Cloud enabled Business Model Innovation

business-model-canvas-solar

Cloud business enablers are already driving innovation across  customer value propositions and company and industry value  chains. Enterprises are applying cloud to generate additional  revenue streams by enhancing, extending and inventing new  customer value propositions. And cloud is being used to  improve, transform and create new organization and industry value chains . This has resulted in shifts in who  creates value, as well as how it is created, delivered and  captured

Enhance:

Organizations can use cloud to improve current products and services and enhance customers’ experiences to retain current and attract new customers, garnering incremental revenue.

Extend:

Cloud can help a company create new products and services or utilize new channels or payment methods to attract existing or adjacent customer segments in an attempt to generate significant new revenues.

Invent:

Companies can use cloud to create a new “need” and own a new market, attracting new customer segments and generating entirely new revenue streams Value chains

Improve:

Cloud adoption can help an organization maintain its place in an existing value chain through increased efficiency and an improved ability to partner, source and collaborate.

Transform:

By assisting in developing new operating capabilities, cloud can help a company change its role within its industry or enter a different industry.

Create:

Organizations can use cloud to build a new industry value chain or disintermediate an existing one, radically changing industry economics.

Cloud Enablement Framework

Using the extent to which an organization’s use of cloud can affect value propositions and value chains as dimensions, “Cloud Enablement Framework,” identifies three organizational archetypes: Optimizers, innovators and disruptors . These archetypes characterize the impact of an organization’s cloud-enabled business strategy.

They are based on the extent to which an organization enhances, extends or invents customer value propositions – and improves, transforms or creates new value chains.

The framework is not a maturity model.  It is not either  expected  or recommended  that organizations first start as optimizers and then become innovators and disruptors. Instead, an organization should determine its place in the Cloud Enablement Framework based on the company’s strategy, risk profile, competitive landscape, etc Optimizers use cloud to incrementally enhance their customer value propositions while improving organizational efficiency

 Optimizers stand to deepen their customer relationships without risking the potential failure inherent in radical new business models. While optimizers can expand the value they offer through improved products and services, enhanced customer experiences and broader channel delivery options, they tend to realize lower revenue and market share gains than innovators and disruptors.

Optimizer case study: North Carolina State University

Based in Raleigh, North Carolina State University is a comprehensive university known for its leadership in education and research and globally recognized for its science, technology, engineering and mathematics leadership.

Challenge

With more than 31,000 students and nearly 8,000 faculty and staff, NCSU faced growing demand for academic computing resources, making it challenging to deliver the service level that its key user populations – students, instructors, researchers and administrators – require. The university not only wanted to fundamentally change the way it managed computing resources, it also wanted to enhance the user experience, position itself for continued growth and effectively control costs.

Cloud-enabled business model

In collaboration with IBM, NC State created its Virtual Computing Lab (VCL), a cloud-based technology that provides students, faculty and researchers access to the most advanced educational materials, select software applications, and computing and storage resources. The

VCL solution allows users to remotely access a desired set of applications and environments over the Internet – using a personal computer, laptop or mobile device – from anywhere at any time. The solution’s flexible and intelligent resource provisioning offers significant improvements in access, efficiency and convenience over the previous approach, allowing NC State to optimize operational efficiencies and enhance the user experience. In fact, the university has now provided access to the VCL to students throughout North Carolina, including those in elementary, high school, and other colleges and universities.

The Virtual Computing Laboratory (VCL) at North Carolina State University has been a pioneer in delivering secure on-demand computing services for education institutions. VCL was using cloud computing before the term came into popular use: It has been doing research on virtual computing since 2003 and began offering cloud services in 2004.

The VCL academic cloud is based on open-source technology and offers infrastructure-as-a-service, platform-as-a-service, and software-as-a-service, including support of high-performance computing services. The advantages of VCL’s cloud computing approach include consolidation of computing resources and technical support services, delivery of applications that would be difficult to install on student computers, and the extension of computing services to education institutions that otherwise would have only limited technology infrastructures.

As of 2009 VCL was serving more than 30,000 faculty and staff. A typical user accesses VCL through a web interface, going through a set of authentication and authorization steps and then choosing the desired kind of computing environment and time period from a set of pull-down menus.

VCL can dynamically move resources from one application to another, producing increased efficiency and lower costs. During semester breaks, for example, when most students are not using computing resources, the system assigns those resources to researchers with heavy computing requirements for activities such as running complex models and simulations.

VCL now offers services on a pilot basis to seven other North Carolina public universities, the North Carolina Community College System, and several out-of-state universities including three in India. Possible extension of these academic cloud services to K-12 schools are being planned.

 

Business results

  • Moving to a cloud-based infrastructure provided North Carolina State University with:
  • Increased flexibility to shift computing capacity between instructional, research and administrative needs
  • The ability to scale up to match significant growth in university enrollment
  • A chance to share its resources with students throughout the state, improving the education opportunities and lives of many.

Innovators

Innovators utilize cloud to significantly extend customer value propositions, resulting in new revenue streams. In doing so, they transform their role within their industry or enter an adjacent market or industry space.

By extending and transforming, innovators have the opportunity to combine previously unrelated elements of the value chain and value proposition to gain competitive advantage.

3M Visual Attention Service

The 3M Visual Attention Service is an online scanning tool that scientifically analyzes design effectiveness based on how the average human eye responds. VAS marries vision science with technology to help designers, marketers and other communicators test the visual impact of their content and increase the probability that viewers will notice the most important elements of a design.

Challenge

Since the global design community is made up of copious small design organizations, 3M needed to make the new capability accessible from anywhere, affordable to many and available as needed during a design project. By delivering VAS using cloud technology, 3M is able to offer the service on a continuous basis without requiring customers to install special software to use it. Hosting the solution via cloud also helps the company ensure the latest version is always available for customers.

A recognized world leader in technology research and  development, 3M wanted to make its decades of expertise in the  workings of the human visual system available as a service to  customers. Using the Windows Azure™ platform, 3M created a  Web-based application that gives designers the ability to invoke  complex algorithms to analyze the effectiveness of a design,  based on how the human eye will respond. By hosting its  application in Microsoft® data centers, 3M has made an  innovative service available to a global audience, while  minimizing its investment in hardware infrastructure and ongoing administration. The solution, which permitted developers to  evaluate frequent iterations of the application, helped the  company speed time-to-market for its service and achieve  higher quality results, faster than in a traditional development  environment.

Cloud-enabled business model

3M’s cloud-enabled business model allows it to offer a new solution, known as VAS, to a new audience – the creative design community. The cloud-based offering allows 3M to transform its role in the product development value chain by closely integrating with a global network of designers. The affordable, flexible, cloud-based, pay-as-you-go model allows the company to deliver VAS in a fast, user-friendly manner that fits into a designer’s existing design process.

The company developed a prototype of a  Web-based application, called the 3M  Visual Attention Service (VAS). The service  makes it possible for designers to test the effectiveness of their content using visual  attention models, which are based on algorithms that predict the elements of a  scene that a viewer is likely to see and to remember. The prototype, a Web-based  application that was hosted on 3M data  center servers, enabled users to upload  photographs of a physical environment or a  graphic design to the VAS. The  application’s processing engine then  evaluated the image for its “visual saliency”  and returned a map of the image that  indicated, using markings such as those  seen on a heat map, which areas of the  image were most likely to attract a viewer’s attention

3M believed that the most effective  approach would be to operate the VAS  application from a “cloud computing”  environment, in which the solution would  be hosted and managed on the Internet  and reside in an external partner’s data centers. The company evaluated hosted  infrastructure offerings from Microsoft and  others,, 3M chose  the Windows Azure™ platform from  Microsoft. Windows Azure is a cloud  services operating system that serves as  the development, service hosting, and  service management environment for the  Windows Azure platform. Windows Azure  provides developers with on-demand  compute and storage to host, scale, and  manage Web applications on the internet  through Microsoft data centers.Currently, VAS helps customers evaluate  any number of graphical or photographic  images that they choose to upload to the  application. In future versions, 3M plans to  provide customers with the ability to create  entire databases of test images, enabling  users to experiment with, for example, the  content of an advertisement in a variety of  design scenes—or, conversely, a number  of different types of advertising content in  one particular scene

Business results

  • By hosting VAS via cloud, 3M achieved:
  • A highly scalable environment – important during peak  design times
  • A low up-front investment and a flexible pay-as-you-go pricing model to help significantly reduce hosting costs and optimize profits
  • The ability to attract new customers with an innovative solution while facilitating tighter integration within the product design ecosystem

Disruptors

Disruptors invent radically different value propositions, generating new customer needs. They capture unique competitive advantage by creating a new or disrupting an existing industry or market

Disruptor case study: Comcast Xcalibur.

Disruptors often provide customers what they weren’t even aware they wanted or needed! By taking a risk.

Disruptor case study: Comcast Xcalibur

Comcast Corporation is a leading media, entertainment and communications company. It operates cable systems and develops, produces and distributes entertainment, news, sports and other content for global audiences. It is also one of the nation’s largest video, high-speed Internet and phone providers to residential and business customers.

Challenge

In 2011, Comcast piloted Xcalibur, its next generation cloud- based TV platform that aims to revolutionize the way people watch TV. Xcalibur moves the company beyond the delivery of channels and video via set top boxes that use digital television technology to leveraging cloud architecture that delivers live TV service to any Internet-connected device. Leveraging Internet Protocol (IP) technology, the company can update its guide and add features more easily and cheaply. It also helps Comcast meet the demands of “connected customers” to watch TV wherever they want and access content sources more seamlessly.

Cloud-enabled business model

The cloud-based platform shifts the ability to control content into the cloud. It enables live video feeds that serve the ever- growing numbers and types of mobile and connected devices. Customers can find content tailored to their needs in new ways, for example, by using an iPad app to choose channels, on demand videos and Xfinity online streaming videos. They can then watch their selected content when and where they want – whether on TV, tablet or other device.

This personalized TV experience, combined with a powerful search engine and Internet apps to access non-TV content, as well as the ability to share via social media channels, allows Xcalibur to create a radically different customer value proposition, with the potential of attracting entirely new customer segments in the future.

Business results

The Wall Street Journal cited this move to the cloud as evidence of “a new phase in how Internet technologies are transforming television.” Benefits thus far to Comcast include:

  • Meeting customer demands for easier access to TV and other Internet-enabled content
  • Delivering content to more devices than before
  • Creating new apps faster and more cheaply
  • Making UI changes more quickly and easily.

Disruptors can gain “first-mover” advantage. IBM survey indicates a larger percentage of disruptors expect to outperform their peers in the next three years than do innovators or optimizers. While they face greater risks, disruptors tend to anticipate higher rewards

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