Why Businesses Must Care About Cloud!

Elasticity is THE key advantage in using cloud services. Traditionally with Information Technology spending, actual demand is either less, or greater than capacity. If I.T. has built out capacity too far ahead of demand, it may result in good service, but the cost is not so pleasing to those concerned with earnings.  Conversely, if I.T. is short on capacity nobody in the company is happy. To understand the true gravity of the opportunity or threat that cloud has on legacy business, let’s start with this:

“Constraints, in general, are likely the single biggest factor why a profitable legacy company can fail in this millennium.”

Of course one could make the argument that this has always been the case. The difference is that because of the tools available to entrepreneurs now, you have very little time to respond to competitive attacks. The legacy companies usually were birthed because of some secret sauce. After they became huge and established the sauce wasn’t secret anymore. However, competition was easily held at bay due to the bigger company’s ability to survive a price war or some other predatory tactic.

There have been books and books written on this subject. My favorite is Judo Strategy: Turning Your Competitors' Strength to Your Advantage, by David B. Yoffie. This book was written well before the term “cloud” was coined. While the practice of Judo is ancient, the fundamental point will never change – and the point is in the title itself. Suffice it to say that if an entrepreneur can figure out a way to deliver some small component of a product to a customer cheaper, better and faster, then he may be able to drive a splinter in that market and thrive. Why? Because the big company’s processes are too fat, too slow and too invested to react quickly enough to head off Mr. Small Potatoes. See the Judo reference?

Cloud is a tool that entrepreneurs will use to strike it rich from here on out, and this will continue to erode legacy market share. However if you’re a legacy company take heart, everyone can play and win at this game.

Watch out though, because cloud is just a tool and you could easily buy the wrong brand, spend too much, fail to measure, implement it incorrectly or fail to establish a timeline. With so much to lose or so much to gain, I can’t think of a single legacy business in this country that shouldn’t be evaluating cloud services in some way and at this very moment.

(Patrick Bouldin is the President & CEO of RunThis Project, specializing in cloud computing strategy and Business Process Improvement.)