Attending the Cloud Computing Conference in Athens today I was struck by the overarching interest of the audience in security. This is entirely understandable, and certainly should be the primary concern for IT directors whose overarching concern is to keep the company safe in this dangerous digital world. As fellow speaker Ian Murphy discussed – Hacking is available “as a service” today and for little money hackers can be directed towards any organisation whose security protocols are substandard.This point was reiterated by Amar Singh.
What worries me though is that organisational strategy is not also considered a significant security concern in the face of the cloud. For me IT directors should be taking a primary position in considering the strategic risks to their organisation from cloud-based services ripping the heart out of their business. Without considering how the business model of a business might be undermined by cloud based digital services companies look like the vacuum-valve or Cathod-Ray-Tube manufacturer obsessing about whether their product can be stolen in production and delivery!
My rather random list of possible risks would include.
1) Disintermediation – Don Tapscott discussed many years ago how intermediation business can be lost as customers circumvent or replicate intermediary business and go direct. Cloud provides the simple tools to create this type of business.
2) Cost Collapse – Many businesses rely on cost inhibiting entry into marketplaces. Automation, Cloud and Data-abundance, and PAYG infrastructure can collapse the cost of entering some of these marketplaces. An example of this is Animation where small studies can now produce full feature-films using cloud rendering services.In the future digital technology are likely to do the same to many other areas of business which are today considered capital intensive.
3) Globally local – Prior to Uber most people working in taxi services could not imagine that the value of their business would shift to include services provided from north america. Yet such platforms, by their intensive focus on value creation for users, and their creation of brokerage services radically change the business model. Like Ebay, AirBnB, and Booking.com the creation of a dual-sided market… Read Eisenmann, T. R., G. Parker and M. W. V. Alstyne (2006). “Strategies for Two-Sided Markets.” Harvard Business Review(10). for more on this type of business model
4) Service Quality – Many existing companies struggle to respond to customers need. Using cloud services small businesses can emerge which provide much better ease of use and services by starting with a cloud-only strategy and uninhibited by the existing legacy IT.
This is just a rather random list – with time I will try to develop these ideas into something more coherent! I welcome readers contributions.