I can still recall the day in 2014 when I was presenting the benefit of using AWS. Unlike United States or other western countries, the cloud adoption rate in APAC is very fastbut the penetration rate is very slow. The top 3 questions that enterprise customers asked are:
- Why I need to move to AWS?
- Is Public Cloud secure?
- The cost of running applications on AWS is very expensive
After 4 years, everything has changed. Customer no longer ask, “Why I need to move to Cloud” but “How can I move to the Cloud quickly”. If you dive deep and understand AWS, AWS is started their business in 2006 and it is the pioneer of the shared economy. In fact, it is very interested to know that AWS is founded 2 years ahead of Airbnb and 3 years ahead of Uber. No only AWS is the pioneer of the shared economy, it embraces them. Airbnb, Lyft, and Gobee.bike are the customers of AWS.
AWS gives them a platform to fail in a much lower opportunity cost and increase the pace of innovation. And that’s the reasons after 2006, the number of startups are increasing.
Conventional Business Models are under attack
As Deloitte’s Shift Index shows, the average life expectancy of a Fortune 500 company has declined from around 75 years half a century ago to less than 15 years today, and heading towards 5 years if nothing is done. So, if we deconstruct a business model into four key components what are we seeing is as below:
- Customers: Customers have more power than ever before. Customers are no longer willing to sign up to long term commitments. They have lots of choice and have much higher expectations. Customers also want to be able to make choices of their own
- Processes: Previous generations concept such as six sigma where in high demand where incremental improvement was a key focus. While this is still true due to the fast-moving landscape its now very important that you have processes that are modular and can be adapted.
- Resources: Size and a fat balance sheet are no longer a barrier to entry. The inverse is almost the case. Asset light business models are emerging in all industries from taxis to accommodation to aircraft
- Cost Base: All about reducing cost to serve. Now we’re at a point where the marginal cost of entry into new markets is almost zero and it is much closer alignment of revenue and costs
In short, the Cloud is changing how we should think about our business and operating models. Cloud computing has enabled new methodologies like continuous deliveries and DevOps to explode and challenge traditional thinking on how you support your customers.
Innovation like a startup in Enterprise
Yes. Enterprise is facing a huge threat right now. And the most scared thing is not the existing competitors but the potential competitors in a startup world. They act fast, fail fast, and once they find a sweet spot, they will compete with you in a totally new form of competition. The only way to survive in this new digital era is that how can a large enterprise can act like a startup?
- Establish a culture of innovation: Everything should start from changing the mindset in the organization. To survive, you need to leave your comfort zone. Large companies need to disrupt themselves or be disrupted. Take Amazon as an example. One of the absolute advantage of its eCommerce Platform is their warehouse system. It keeps the storage cost low and deliver the goods and services more quickly. Amazon didn’t stop here and enjoy their success. They launched Fulfillment by Amazon (FBA). Although Amazon lost its strengths in the technology and warehouse system, it regains the revenue by providing the fulfilment services to millions of sellers around the world. And those sellers can provide 2 days shipping and return services as well. Establish a culture of innovation is a key survival factor for large enterprises.
- Build the innovation lab within your enterprise: Admit it. With thousands of employees, not everyone will be your champion for innovation. There are lots of noises when you are doing an innovation initiative. The mission of innovation lab is to serve as a focal point for innovation programs and activities and it provides a new working environment for the staff to do innovation projects and it proves that it helps to innovating faster, smarter, and cheaper. One of the books I highly recommend is “Sprint” written by Jake Knapp and it provides a framework to solve big problems and test new ideas.
- Experiment new digital initiatives with AWS Cloud Computing: You need to utilize tools for innovations. AWS provides a perfect environment for testing the new digital initiatives. You do not need to go through a legacy procurement process of purchasing hardware and software. You can spin up machines in a few minutes and run your new projects. Nevertheless, if an innovation idea is failed, what you need to pay is only the running cost as the pricing philosophy of AWS is pay as you go and without contract period.
- Accelerate your digital transformation with partners: A lot of time, you do not have resources to work on a new digital project. Also, you may not have a practice of building a cloud innovation lab. We highly recommend you look for born-in-the-cloud partners. Those partners whose business models revolve around cloud-based delivery of computing resources and software rather than on-premises hardware and licensed software. They can help to develop and design an innovative solution which can take advantage of the many benefits of cloud computing
Head of eCloudvalley Hong Kong