cloud. For example, data from wearable fitness devices can be integrated into a customer’s health record at the doctor’s office, or order information can be automatically exported from a supplier to a customer’s accounting system.
- Multiple cloud services can be integrated with each other to build new products or insights. For example, tweets can be parsed by a sentiment analysis engine and combined with a coupon service to deliver offers to Twitter users who express certain needs or opinions.
The importance of competitive advantage to cloud deployment decisions was underscored by a recent survey by 451 Research underwritten by Microsoft. More than half of the respondents cited factors relating to improving technology quality, helping grow the business and adding capabilities that couldn’t be built internally as their principal reasons for moving to the cloud.
“The biggest impact of the cloud is the ability to accelerate the rate of innovation for the business,” says Frank Gens, senior vice president and chief analyst at IDC. “The cloud is enabling a tripling in the number of new developers and innovators who can create business value through IT. Together, they are going to create about a tenfold increase in new killer applications.”
Nowhere is cloud-enabled change more apparent than in the automobile industry, where the race is on to make cars safer, more reliable and more comfortable for passengers through the use of information. The Chevrolet Volt already has as much electronic sophistication as a Boeing 777, according to Dr. John Kershaw, a consultant who ran General Motors Corp.’s technical training programs in six states for 25 years.
And that’s just the beginning. By 2020, Kershaw expects the average car to throw off more than one petabyte – or the equivalent of 500 billion pages of printed text – of information annually that automakers, insurers, municipalities, repair organizations and consumers can use to protect riders, get people to their destinations more efficiently and reduce traffic snarls and pollution. “Competitive advantage is now being defined more by the IT that’s in the vehicle than by traditional design,” says IDC’s Gens.
Cloud computing is essential to the car of the future because cloud services can not only stream software updates and new services to vehicles in motion but also monitor information from sensors in real time. “When we get software through the cloud, we get updates and new features at three to six times the rate that we had with traditional software,” Gens says. “We're not talking about fixing bugs; we're talking about driving new waves of innovation to the market at a rapid rate. Companies that don't use the cloud to drive this new value and innovation to the marketplace won’t keep up.”
In the retail sector, big data in the cloud is fueling insights and customization features that are turning mass markets into markets of one. Pier 1 Imports Inc., for example, has enlisted the cloud to deliver a more engaging shopping experience for customers and a competitive advantage for the retailer.
Pier 1 set out to extend the unique shopping experience of its more than 1,000 stores throughout North America to online customers. It partnered with cloud-based analytics firm MAX451, Inc. to take advantage of a pilot program for Microsoft Azure Machine Learning Solutions that enables Pier 1 to make specific product recommendations to both online and in-store customers based upon past behavior and predictive analytics.
By delivering better-targeted offers, the retailer has improved response rates and enhanced customer loyalty. “We don't want to fill up our customers’ inboxes with offers that aren’t relevant,” says Pier 1 CIO Andrew Laudato.
Thanks to cloud services, companies like Pier 1 can now tap in to this kind of advanced technology without hiring teams of data scientists or buying budget-busting hardware. “It wasn’t that long ago that you needed really big computers to do big data,” Laudato says. “With the Microsoft cloud we're able to quickly upload our data, ask the questions and get the insights to operationalize that data.”