Nearly 10 years ago I wrote a blog looking at the impact of cloud computing on traditional businesses. At the time the IT, media and analysts were proclaiming cloud as the way of the future and were extolling CIOs to transition to the cloud now or risk being left behind. The headliner at that time was AWS for cloud infrastructure and a series of SaaS solutions from Gmail through Saleforce.com. The message was clear, ubiquitous cheap “as a service” technology was the way of the future and companies needed to transition to this now or risk being disrupted.
As a CIO at the time I was keen to keep abreast of these trends and understand what they meant for us, so I and the team began to investigate the applicability of these trends specifically IaaS. At the time my conclusion was “hurry up wait” (a republished copy of the blog can be found here). This was based on an assessment that while the trends were real the technology wasn’t really ready, particularly when it came to the relative cost of the services. At the time cloud computing was substantially more expensive for our core processing and storage loads than traditional sourcing methods. The hype was moving now or disrupted. The reality was, yes, this is coming, but wait until the value proposition was right.
It’s now nearly 10 years on and things have changed. Over the last 2 or 3 years I and my clients have begun to see business cases for moving to cloud make economic sense. The costs are now comparable or perhaps slightly better than traditional sourcing and the flexibility cloud offers makes it a real option and often clearly the preferred option. To make things even better New Zealand now has a growing ecosystem of partners who can support you through this process at relatively low risk of failure (a major issue in many IT projects).
But it took 8 – 10 years from the peak of the hype to being real for the mainstream market and that’s where IaaS is now, ready for mainstream. Many analyst firms are reporting that public and private cloud now represent 15% + of deployed processing capacity, or will be by the end of 2019. 15% is generally regarded as the inflection point between early adopters and early mainstream, a full 10 years after the hype.
This gap between hype about a technology and the commercial reality of that technology for the mainstream of the market is persistent. It’s not always 10 years, some technologies move more quickly, others take longer (paperless office anyone?) and some never quite make it (remember when virtual worlds such as Second Life were the next big thing). Whatever the size of the “gap” it can be a difficult period to manage through as prominent business magazines, consultants and technology sales teams bombard senior leaders across the organisation with messages of fear (you’ll be disrupted) and hope (competitive advantage) from emerging technologies and technology enabled transformation. This period can be particularly difficult if the promise of the hype behind the technology is truly transformational or more cynically, appears to provide a one off silver bullet solution to an organisation’s performance woes and let’s face it, that’s how every new technology is pitched.
So how can you manage the gap? You need a way of understanding which new technologies you should invest in early and which you should avoid or at least wait until they mainstream. Each organisation’s specific answer to this question will be different, however, your answer will flow from having a deep understanding of who your organisation serves and how your organisation seeks to add value.
There are many different frameworks that you can use to shed light on these issues. For me, I like the concepts of the job to be done and value disciplines.
The concept of the job to be done was introduced by Clayton Christensen and Michael Raynor in their book the Innovator’s Solution. The jobs to be done theory encourages businesses to think less about standard industry structures, product specs and broad demographic based analysis and more about why a customer buys a product, what problem they are trying to solve or what job they are wanting to get done. They propose that if you can understand the underlying customer need or job you can, then design focused, innovative products and services that better meet that need than is available today. Much has been written in recent years about the jobs to be done theory, if you’d like to know more I suggest you start with this HBR article – Know Your Customers Jobs to be Done in the meantime you might want to start asking and answering this question:
What jobs do our customers hire us to solve and how can technology help us to solve these jobs more effectively?
The concept of value disciplines was introduced by Treacy and Wiersema in their book The Discipline of Market Leaders. The notion of value disciplines is rooted in Michael Porter’s strategies for competitive advantage. Treacy and Wiersema took these generic strategies, recast them as value disciplines and empirically tested them in an attempt to identify what differentiated high performing companies from the others. What they found is that the market leaders in virtually every industry became the market leaders the same way, by dominating one of the value disciplines while being good enough in the other two (find out more in their book, this related HBR article or one of the many summaries available).
Value disciplines have direct implications for how we invest in technology, specifically, investments in emerging technologies should be focused on supporting those activities that help the organisation to dominate their critical value discipline while all other activities should be supported by good enough commodity technology that meets industry standards. Invest in uniqueness, but only where it makes a sustainable strategic difference. With this in mind:
What is your organisations competitive positioning / value discipline and how does this technology support us to advance and dominate this position in the marketplace?
By answering these questions and using this frame of reference for discussions across the organisation about how can technology best be used to add value to your organisation you can begin to gain a consensus of where you should be investing and use this to manage the gap between technology hype and technology reality.