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Mass Disruption in a Disrupted Market

19 June 2009

Jamie Pride discusses how Cloud Computing and how SaaS platforms can provide a big upside for businesses in a down market.

If the media are to be believed, the sky is falling ... and whilst there is no doubt that a lot of industries are feeling the pain of the current economic downturn, business leaders certainly have a choice as to what strategy they employ in order to navigate the current conditions. In my discussions with business leaders, three questions seem to be front of mind;

• How do I do more with less and drive a better financial return for the organisation?
• How do I establish a serious advantage over the competition?
• How do I better engage and motivate my staff?

Given these priorities, there is certainly a case for a defensive, conservative strategy, that focuses on cost reduction and core business. However, there is clearly an opportunity for leading businesses to be more aggressive and innovative in the current environment, and to look at some disruptive technologies to gain an advantage over the competition. In particular, three technology areas (cloud computing, open source and corporate social networking) should be getting some serious consideration as enablers for strategy development.  

Cloud Computing - Focusing On Your Core Business

So you want to sit on your lounge and watch television. Would you build a power plant to watch television? Would you build a television production company? Would you hire actors? Buy cameras & lights? Of course not - you just want to sit back, relax and enjoy the show. You are not in the business of power plants or producing TV shows - its not your core business, plus it would be really expensive. Well, this is exactly what we have been doing with our technology - we have been buying servers, operating systems, databases, and middleware - all in an attempt to get to the applications - and its the applications that really provide that value to our business - not the technology stack.

Enter cloud computing. 

Cloud Computing has many names - you may have heard it referred to as Software as a Service (SaaS), Utility Computing, or On-Demand. Regardless of what you call it, cloud computing providers typically deliver an application over the web - you get to use the application - the provider worries about the technology stack (hardware, databases etc). Most services are sold on a subscription basis. A simple example of SaaS would be an online email account like Gmail. You get email, Google operates the mail server. But beyond email, a whole host of applications can now be delivered over the web as a service - from CRM to ERP to office productivity apps like word processing and spreadsheets. 

The technology has many benefits - firstly you don't have to invest in a technology stack - no need to buy servers, databases and the like - plus all of the IT management that goes with it. Secondly, its highly scalable - you can typically increase or decrease your user count on an 'as needed basis' - so it matches your business growth and makes you more agile. Software as a service also levels the playing field - small and mid sized businesses can now have access to the same leading technology applications that large companies do, without the capital costs of buying a whole lot of IT infrastructure. 

The last advantage of SaaS, which is very relevant to the current market, is that it allows you to focus on your core business - allowing you to put your valuable resources into activities directly related to growth and development.

Open Source Software - Doing More With Less

As much as I am a huge advocate for cloud computing - in certain situations or for certain applications, it may not be suitable for your business. If your technology "is" your core business then you probably want to maintain and develop that intellectual property in-house. If that is the case, then other disruptive technologies such as open source software can help build a competitive advantage. 
Open source is the poster child for technology disruption. Software is typically developed by a community (many of whom do so in their spare time), is typically distributed for free, and innovation is shared by all. Open source provides two key benefits - firstly it can be a very cost effective solution, and secondly, due to its open nature, it is an outstanding platform for innovation. In an environment where CIO's are being asked to deliver more with ever shrinking budgets, open source has to be a serious contender in any major technology decision. Open source also embodies a key paradigm - openness and ecosystem development. Open platforms and open ecosystems are disruptive and a huge competitive advantage as they allow others to extend your business and create a richer offering for your customers and partners. Creating or enriching your existing ecosystem, either through open API's or traditional community building will be key to your long term business success.

Corporate Social Networking - Harnessing The Power Of Your People

A key challenge facing business leaders in the current environment is how to develop and grow a culture of innovation and engagement inside their organisations. Its a worthy challenge - culture is one aspect of your company that is very hard for a competitor to replicate - and it can provide the "secret sauce" in corporate performance.

The new buzz in tech is "social", and even corporates can't avoid getting involved. Even with the hype, corporate social networking will become the logical evolution of today's corporate intranets - the big difference being interactivity. The typical corporate intranet is quite stale - information rarely gets updated, and content creation is usually centralised. The "social" extension of intranets will allow your teams to more easily connect with each other, create content, vote for and suggest new ideas and initiatives - and do this in same way they already do on sites like facebook and twitter in their personal lives.

Increasing your employee engagement, crowdsourcing ideas, and two-way communication fosters a more grass-roots culture of innovation and collaboration within an organisation. Many companies are already seeing huge success through the use of technologies such as Jive and Yammer - sourcing new ideas for product development, process improvement, or customer engagement. The added advantage is that the cost of these kinds of technologies is very low, and you can experiment to see what works best for your organisation. The key to adoption is to ensure that you start small and get good grass roots adoption, rather than making it an enforced mandate from the top - for these kinds of projects to work they need the natural buy-in and support of the staff.

Taking Advantage of the Opportunity

Technology can never be a replacement for a sound strategy, great leadership, and a respected well motivated team. That said, there is currently a huge opportunity for organisations to rethink their traditional approach to technology, take some small risks and set themselves up to take full advantage of the market upturn when it will inevitably come. Key principles of innovation management, ensuring resources are deployed into core activities, and building a scalable, agile infrastructure are always a sound approach - and these activities can be greatly enhanced by the selective use of disruptive technology. The great thing about them is that experimentation is usually low cost or free - it just takes a little sweat and a little vision.

Jamie Pride has over 17 years international experience working  for disruptive technology companies including salesforce.com, Red Hat Software and Cisco Sstems. Most recently he was the CEO of realestate.com.au, one of Australia's largest online portals. He holds a Masters of Management from MGSM and has competed post graduate studies at Stanford University. He blogs  at Goodbye Machiavelli (www.goodbyemachiavelli.com), and can be found on Twitter @jamiepride.

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Written by: Jamie Pride

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