Cloud advice

Digital Economics

This week I presented at the UCISA IG19 conference about ‘Quantifying the value and cost of cloud’, a session to support your digital strategy, increase your financial knowledge and understand the value-based business case. I also introduced ‘digital economics’; seeing the bigger picture of how technology can enable businesses transform, not just cut costs but grow new revenues, increase customer excellence and create new products and services. The term digital economics is fairly new. Gartner are using it, others are calling it the value proposition. So maybe you heard it here first! Read on to find out more.

Technology is solving business problems and enabling business transformation, it isn’t technology for technology’s sake. Digital transformation is leading the adoption of cloud, cloud alone isn’t digital transformation. I got into the conversations about cloud a few years ago, by learning about cloud economics to support customers with the business case of moving to cloud, explaining the capex to opex shift and total cost of ownership (TCO) model. Whilst these are still important factors when changing IT models, the fact remains that using cloud compared with running an on-premise datacentre is not like for like. There are limitations in the TCO model plus that is just the first step of migration, next you optimize through right sizing, reserved instances, storage optimization, etc and go serverless to really reduce costs.

The conversation moves up to the value proposition which involves better resiliency, efficiency and being able to focus on value-add instead of keeping the lights on. Importantly by supporting the technology with the right culture, an organization will gain the ability to quickly deploy enabling innovation, agility and pace to market just to name a few, but the conversation doesn’t stop there.

Now the conversation has gone further, to the strategic outcomes. Cloud enables future technologies like AI and ML which opens new opportunities from data, creating business intelligence which can help companies get closer to their customers, understand trends and respond quicker to the market. To remain relevant and be a market leader this is key. Having an innovative culture means you can release new products and services quicker and ultimately grow revenues. So we are no longer just talking about changing cost models, we are talking about business transformation, customer experience and growing revenues. This is digital economics.

This is shown in the following chart, an upside-down triangle illustrating that the strategic outcomes outweigh the cost.

How to approach this? Always start with why; address the purpose and ensure the business strategy and objectives lead with the technology strategy aligned. Think big, strategically with a digital strategy aligned to the business strategy driven by business outcomes. With exec sponsorship this clear vision will underpin decision making across the organisation. Start small to get users onboard with the change, look to do ‘lighthouse’ projects. Learn fast underpinned with a culture embracing experimentation, accepting failure to fail fast, learn fast and ultimately increase innovation. Then iterate, transformation is continuous, so lots of small changes frequently deployed as this keeps up the fast pace and limits the impact.

Is your organisation on this journey? Many are embracing digital transformation and business transformation. Others aren’t and failing. Higher Education has some different opportunities and challenges to private sector, however many principles still apply. By getting closer to your students, having insightful data and getting to understand their needs, could result in being their chosen provider of lifelong learning, not just an initial degree. This increases the value from that initial relationship.

Education 4.0 is all about embracing technology in the future of learning, an area changing as a result of technology and student expectations. For the sector the challenge is to future-proof as it isn’t immune to disruption. In the USA Udacity has entered the online education market with no campus, is gaining thousands of students and already boasts 80,000+ graduates. With student fees so high, students will be looking for alternatives. The opportunity is to gain lifetime access to the students to be their provider of lifelong learning, therefore increasing their overall value.

What does success look like for your organisation? Suggestions would be collaboration, speed to market, doing things differently, great customer and user experience, business intelligence from data insight, business transformation, continuous iteration and being future ready. And don’t forget to mention digital economics – you heard it here first!

By Louise Wain

• Adding value & making an impact where business, finance & technology overlap.
•Lead commercial partnerships, strategic financial planning and shape the strategy to enable business development as the commercial lead on the Jisc Cloud Solutions senior leadership team.
•With a deep understanding of the business and financial considerations of cloud technologies, support business decisions on this topic internally and externally, focusing on business outcomes.

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