Page 210 - How Cloud Computing Is Transforming Business and Why You Cant Afford to Be Left Behind

MANA GEMENT STRATEGIES F O R THE CL OUD R EV OL UTION

late to their customers. As it matures over the next few years,
unease with the term cloud computing will disappear, and this
disruption will become known as the cloud revolution.

To Disrupt or Be Disrupted

What generally happens to businesses when they are faced with
disruptive change? A number of fascinating studies have cap-
tured the effects of disruption. In summary, they say that a
new, low-cost way of doing things appears, based on new tech-
nology underpinnings. Initially, established businesses reject
the change because it isn’t as well developed as the products

they offer. It also lowers prices and margins and is unsuitable
for their core customer base. The early adopters are not their
customers anyway, and they represent low-profit prospects.
The change, however, is revised, improved upon, and built out
by those who see value in it, and it is adopted by more and
more customers. Established businesses see their customers
starting to make a shift, so they rush into the new technology.
But leadership in the segment has already been assumed by
those who pioneered its development. Established businesses

decline or fail in the face of this new competition.
A book that graphically captures the sequence and draws
measured conclusions from it is The Innovator’s Dilemma,by
Clayton M. Christensen (HarperBusiness, 2000). Established
businesses have a hard time coping with disruptive change be-
cause their culture has set up processes and cultivated pat-
terns of thought that serve their existing customers. To serve

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