Cloud computing is not simply a better solution to internal IT; it creates a new strategic option for enterprise growth.
This is according to the technology industry head at PWC, Johan Potgieter, who says this type of growth blends organic (internal initiatives) and inorganic (mergers, acquisitions and partnerships) methods by offering business services as cloud services.
He says the potential for cloud computing to change the fabric of an enterprise makes it clear that there are already opportunities for modularising and extending the reach of the business. “Business services are being fully encoded in software, provisioned in the cloud,” he adds.
He reckons this requires third-party business partners in the ecosystem to incorporate their own unique customer value propositions via software application programming interfaces (APIs).
“The result is very low cost of sales for extending your reach to new customers and a very low cost of delivery for high-profit margins,” he points out.
Potgieter says the best description for this new strategy is an extensible-enterprise strategy. He says the businesses' own internal capabilities are viewed as potential business opportunities.
“Cloud computing allows these internal enabling capabilities to be made accessible in the cloud. These capabilities can function as a business platform, driving ecosystem interactions that are deeper and occur at a much lower cost than previously possible,” he notes.
Once in the cloud, a network of partners can help grow business by linking to one's cloud services at minimal marginal cost to one (extensible enterprise), he points out.
The extensible enterprise represents the transition from the slow, one-off ecosystem partnering and customer acquisition processes of the pre-cloud era to the scalable partnering, service delivery and customer acquisition made possible by the cloud, Potgieter says.
“An extensible enterprise relies on two key characteristics. The first is versatile processes that need to enable deeper process integration with partners and collaborators. The second is ecosystem integration which involves deep integration and on-demand provisioning of ecosystem collaboration,” he says.
Collaboration key
Deeper collaboration is the ability to work with other businesses in the ecosystem as if enterprise boundaries did not exist. Potgieter explains: “Cloud computing represents a disruptive approach to growing the business. The cloud can be a new venue in which to conduct business with partners by creating an extensible enterprise.”
As increasing numbers of extensible enterprises populate the cloud, the network effect will take over, creating more value for all - especially for first-movers, he says.
“This network of cloud-based business services will require adjustments in the broader business. For this reason, cloud computing is not just a CEO opportunity associated with improved IT; it will be an opportunity for the entire C-suite.”
Potgieter says cloud computing is the most transformative technology since the Internet became a major C-suite concern 15 years ago.
“Extensible enterprises are likely to offer cloud-based collaboration and a fundamentally new proposition - one that builds value for end customers through interconnected, cloud-based platforms.”
He adds that the road to a cloud platform will require significant changes to the business itself. “The first step is to digitally transform and modularise business processes so they can be dynamically combined on the fly. The second step is provision digitally transformed services in a cloud-friendly IT infrastructure - to add and integrate with the cloud itself,” he says.
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