Cloud’s democratisation of tech means firms need to refocus on their data
As we follow the continuing evolution of cloud product offerings from one year to the next, one thing is clear: they keep getting smarter. The clever people at Google, Amazon, Microsoft and others clearly take their product management very seriously, working in close collaboration with customers to understand their needs. Moreover, the sheer scale of their customer base makes them highly effective at identifying solution patterns that can be repeatedly applied across many different domains.
As a result, public cloud providers now have out-of-the-box, managed solutions for nearly all generic use cases – capturing and storing data, exposing content over the web, managing business workflows, collaboration, etc. These solutions come at trivial cost compared to the investment their customers would traditionally spend provisioning and managing such tools from scratch, the cost being mutualised across cloud providers’ entire customer bases. In this way, cloud is having a profoundly democratising effect: firms with bigger IT budgets no longer automatically have access to more sophisticated technology than their smaller rivals.
This has implications for firms’ commercial strategies. The proliferation of cost-efficient managed services, together with the inexorable march of automation, is eroding the potential for firms to outperform others with similar products purely by being more efficient. Accordingly, firms across many sectors are coming to the uncomfortable realisation that there is precious little to genuinely differentiate them from their peers.
Every retail bank, for example, now offers a mobile app with two-factor authentication with the same basic features – instant payments, cash management etc. Product managers scramble to find novel features to make their app stand out, but risk straying into gimmick territory by doing so.
More generally, customer experience is indeed an important differentiator, as are brand and pricing strategy. But one factor sits under and enables success on all of these: Data.
We have been saying “data is an asset” for around 20 years by this point, but it is only with the massive democratisation of technology that we see how relevant data really is to market competitiveness. A company with better data (and the capability to mine it for insights) can more easily identify product features their users want vs. those which can be retired, and predict how product usage will change. It can better assess how its brand is perceived, and which segments to target with which marketing channels and messages. It can predict with greater confidence how pricing changes will affect profitability. There are many more examples.
Data also becomes an asset in another context – when you can sell it. Many of our clients collect vast amounts of data from business interactions which, subject to GDPR and other legal/reputational controls, can be monetised by offering APIs to the broader digital ecosystem. Often the value proposition is not just around sharing the data collected, but insights derived from it – for example, pricing and other statistical models can be made available for external parties to consume on a paid basis. This can turn a traditional bank or corporate into genuine digital product company for the first time, adding a new and compelling revenue stream on top of the existing business model.
Such opportunities set the focus firmly on how effectively an organisation manages data, as an indicator of how competitive it can remain. Here again, access to technology is no longer a differentiator. Cloud providers now offer a raft of powerful data tools including big data processing, machine learning, streaming analytics and more, on-demand.
What we see instead is that an organisation’s ability to get value from its data ultimately depends on the competencies of its people and their cultural recognition of data as the ‘new oil’ underpinning the success of their organisation. In many organisations we work with, ways of working are not optimised to adopt new tools and methods rapidly, or to pivot their business strategies based on insights drawn from their data – expect more on this in a future blog.
These observations leave us confident that, across every industry, the organisations which make better use of their data will continue to outpace those who fail to do so.