By Saul Berman, Global Strategy Consulting Leader, IBM Global Business Services
Cloud was the “invisible” star at the Consumer Electronics Show this year. While it didn’t have a booth on the showfloor, cloud technology was key to many of the new experiences and capabilities on display – from gaming to smart TVs, smarter homes, connected healthcare devices and even autos.
Consumers today have high expectations. Increasingly their focus is not just on the devices, but the kinds of experiences these products can offer — which significantly impacts manufacturers’ business strategies.
Think about it: electronics companies aren’t just selling cameras, they’re in the business of creating and sharing memories. Instead of selling TVs they’re providing a personalized entertainment and shopping experience. And this theme isn’t limited to entertainment. It’s making its way into other areas such as the laundry room where the focus isn’t just on washers and dryers that can run when energy prices are lowest, it’s on having the appliances communicate how much consumers are able to save, and having the built-in ability to notify the repairman before the appliance breaks down.
In fact this emphasis on the consumer experience and the technologies behind it have some pundits suggesting the CES show be renamed the Connecting Everything Seamlessly show or the Cloud Electronics Show.
I believe what this industry is experiencing is a dramatic shift to an era “Beyond Devices” and into one of innovative new business opportunities thanks largely to the growing role software plays and the increasing capabilities of cloud technology. And this shift isn’t limited to the Consumer Electronics sector.
When it comes to the power of cloud technology to reshape business models, I’m not alone in sensing a major change in how companies are thinking about cloud. To better understand the shift in how organizations use cloud today and how they plan to employ it in the future IBM, in conjunction with the Economist Intelligence Unit, recently surveyed 572 business and technology executives in multiple industries around the globe. While only 16 percent of respondents indicate that they are already using cloud capabilities and technologies to enhance their revenue and profits through business model innovation, in the next three years 35 percent intend to use it as a platform to transform their business models.
There are a number of external factors driving this change.
Mobility – Sixty-four percent of the executives in our survey saw this as a major factor because it creates all kinds of challenges and opportunities since we’re always using mobile devices.
Social media and the ability to connect and speak with peers, friends and associates, and how their realtime perspectives influence our behavior – is another major factor. Many companies are using social media today (IDC indicates that the market opportunity for social platforms is expected to grow to nearly two billion by 2014). But most firms are still trying to figure out how to get the most value from it.
Hyperconnectivity – the idea that all our devices are increasingly instrumented, producing intelligence and talking to each other also creates tremendous new opportunities for business.
Big Data – all the information that is produced by these external forces – is probably the biggest challenge. At the recent National Retail Federation show IBM put this into stark perspective: 90 percent of the world’s data was created in just the last two years. How companies use all this data and how they apply predictive analytics to it creates all kinds of opportunities to develop new business models.
The momentum is clear. As we move into 2012 CEOs and business strategists across all industries need to take note: Cloud computing is clearly not just for the CIO anymore. It has the power to fundamentally shift competitive landscapes and open up whole new frontiers of business model innovation and revenue opportunities.