Proponents of cloud computing often insist that one of its biggest benefits is not decreased costs, but greater agility. To them, obtaining infrastructure in minutes rather than months is a game-changer. Of course, as I noted in a column last year, viewing lower costs and increased agility as separate cloud characteristics is incorrect; instead, lower costs and greater agility are, so to speak, two sides of the same coin.
Notwithstanding the confusion regarding cost and agility, many people fail to appreciate the point of agility. For them, cloud computing’s agility offers the opportunity to speed up a lengthy process in an application’s lifecycle; however, they leave the rest of their processes undisturbed. The ultimate result is that one group in the overall IT organization is happy – developers – while for everyone else, it’s business as usual.
As I noted in another column discussing cloud agility, approaching cloud computing in this way is actually dangerous. Using cloud computing to address developer agility without enabling better business agility – which requires streamlining the entire application lifecycle – poses the potential for IT to be seen as self-involved and not contributing to better business outcomes. This is a recipe for “shadow IT,” as business units, dissatisfied with the fact that application timeframes aren’t appreciably shorter, look elsewhere to solve their problems.
However, even if you perceive that the true purpose of cloud agility is to “serve the business,” it’s easy to misunderstand the real potential of cloud computing. The power of cloud computing is not in doing the same stuff faster, it’s doing new stuff that could never be done before.
Of course, we commonly see examples of this – Airbnb, Pinterest and Netflix spring to mind. But people (and I include myself in this) totally underestimate how much innovation is being unleashed by cloud computing, and how this innovation is leaking into every aspect of our society and economy.
Disruption is a word that gets thrown around very easily in Silicon Valley -- where I live – and it’s often applied to less-than-earthshaking ideas and offerings. But dismissing the term because it’s applied to so many trivial projects is a huge mistake. Cloud computing is enabling applications that hold the very real potential of transforming existing industries, redistributing their revenue streams and, yes, disrupting their value chain.
In this series of columns, I will be highlight several examples of cloud-based offerings that are nearly certain to make the future of the industries they address look very different from their recent past. Here, for instance, is a new service that has a 50 percent chance of affecting you.
Eye exams move online
Opternative is a company that has been approved to offer online eye exams that you can do in your home – in other words, it’s figured out how to let people self-test.
Opternative turns a medical procedure from something performed in a physical location near the patient (aka the customer) to a cloud-based service available anywhere, anytime, for $40 ($60 if you want a contact lens prescription).
The first effect of this cloud-based offering would be to reduce demand for optometry services, which in 2012, according to the U.S. Bureau of Labor Statistics, was a field with 33,000 members – a relatively small number. However, this is nowhere near the likely total economic impact of Opternative. It holds the very real potential of dramatically changing the way revenue is distributed throughout the eyewear industry. In other words, disrupting the existing vision correction industry by displacing the prime role of optometrists in examination and dispensing prescriptions for eyeglasses and contact lenses.
Traditionally, optometrists perform exams, and, for the vast majority of customers, sell them their glasses/contacts as well (in many cases, through an affiliated, on premises optician). While there have been dispensaries that could sell eyewear without also performing the exam, there was a lot of friction in the process, much of it imposed by optometrists themselves.
[Related: Google is developing a smart contact lens]
Optometrists typically resist giving the customer his or her prescription, citing potential health issues if the prescription is used to source eyewear elsewhere. While this might be a valid concern, it’s also likely that the majority of optometrist revenue is realized by selling eyewear, not performing exams, so the reluctance to share prescriptions might be attributed more to income protection than to possible medical concerns.
With Opternative, customers can now source their eyewear from any provider…including, of course, an optician. However, it’s more likely that prospective customers will turn to a low-cost local provider, one that specializes in high volume and lower prices (and, of course, from online boutiques like Warby Parker).
How big a market is this? According to Essilor, the leading manufacturer and wholesale distributor of optical lenses in the U.S., more than half the adult population wears glasses (a number that only increases as people get older). By my back-of-the-envelope calculation, if one assumes an average cost of $250 per pair of glasses, this is potentially a more than $43 billion market. By reducing the role of the optometrist at the top of the eyewear value chain, Opternative could affect the direction and size of the revenue stream away from current market leaders to a new set of providers.
Put another way, by migrating a portion of the existing value chain from the physical to the cloud, there will be a huge impact across the entire industry.
Opternative represents how cloud computing is truly disrupting an existing industry. And it’s a good example of how replacing one part of an industry value chain with a cloud-based offering can have unexpected effects in parts of the industry that remain in the physical world. I believe that the company is one among many that will serve as catalysts to shake up established industries.
In other words, we’re in the early days of seeing how cloud computing is enabling the creation of entirely new ways of delivering value via digital-based offerings, often with surprising changes for everyone involved, from the product or service originator to the final end user.