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BEHIND THE CLOUD BOOM - THE CLOUD BUSINESS AUTOMATION MODEL
Cloud based business automation is considered one of most important technologies of the decade. Companies that have adopted and are following the principles of the Cloud Business Automation Model are expected to become leaders in their markets. On the other hand, those that don’t are predicted to lose significant market share. Some pro cloud market analysts even predict cataclysmic financial change.
This effects of cloud business model adoption are expected to be seen in the turnover rate of Fortune 500 companies. Analysts suggest that the turnover rate may reach new highs in the next 5 years as those that haven't followed the tenets of cloud business automation are replaced with those that have. Historically, the rate of turnover for the Fortune 500 companies has trended upward, from approximately 25 companies per year in 1955 to over 35 per year today in 2012 (1). Because of the effects of cloud automation that number is expected to increase even higher, resulting in a possible turnover of over half the companies on the list by 2017.
One metric that analysts use to predict changes in the turnover rate of Fortune 500 and Fortune 1000 companies is business operating costs. Because analysts know that cloud automation and associated business process management technology reduces business operating costs they know that companies that adopt it will gain market share, making it easy for them to predict the fortunes of the Fortune 500.
Astute analysts and even venture capitalists and investors take the cloud analysis one step further. They look at the level of cloud automation and business automation programs that are in place at companies. Companies that have followed cloud automation principles diligently are more likely to be marked as not only safer investments but investments with a higher return, And that's because companies that are skilled in the art of cloud business model optimization can reduce operating costs more than those that approach cloud business automaton half-heartedly.
Many believe that cloud business automation will have more of a business impact than the world wide web. Comparing the cloud boom to the dot com boom however requires a close look at the business parameters that the web business model and the cloud business model have had the most effect on.
The web boom and the resultant dot com boom increased the demand for skilled IT workers and fixed technology assets like high performance software, workstations and networks. Unlike the dot com boom, the cloud boom, has resulted in a reduction in demand for workstations, workstation software, network equipment and network software. Also unlike the web boom, the cloud boom has resulted in a reduction in demand for IT programmers and maintenance personal.
Today’s start-ups, small and mid-size companies see not just the reduction of operating costs as a factor in their cloud decision. They also see the cloud as a way to increase their technology power to the same level as large corporations and governments. Today, through judicious selection of cloud vendors, an engineer can access the same product development tools for pennies that large corporations have spent millions on to integrate into their infrastructure.
In both of the government and financial market segments, there are signs that the cloud is changing the economic landscape. In the United States, the federal government’s IT budgets are pointing downwards The government emphasizes that cloud based technologies are expected to lower IT costs further. Companies in the financial markets have reported significant IT layoffs that they attribute to the “IT Transformation, ” the code word for the IT migration from yesterday’s bulky on-premise ERP solution to the streamlined BPM cloud solution. The business solution that Cloud and BPM vendors market as IT-free, software rich, and computationally unlimited
The cloud boom is here today because the cloud has removed the major impediment to high technology entrepreneurs: IT capital outlay, services and maintenance costs. Today’s cloud boomers, that group that lives and breathes the cloud, don’t have the up-front hardware and software expenses that the dot comers did. They also don’t have an IT staff.. Even more important, because of the cloud, today’s cloud boomers can expand and contract their business at will and without IT expenses. The same expenses that put an end to the dot com boom.
About the Author
Mark Stansberry has been involved in the technology markets since the early 1980s. His background spans a variety of technology market segments. Mark works as an analyst, engineer and technical writer in various segments of the electronics hardware and software markets. His current focus, which is always on the latest technology, is on cloud technology and graphic design automation. Mark can be reached at mark.c.stansberry@gmail.com
References
WHAT DOES FORTUNE 500 TURNOVER MEAN? Dane Stangler and Sam Arbesman
Ewing Marion Kauffman Foundation, June 2012, http://www.kauffman.org/uploadedFiles/fortune_500_turnover.pdf .
