Cloud's Next Benefit: Helping Companies Grow

 
 
By Jeanne G. Harris and Allan E. Alter  |  Posted 2011-03-21
 
 
 

If an IT leader works for a company that isn't named Amazon, Google or Facebook, chances are it hasn't gotten a big revenue boost from the cloud. It's much more likely that the company has used the cloud to cut costs, replace a standalone software application or back up older documents.

Research by Accenture, however, shows that 40 percent of all businesspeople with a knowledge of cloud computing believe it will support their product or service innovation in the next five years. If they're right, the cloud will move from its current position, of providing operational benefit, to a new position of strategic value.

Cloud as a platform for new services

Many early initiatives have involved using the cloud as a delivery mechanism for something they already sell to consumers. Take the paid apps that the Wall Street Journal and Time magazine have developed for the iPad.  Those organizations had terrific digital news products in the pre-iPad era, but are banking on highly touted iPad versions to bring in new revenue. 

Likewise, Best Buy and Netflix have started streaming movies and television shows over the cloud in addition to selling or renting DVDs. Consumers loved the immediate delivery model, and Netflix's revenue in 2010 surged 29 percent, to $2.16 billion (more than tripling the value of its stock).

Now, new cloud services are targeting business customers. Fujitsu has launched an initiative to let local governments in Japan put digital images of worn-out bridges in the cloud, where construction companies can study the images (and other data) and provide the government with assessments. This is a cost-savings to the government, and a potential source of new revenue to Fujitsu.  This system may get quite a test in the wake of the devastating earthquake and tsunami in that country.

BGCantor Market Data—a provider of fixed income, credit and derivatives market data— is offering its service directly to customers through a cloud product called BGCantor On-Demand.

Deeper connections to customers

One obvious way that companies have been using the cloud is by communicating with new and existing customers through social media. Hundreds of companies have set up Facebook fan pages to create awareness of what they do and build goodwill in a place where (theoretically) the network effect can multiply that goodwill overnight.

More and more restaurants are following the example of Starbucks, which has used social media for many promotions and contests. For instance the Outback Steakhouse restaurant chain offered a coupon for a free appetizer on its Facebook Web page to the first half-million people who requested it.

But some companies are going beyond generating publicity and good will to using clouds for tracking and analytics.  A third of executives in Accenture’s research are using—or will soon use—cloud computing to analyze customer data.

3M’s marketers are using cloud services to mathematically analyze images that appear in their promotions, and evaluate how visually effective they are to customers. Other companies use Twitter to send information and to track negative commentary, if any is in the air. The ability of the cloud to quickly analyze oceans of data makes it a powerful tool for catching customers.

Enabling moves into new markets or customer segments

Finally, some organizations have found that the cloud makes it easier for them to set up shop in a new location or reach new customer segments. MOTECH Automotive, a chain of automotive service centers in the Philippines, has cut months off the time needed to open new branches in its home country by using cloud services.

GE Healthcare, which had previously focused on selling to enterprises, has introduced a cloud-based service that small physician groups can use to maintain patient medical records and manage their practices digitally.  And Xiwang, a Chinese food processing company that sells sugar and other grain products to food manufacturers, is using a cloud-based CRM system to support its first efforts to enter the consumer market. 

Cloud computing can also help companies acquire and integrate other firms more quickly.  Brady Corp., a manufacturer that has acquired 30 companies in recent years, is turning to cloud services to assimilate its acquisitions more quickly.

All of this is just a start. In the next few years, growth-oriented businesspeople everywhere will be looking for cloud applications that can generate incremental revenue.

For retail chains, it might be mobile promotions; for automobile makers, it might be in-car information and entertainment. The specific applications will depend on the industry, the products being sold and the expertise available within the company.

None of these innovative ways of adding revenue, however, will be possible without the involvement of corporate technologists. Smart IT managers and executives should jump at the opportunity.

Jeanne G. Harris is a senior executive research fellow at the Accenture Institute for High Performance, and co-author of “Analytics at Work: Smarter Decisions, Better Results.” Allan E. Alter is a research fellow there, and the former editorial research director of Ziff Davis Enterprise.