Accenture: High-tech firms challenged in cloud service delivery
By Enterprise Innovation editors 30-Apr-2012
High-tech companies should reevaluate their business operations as they transform their traditional business models of shipping hardware products or packaged software to a cloud service model, a new Accenture research advised.
The research report, titled "Where the cloud meets reality: Scaling to succeed in new business models", included interviews with more than 40 senior executives from 30 companies that operate, or are building cloud-based businesses including software-as-a-service, platform-as-a-service or infrastructure-as-a-service.
The research revealed that many senior leaders do not fully understand how the complexity of cloud-based business models impacts their company operations. This disconnection will become increasingly important because most leading technology firms expect to generate revenue growth through five or more business models by 2015, several of which are likely to be based on cloud, the research concluded. These companies typically have two-to-three business models today.
"Growing cloud-based business models is highly strategic and an immense undertaking for high-tech companies," said Mitch Cline, global managing director, Accenture electronics and high-tech group. "Companies face enormous operational challenges in determining how to support these new models and deliver the world-class experience demanded by enterprise customers, in particular. Companies aren't prepared today strategically or operationally to cope with the magnitude of disruption they're facing."
4 steps to overcome challenges
Accenture recommends that companies take these steps to help overcome the challenges:
- Determine how many business models they have today and which new ones are needed to capitalize on market opportunities;
- Identify and build distinctive capabilities needed to deliver business in the cloud;
- Develop a segmented operating model to deliver distinctive service capabilities with the right customer experience and economics; and
- Implement a governance model for making key resource allocation and other critical decisions.
"Executing these recommendations requires a dramatic departure from how most high-tech companies run today," Cline added. "Delivering to customers using a service business model is so fundamentally different than using a product business model that nearly all business operations need to be re-thought. As a result, high-tech companies need a coherent blueprint to make a successful shift to a services-centric business and to compete more nimbly with new cloud competitors. Chief operating officers in particular need to take more responsibility for forward-looking strategic planning and to develop sharply different capabilities and skills."