CLOUD COMPUTING
DISRUPTIVE INNOVATION
Managing Technology and
Innovations
Date: 30 March, 2016
Shireesha Sudhakar Manchal
152093
MIB 39 A
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Disruptive Innovation – Cloud Computing
“A disruptive innovation is an innovation which creates a new market as well as a new value network that will eventually disrupt an existing market and its value network, displacing established market leaders and alliances”. The term was coined and analyzed by Mr. Clayton M.
Christensen beginning in 1995.
It is the term that is used to describe a new technology that has a vivid effect towards the competitive existing incumbent firms. This kind of innovation is a hybrid of both technological and market innovations which make old technologies obsolete. It is a technology based on new- value structure which provide value experience for new low-end customers in a highly competitive market which later spreads to the incumbent market as well. By utilizing this kind of innovation, the already existing markets will be forced to modify their strategies to suit the new innovation and hence will result in those companies having to undergo a lot more changes to both try and crush the old technology with a more advanced one as well as to try and adapt this technology in their business successfully.
Let us take the example of Cloud Computing which uses a network of remote servers hosted on the Internet to store, manage, and process data, and which does not require a local server or a personal computer that is currently being used. The initial entrant to disrupt the local server trend was Amazon through their Amazon Web Services. In 2006, Amazon Web
Services (AWS) started to offer IT infrastructure services to businesses in the form of web services - now commonly known as cloud computing.
Amazon is the company responsible for the innovation of Cloud
Computing and is considered to be one of the leading technology vendors in the world. By doing so Amazon proved to be a strong contender in the highly competitive business world with a net worth of over $160 billion.
This innovation changed the way a company managed its technological assets and computer needs. More importantly, it can yield better results for the consumer of an IT service due to Cloud’s scalability and low latency. By introducing Cloud Computing into the global market, Amazon Web
Services was able to find large number of customers who were unable to
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Disruptive Innovation – Cloud Computing
finance the long-standing technology of workstations and huge private data centers. The main characteristics that Amazon provides are simple ways to access servers, storage, databases and also a big set of application services over the Internet. If Cloud is implemented, most businesses no longer need to plan and order and buy servers and other IT infrastructure many weeks or months in advance. Instead, they can instantly start to use over hundreds to thousands of servers within minutes and deliver faster solutions and results. The reason why this innovation is disruptive is because it is very cost efficient and it provides various ways by which a business can be profitable and this can be done very quickly with a click of a button.
To increase their sales, Amazon initiated the ‘pay-per-use’ metered technology using Cloud Computing which is also considered as a disruptive innovation as the ‘pay-per-use’ technology offered stiff competition to the age old technology of subscription payment technology. Amazon tried to monopolize this innovation by charging at very low and economical prices which helped even the near-bankrupt companies to embrace this amazing technology. By doing so, again
Amazon was able to attract people which such fancy offers the way flowers attract bees. Amazon Web Services implements such an approach
- how much you use the Cloud infrastructure is irrelevant - you will only pay for the duration your virtual machine is available to you and how much of it a user has used. Amazon Web Service’s pricing helps you to reduce costs in multiple ways when using the pay-per-use model. With this, you can plan for growth and/or increased surge in demand due to work load.
Amazon gives you a quicker option to budget your projects according to your business requirements. With the Amazon pay-per-use model you can have the assurance that capacity of Cloud will be always available to meet all of your users’ needs without having to provision and run the risk of not meeting demand.
Looking at a more basic level of business demand, cloud computing provided innovative ideas and solutions to various organizations and in many sectors, if they see the tangible benefit it provides. Undoubtedly, cloud computing in the near future will be the basis of most industries
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Disruptive Innovation – Cloud Computing
which will rapidly transform IT services with Internet as an effective platform for computation. Many IT companies have begun to see its value and have adopted the use of cloud computing. Their challenges mainly include on whether they can quickly transform their existing processes and practices, and costing structure to meet the new goals offered by cloud service providers.
Hence I would like to conclude by saying that disruptive innovation is as much a blessing as a curse. As a blessing because it proves to reduce the cost of building a business for some startups as it is being seen as a catalyst to entrepreneurship, and a curse because it proves to be an additional cost for the older business models and companies.
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Disruptive Innovation – Cloud Computing
Bibliography
1) Amazoncom. (2016). Amazon Web Services, Inc. Retrieved 1 April, 2016, from https://aws.amazon.com/ 2) Cloudbooknet. (2016). Cloudbooknet. Retrieved 1 April, 2016, from http://www.cloudbook.net/resources/stories/cloud-computing-as-a-disruptivetechnology 3) Ric telford. (2016). ZDNet. Retrieved 1 April, 2016, from http://www.zdnet.com/article/the-disruptive-nature-of-cloud-computing/ 5 