For any company embarking on this change journey, where to start – and where to focus – depends on the business’s specific industry, size, business model, and current digital maturity. However, the key components of an ideal cloud-centric operating model remain consistent. So, to help communication service providers (CSPs) – including wireline, wireless, cable, and other/integrated communications carriers – map out and undertake the optimal journey to a cloud – enabled “zero infrastructure” future for their IT, we’ve developed the framework for a cloud-centric operating model.
For CSPs worldwide, cloud presents exciting opportunities to drive speed and agility, and to lower costs throughout their operations. These benefits mean that harnessing the cloud is critical to many parts of the CSPs’ strategic agenda, and make navigating the transition to a cloud-centric operating model an urgent priority for many companies.
The key question is how to get started. The solution lies in combining a methodical approach with a commitment to moving at pace. To help CSPs achieve this, we’ve developed the approach enabling a successful transition managed through a clear five-step process. CSPs that undertake this journey will be well placed to compete and win in tomorrow’s communications services marketplace – and to realize the aspiration of zero infrastructure “anything as a service”.
Cloud computing is generally defined as using a shared pool of computing resources accessible via the internet. Those resources can be rapidly acquired as needed, with minimal management effort or service provider interaction.
However, operators who provide cloud services face a number of complex accounting challenges. In particular, bundling cloud services with non-cloud services will likely complicate revenue recognition patterns. Adding cloud services to the equation means operators may face problems in pricing mechanisms and revenue allocation amongst the various elements. There are also re-seller arrangements to consider (in which it is sometimes difficult to determine the principal and agent) thereby making things even more complex. Some arrangements could result in embedded leases, where an operator is providing exclusive use of an asset.
Two-and-a-half years ago, McKinsey described eight technology-enabled business trends that were profoundly reshaping strategy across a wide swath of industries. Since then, the technology landscape has continued to evolve rapidly. The dizzying pace of change has affected those original eight trends, which have continued to spread (though often at a more rapid pace than anticipated), morph in unexpected ways, and grew in number to ten:
1. Distributed cocreation moves into the mainstream
By McKinsey’s estimates, when customer communities handle an issue, the per-contact cost can be as low as 10 percent of the cost to resolve the issue through traditional call centers. Other companies are extending their reach by using the Web for word-of-mouth marketing. However, since cocreation is a two-way process, companies must also provide feedback to stimulate continuing participation and commitment.
2. Making the network the organization
The recession underscored the value of such flexibility in managing volatility. McKinsey believes that the more porous, networked organizations of the future will need to organize work around critical tasks rather than molding it to constraints imposed by corporate structures.
3. Collaboration at scale
Across many economies, the number of people who undertake knowledge work has grown much more quickly than the number of production or transactions workers. While the body of knowledge around the best use of such technologies is still developing, a number of companies have conducted experiments, as one may see in the rapid growth rates of video and Web conferencing, expected to top 20 percent annually during the next few years.
4. The growing ‘Internet of Things’
Assets themselves became elements of an information system, with the ability to capture, compute, communicate, and collaborate around information – something that has come to be known as the “Internet of Things.” Embedded with sensors, actuators, and communications capabilities, such objects will soon be able to absorb and transmit information on a massive scale and, in some cases, to adapt and react to changes in the environment automatically. These “smart” assets can make processes more efficient, give products new capabilities, and spark novel business models.
5. Experimentation and big data
McKinsey affirms that some companies haven’t even mastered the technologies needed to capture and analyze the valuable information they can access. More commonly, they don’t have the right talent and processes to design experiments and extract business value from big data, which require changes in the way many executives now make decisions: trusting instincts and experience over experimentation and rigorous analysis. To get managers at all echelons to accept the value of experimentation, senior leaders must buy into a “test and learn” mind-set and then serve as role models for their teams.
6. Wiring for a sustainable world
Companies are now taking the first steps to reduce the environmental impact of their IT. Information technology is both a significant source of environmental emissions and a key enabler of many strategies to mitigate environmental damage.
7. Imagining anything as a service
In the IT industry, the growth of “cloud computing” (accessing computer resources provided through networks rather than running software or storing data on a local computer) exemplifies this shift. Consumer acceptance of Web-based cloud services for everything from e-mail to video is of course becoming universal, and companies are following suit.
8. The age of the multisided business model
Thr advertising-supported model has proliferated on the Internet, underwriting Web content sites, as well as services such as search and e-mail. It is now spreading to new markets, such as enterprise software: Spiceworks offers IT-management applications to 950,000 users at no cost, while it collects advertising from B2B companies that want access to IT professionals.
9. Innovating from the bottom of the pyramid
Hundreds of companies are now appearing on the global scene from emerging markets. For most global incumbents, these represent a new type of competitor: they are not only challenging the dominant players’ growth plans in developing markets but also exporting their extreme models to developed ones. To respond, global players must plug into the local networks of entrepreneurs, fast-growing businesses, suppliers, investors, and influencers spawning such disruptions.
10. Producing public good on the grid
Technology can also improve the delivery and effectiveness of many public services. At the UK Web site FixMyStreet.com, for example, citizens report, view, and discuss local problems, such as graffiti and the illegal dumping of waste, and interact with local officials who provide updates on actions to solve them.