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The role of cloud computing in industry transformation

The role of cloud computing in industry transformation

We are living in an age of unprecedented industry change, as industries as diverse as retail, media and manufacturing are undergoing rapid, and often unpredictable, transformation.

The accelerating rate of industry disruption is driving companies to adapt far more quickly to the changing business environment in order to survive.

Whilst Kodak is perhaps one of the best known examples, organisations in virtually every industry are having to adapt, driven by disruptive forces from digitalisation to globalisation to servitisation, and the entry of new, disruptive competitors into their industries.

Flexibility and adaptability

Survival is increasingly reliant on flexibility and short-term adaptability, with those organisations that have the ability to quickly re-invent themselves in response to changing industry dynamics most likely to survive.

A crucial factor in this adaptability is cloud computing, which has emerged not just as a cause of industry change but increasingly as a necessary response.

As cloud computing matures and becomes more established, not just as a technology but as a business concept, organisations are gaining a more nuanced view of its benefits. The cloud was initially adopted on the basis of its ability to lower both capital and operating costs for businesses. With industry change accelerating, however, the flexibility, scalability and adaptability of cloud have become significantly important factors for adoption.

Frost & Sullivan research paper

To understand the degree to which organisations are experiencing industry change and how they are responding, Frost & Sullivan surveyed 1,500 senior executives (CEOs, CFOs, CIOs and other senior managers) globally, including 200 in the UK. Respondents spanned all major industry sectors, ranging from manufacturing to retail.

The research shows that most executives not only agree that their industry is undergoing transformation, but that flexibility and adaptability are increasingly becoming key factors for survival.

Download_the_white_paper

Key takeaways from the research paper

  • The five-year business survival rate for companies in the UK is only 45%, which indicates that more than half of today’s businesses will not be around in five year’s time.
  • 28% of executives now feel that the pace of change in their industry is ‘fast’ or ‘very fast’.
  • The rate of change is most noticeable for executives in the ICT and retail / e-Commerce sectors, where 56% and 50% respectively feel that their industry is changing ‘fast’ or ‘very fast’.

Frost & Sullivan’s research has identified four common trends that are impacting organisations in all sectors:

  • The emergence of new, disruptive competitors
  • Digitalisation
  • The need to embrace new business models
  • The growing adoption of productisation and servitisation

The emergence of new, disruptive competitors

  • 58% of UK executives believe that their industry has been significantly impacted by the entry of new, disruptive competitors in the past five years.
  • Disruptive competitors such as Airbnb and Netflix are using cloud computing to quickly scale their businesses at low-cost.
  • Cloud computing is allowing new competitors to quickly and cost-effectively roll-out new products and services and enter new markets, at a speed which can often blindside established market participants.

Digitalisation

  • 62% of UK executives believe that the impact of digitalisation is or will be very significant in their industry.
  • Almost one-quarter of UK businesses are now selling online.
  • Digital leaders tend to be significantly more profitable than counterparts that are slower to adopt digital change.

Development of new business models

  • Cloud and other technologies such as mobile broadband, 3D printing and low-cost sensors are enabling the emergence of new business models

The growing adoption of productisation and servitisation

  • The rapid increase in service productisation and manufacturing servitisation is the fourth major trend driving disruption.
  • 40% of UK manufacturers are now at least partially servitised, which means a complex shift for product manufacturers.

In conclusion

  • Cloud computing is a key driver of industry transformation, enabling companies of all sizes to have access to IT systems and functionality that have in the past been in the realms of large global competitors, at a much lower cost.
  • This is allowing smaller companies to rapidly expand their operations – giving them the ability to quickly and cost-effectively roll-out new products and services, and to service customers across the world.
  • 40% of all organisations in the UK are now using a cloud solution.
  • Adaptability is an increasingly important driver of cloud adoption.
  • 72% of UK organisations that have now adopted SaaS for at least one of their main business applications feel that it has given them a competitive advantage.

Download the full research paper here to find out:

  • The five-year business survival rate by industry sector
  • UK executives’ perceptions on rate of industry change, by industry sector
  • More detailed information on the factors driving transformation
  • How the cloud improves adaptability
  • How successful companies are using the cloud to adapt to this rapid rate of change
  • The main reasons companies are adopting Software-as-a-Service (SaaS)
  • The main area of competitive advantage obtained through SaaS

Download_the_white_paper

If you would like to discuss the role of cloud computing in industry transformation, or how a SaaS product such as NetSuite could help you to adapt, then please don’t hesitate to get in touch with us!

All content contained within this article has been adapted from the Frost & Sullivan report ‘The role of cloud computing in industry transformation‘ which can be downloaded here.

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