The Cloud Drives a New Wave of Disruption

In one industry after another, cloud computing has fostered unprecedented changes, allowing startups and staid companies alike to more easily set up operations, scale workloads and build competitive products.

There’s no one size fits all but as Deloitte’s John Seely Brown notes, the cloud has become the catalyst for the emergence of new technology delivery models in many different industries. Companies now use public, private or hybrid cloud models to transform key aspects of their business by reducing time to market, increasing scale, and improving insights garnered from analyzing ever-increasing volumes of data.

Some $118 billion is expected to be spent on the greater cloud ecosystem this year, according to IDC. And it’s not just companies borne in the Internet era getting on board.

“Every company of all sizes can digitize every bit of value they create and bring that value to the marketplace,” says Frank Gens, SVP and chief analyst with IDC (watch the video).

Indeed, the cloud is enabling a tripling in the number of new developers and innovators who can create business value through IT, says Gens. “Together, they are expected to create about a tenfold increase in new killer applications,” he says. “Probably two-thirds of those are going to be focused on specific industries.”

Here are a few examples of how the cloud is disrupting business models – and entire industries.

• Weather forecaster AccuWeather, which provides services to 175,000 clients worldwide and has a viewership of more than 1 billion, uses a cloud infrastructure that lets it handle up to 10 billion data requests each day. The cloud strategy has helped AccuWeather reduce IT costs by 40% even as it scales up in response to the number of devices connecting to the service for updates.

• Transportation startup Uber uses a dynamic pricing model driven by algorithms to set prices in real-time during peak or low demand periods. That’s how it can incent extra drivers to be available when demand spikes. A smartphone app lets customers reserve rides while drivers receive exact pick-up locations. Customers can track the location of their driver as they wait, along with a picture of the vehicle and the name and phone number of the driver. They can pay for the ride using the app instead of cash – all delivered through the company’s cloud-based network.

• Airbnb’s cloud infrastructure lets travelers book rooms, apartments or homes from guest hosts, helping to create a supply of accommodations that never existed previously. Cloud-based forums allow suppliers and renters to share feedback, photos and reviews, adding transparency to an industry where the quality of the guest experience is the litmus test.

• Zillow, which operates the biggest online real estate database in the industry, taps the cloud’s scalability to enable its customers to sift through more than 110 million homes. The company processes more than 3 million new images daily. Company executives reference their use of the cloud to make more accurate price estimates because the system allows Zillow to use sophisticated predictive pricing models.

• SunTrust Banks, which holds more than $17 billion in deposits, transitioned to the cloud from a myriad of complicated back-end systems for services like underwriting and loan origination, after employees complained about difficulty accessing customer information in a timely fashion. 

These examples only hint at the broader shift underway. As more businesses use the cloud to increase their agility, more industries will likely feel the impact of what Harvard business professor Clayton Christensen has famously described as disruptive innovation.