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Cloud 2.0 - Taking business innovation to greater heights
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Highlights
- Cloud 2.0—is more about addressing what businesses need to achieve their purpose than it is about IT infrastructure.
- The true impact of Cloud 2.0 can be seen in how it enables the next level of edge computing, AI or the Internet of Things (IoT) and helps organizations across industries to harness the power of these modern technologies
- .Cloud 2.0 empowers businesses with an innovation-led transformation mindset that helps them leap to the future.
In this article
In this article
That there’s no digital strategy without a cloud strategy is a given. Today, we can go beyond that and safely say there is no business strategy without a cloud strategy. Cloud technologies have become a mainstay of an enterprise’s agenda and key to achieving sustainable growth.
As a unifying digital hub that brings multiple powerful technologies to life, cloud has accelerated digital and business transformation by years. The way entire economies shifted to cloud-based, contactless ways of buying and selling during the pandemic is proof enough.
The next big wave of business growth and transformation that’s powered by cloud—what we call Cloud 2.0—is more about addressing what businesses need to achieve their purpose than it is about IT infrastructure. Sure, serverless cloud allows companies to focus on their core business without having to worry about IT infrastructure or managing servers. However, the true impact of Cloud 2.0 can be seen in how it enables the next level of edge computing, AI or the Internet of Things (IoT) and helps organizations across industries to harness the power of these modern technologies for business innovation.
The three horizons of growth led by cloud
First, organizations focus on building their digital core. At the second stage they use cloud-native capabilities to come up with business innovations. The third horizon is about driving exponential value by orchestrating or participating in horizontal ecosystems. We believe that many large enterprises are traversing the second horizon today.
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Cloud 2.0 is synonymous with business transformation
With a strong digital core in place, companies can use cloud to extend existing products and offerings to drive growth. They can reach consumers in new ways by incorporating additional digital channels. Their expanded use of intelligent analytics provides ground-breaking insights. They can reshape business processes to deliver greater efficiency and better customer and employee experiences. And fueled by cloud-native capabilities and technologies such as AI, machine learning, and low- or no-code platforms, they can innovate and reinvent themselves.
In Cloud 2.0, technology is not something to adopt, but a strategy for business transformation and growth itself. If cloud was earlier seen as a way of future-proofing enterprises’ technology infrastructure, today it’s a means of future-proofing the business itself. Cloud technologies were first seen as a means of building resilience, security, and lowering costs through models like pay-as-you-use. Today, it’s recognized as a way to achieve faster speed to market, a quicker response time to customers, and as a framework for rapid innovation and new business model development.
The native capabilities of cloud hold an exponential potential for business innovation and growth—companies have only realized a small fraction of the possibilities.
The potential of Cloud 2.0 already on display
Today’s cloud workloads represent just 20 to 30 percent of what the potential could be, but the transformative power of Cloud 2.0 can already be seen across many areas:
- New business models and products: Think how cloud platforms are enabling the shift from products to product as a service. Or helping entrepreneurs in small towns and villages reach customers thousands of miles away. Cloud platforms have become core to an organization’s innovation strategy. Whether through an application or advancing a business model, new capabilities are being built on these platforms like this storied global financial services company did. It progressed from having its business model disrupted by new competitors to becoming an industry disruptor, offering new services such as regulatory compliance and risk management consultancy services in addition to cross-border money transfers thanks to cloud-based services. Japanese tire company Toyo Tires reinvented itself from being a manufacturer of products to a digital service provider, digitizing its knowledge of tire performance and maintenance to generate more timely insights and redefine its tire-as-a-service business model using cloud.
- Elevated customer experiences: Adopting cloud platforms, many of which have been designed for multichannel communication, is helping companies support customers better. It’s enabling them to reduce wait times for customers, increase interaction, and enable 24X7 self-service. For mass personalization with a focus on the segment of one, cloud is a game changer.
- Meeting sustainability goals: There’s rising pressure from investors and customers for companies to become more sustainable businesses. Cloud can help. Companies can reduce their carbon footprint by choosing greener cloud service providers that use renewable data centers, and through remote work and improved efficiencies in application development.
- Autonomous intelligent operations: AI-powered solutions make it possible to deliver services autonomously. This is applicable across a wide variety of areas, such as inventory management, financial reporting, personalized learning, tailored recommendations, and the diagnosis and self-healing of IT systems.
- AI-driven, real-time insights and decision-making: Across industries, the power of three—cloud, AI, and advanced analytics—is helping companies gain a deeper understanding of customers and make smarter decisions quickly. Maersk, for instance, uses real-time data to give visibility of ambient conditions to shippers, allowing them to make quick decisions. Damen Shipyards, a Dutch shipping company, is repositioning itself as a maritime solutions provider rather than just a shipbuilder. Leveraging a connected vessel platform, it shares and uses data from its partners in the maritime ecosystem to enable cloud-based predictive maintenance, provide access to remote services, and ensure up to 12% savings in fuel, as well as increased safety and improved operational efficiency.
- Restructuring businesses. Modular cloud business architectures help in inorganic restructuring of businesses, bringing about ease of acquisitions and divestitures. With microservices, containers, and cloud platforms that support integration of servers, applications, and systems, cloud technology can play a key role in making mergers and acquisitions more successful. One example is that of a European professional services company that handled 80 acquisitions in a 5 to 6-year period.
Simply put, Cloud 2.0 empowers businesses with an innovation-led transformation mindset that helps them leap to the future.
Creating exponential value with purpose-led ecosystems
As companies mature in using cloud-native capabilities to refine innovative business models, they prepare themselves for a purpose-led, higher-order transformation in the third horizon. The pandemic reinvigorated the discussion around purpose, with more and more organizations reflecting not just on their economic objectives, but the overall reason for their existence. Many have made it their goal to contribute to a better future, whether it’s by fostering healthier communities or nurturing our planet for future generations. And going beyond lip service and tag lines, many are ensuring purpose is being baked into operating and business models.
We have found that sustainable, purpose-led businesses are shifting from delivering point-products or point-solutions to meeting holistic purposes. For this, they are open to collaborating with competitors and partners across industries, government, academia, startups and others, often through platform play. Take the case of Vitality—it’s no longer just a medical insurer, but also an orchestrator of wellness. One of Vitality’s programs enables their diabetic customers to track activities using an Apple watch app and reap a reward in the form of lower insurance premiums if a certain goal is met. AT&T’s stated purpose is to help people create connections with each other and with what they need to thrive. It’s doing so by investing in digital literacy programs to bridge the digital divide and enabling high-quality remote healthcare. Energy company Total no longer just produces and sells fuel but is reinventing itself as a responsible energy major, providing affordable, reliable, and clean energy. Each of these companies has set in motion a transformation program, led by cloud and other technologies, to future-proof themselves.
As organizations progress along the cloud continuum toward the third horizon, they can unlock exponential value for themselves and for their partners in their ecosystem. Australia’s energy market operator AEMO has done this by transforming the energy market in Australia. Through a big data and AI-infused metering data management solution built on cloud, AEMO could move from a 30-minute settlement of buying and selling energy to a five-minute settlement (5MS) and, in the process, help smaller renewable energy providers compete in the market.
While these are excellent examples, we’re still a few years away from truly cloud-based rich ecosystems. To get there, what’s required is a shift in thinking. Focusing on perpetual value creation leveraging collective knowledge, providing a holistic experience to customers, collaborating with partners and competitors, catalyzing cross-domain innovation with cloud-based platforms, among others, will be critical.
The promise of Cloud 2.0 is the promise of the future
It’s an exciting moment in time when “boundaryless cloud” gives companies the ability to transcend not just enterprise boundaries, but also industry boundaries. In other words, they can look at innovations in completely unrelated industries and adopt those innovations for their own purposes, making themselves ever more relevant to their end customers. Combine it with a cloud and business strategy to continuously invest the gains from cloud—be it savings from hardware and development or from cloud-enabled automation and data analytics—to fuel greater innovation, and organizations would be setting themselves up for future success.
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