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How the cloud will kill your business

One of the benefits of cloud computing is that it lets you punch above your weight. A business can quickly enable computing resources at a fraction of the cost it once paid, so cloud computing helps level the field for smaller businesses.

This is good news for the smaller businesses. But it’s not such great news for larger companies that now face a smaller business that’s disrupting their market. There is an impressive list of once-small companies that did this, a list that includes Uber, Airbnb, and Netflix, as well as hundreds of other smaller companies that have driven market share to their doors by using cloud-based technologies as accelerators to disruption.

Examples of their cloud-enabled smaller disrupters include a health care supply company that uses RFID to automatically detect low stock and automatically reorder new stock without bothering the staff. It also can update the accounting system, pay vendors, track shipments, and deal with mistakes, all automatically, without frustrating the people. This is innovation that the larger businesses could not imagine.

The Global 2000 moves too slow to deal with this threat. These very large corporations—it doesn’t matter if they’re in the finance, health care, retail, or you-name-it space—typically can’t change fast enough to keep up, including making the necessary changes in IT.

There come a point where the market moves beyond an enterprise’s ability to align to it, and customers will notice. At the same time, smaller businesses will continue to leverage their agile digital advantages to build better customer experiences, using cloud technology to do it fast and cheap. This is the typical beginning of the end for the establishment.

We won’t see 100-year-old brands going out of business tomorrow, but we will see their “I give up” actions, such as selling to a consolidator or shrinking the company through layoffs, location downsizing, and product or service divestitures. The most noticeable evidence that this shift is well under way is in the retail space, with once-dominant companies like Sears and Toys R Us dying.

At the same time, we’ll see new businesses emerge that quickly move from less than $1 billion dollars in sales to many billion dollars, with some surpassing their decades-old traditional competition. As we saw with Amazon.com versus for traditional retailers.

What this shift means depends upon your perspective.

Right now, larger companies should be very afraid, unless they are the one in a hundred that saw the writing on the wall and quickly took steps to change. Most did not. There are just too many decades of politics and layers of fear that keep them from trying new things. They have lost touch with the innovations and risks that got them to the top of the heap in the first place.

Smaller companies will thrive, and some will even come to own their market. New businesses will almost naturally take advantage of this opportunity with new systems and strategies that use the most current technologies. I suspect many small businesses will be in a better position to adapt their systems as well.

Many of the largest businesses will turn the ship fast enough to dodge all or even most of the torpedoes. The landscape of the larger brands will see significant changes in the next ten years. You’ve been warned. 

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