Cloud computing used to exist solely to cut costs, and in the early days of the technology, companies achieved impressive savings by using the service. But not any more. Now that everyone has access to the technology, it no longer provides a sustainable competitive advantage.

To extract maximum value from the cloud, companies must use it to generate new business and be more agile in their target markets. Today’s maturing cloud is well positioned to help. Indeed, progressive companies are already using it to drive fresh growth for the long haul. Apple’s trumping of brick-and-mortar music stores with iTunes is one example. In an economic environment characterised by austerity measures and crippled growth, long-term growth can mean the difference between thriving and barely surviving.

The potential is there: a recent study reported by Microsoft estimated that IT innovation created by cloud computing could produce as much as $1.1trn in new business revenues. Moreover, additional research by Forrester on ‘The Changing Clouds Agenda’ shows that cost is less important than business agility in a company’s decision to adopt cloud solutions.

Driving new business with the cloud
The cloud enables new business by supporting agility on several fronts, including connectivity across devices (which can be costly to deliver through internal IT projects); seamless, real-time collaboration among stakeholders (enhancing the value they gain from interactions with the cloud-enabled business); and extraction of insights from data through analytics, which can help companies identify consumers’ buying patterns and quickly provide targeted offers. The new business empowered by this agility can take numerous forms.

Speeding offerings to market
Companies that get innovative offerings to customers sooner than competitors can capture new revenues by grabbing first mover advantage. Toyota’s Prius conquered the hybrid market with this technique. Cloud services are helping companies accelerate speed to market by swiftly meeting a pressing need, or by building on existing strengths. Take Accenture and Google’s collaboration with Clarence House, the official residence of the Prince of Wales, the Duchess of Cornwall, and Prince Harry. The organisations partnered to take the website for Prince William and Catherine Middleton’s wedding live in just four weeks. Launched on March 31, 2011, the site received nearly six million unique visitors on April 29th 2011, the day of the royal wedding, and was scaled back down after the event. The project demonstrated that cloud computing could deliver a robust, readily scalable solution, and at a blistering pace.

NASDAQ’s cloud-based ‘Data-on-Demand’ service shows how augmenting companies’ existing strengths with the cloud can lead to new offerings. The service, which capitalises on NASDAQ’s vast stores of transaction data, provides investors with quick access to historical data on stocks and funds, enabling clients to fully test their trading strategies.

Expanding into new markets
Cloud services can help companies expand into new markets by, in some cases, quickly integrating newly acquired businesses. The Brady Corporation, a large manufacturer headquartered in the US state of Wisconsin, acquired 30 companies. By using the cloud, it was able to assimilate the new entities and standardise IT systems for customer relationship management (CRM) and human resources more rapidly than when using its own server-based software. The cloud can also position companies to expand their customer base and set up operations in new geographies. Motech Automotive, a Philippines-based chain of automotive service centres, used cloud services to open new branches. With quick access to back office systems provided by the cloud, setting up a new centre took just weeks instead of months.

Deepening relationships with customers
Today’s customers expect offerings tailored to their needs, and they interact with companies through multiple channels. To make customers feel unique under these challenging circumstances, companies must get creative and the cloud can help. Consider the Netherlands’ flagship airline, KLM. The company used salesforce.com’s cloud service to analyse passengers’ social media activity before their flight, seeking clues to their travel plans and interests. KLM then gave passengers small, personalised gifts before they boarded their flight, such as sunglasses to someone heading for a beach holiday, or a coupon for free apps to a traveller who checked in using his iPad. Passengers who received gifts spread the news to the tune of one million tweets.

Crafting a cloud strategy
Enabling new business using the cloud, companies need a clear vision and a strategy for realising the potential, otherwise they risk being left behind. The best cloud strategies identify new opportunities, which can capture and outline a process for exploiting them.

They also detail how executives will manage the organisational challenges that come with using the cloud. For instance, how will they reconfigure their IT function from a technology provider to a technical services business, rationalise legacy IT assets, and address data security concerns?

Planning is critical to formulating any cloud strategy; without it, a company may end up just bolting cloud technologies (like CRM systems) onto its legacy IT infrastructure. This tactical approach will not work. Instead, executives must take a holistic and strategic approach by exploring questions like these:
– What businesses should we be in three to five years from now to stay competitive?
– How should we interact with customers, suppliers, employees, and other key stakeholders to make those businesses successful?
– How will our operations and organisational structures have to change?

In crafting a cloud strategy, companies must consider their growth agenda and how the cloud can support it. Additionally, since the cloud is still evolving, they may need to look outside their own expertise and across industries to find examples of best practice, generating a broader view of the possible pathways to achieving greater success.

Here to stay, non-cloud companies that ignore it risk falling behind. When online video streaming soared, home rental stores lost revenue to competitor Netflix by refusing to embrace the new avenue of interactive distribution. It’s not a question of whether organisations should start using the cloud in more potent ways. It’s a question of when and how quickly. The answer? Now, and fast.