The Innovation Services Revolution

Innovation Tools that Work: Part 6

There is a cloud on the horizon. For the last 10 years, it has been looming larger and larger, engulfing more and more of the digital sky in front of us. The storm is part of an industry pivot which is not just changing, but completely revolutionizing the way we interact with our digital devices, and simultaneously making the digital lives of consumers easier and more reliable. Not only that, but it is making innovation cheaper and more powerful.

The revolution is driven by cloud computing and its unique ability to offer software products by way of a service. Pay for what you use; not for what you might use, as has been the industry norm with software products in the past. Cloud computing allows one the ability to break down the costs of something large, complex or expensive into smaller, more affordable amounts spread out over time.

The advantages of cloud computing are not just cost-based. The defining features of the new services are almost ubiquitous access, on-demand self-service and rapid elasticity to respond quickly and efficiently to demand. For those developing tools built on a cloud platform and sold via a cloud-based service provider, such as Apple’s App Store, the distribution, and reach of such services are second to none.

Since the initial development of this form of interconnected computation, many new incarnations and spinoffs have appeared. Today, almost everything is being offered via the cloud, even the proverbial kitchen sink. Not only have existing tools such as Microsoft Office been extended to the pay-as-you-go model, new infrastructure is accessible via the cloud—for software platforms, manufacturing hardware, desktops and much more. It is all part of a trend to reduce the barriers to entry into the market for certain products and services, both new and old.

Cloud Computing: X as a Service

Cloud services make these products and services cheaper by reducing the upfront costs and hence increasing the number of users and level of engagement. At the same time, if the price of a company’s latest offering can be reduced, its business pitch can be made more compelling to investors and customers, leading to more successful business launches. New services aside, a cheaper product means more potential users, which means more potential income. Hence, business models based on cloud computing have given birth to thousands of startups; companies which would not have existed otherwise.

All these new cloud services have spawned a vernacular of terms and abbreviations. For example, it is quite common to see four letter abbreviations starting with a capitalized letter and followed by aaS, e.g. IaaS, PaaS, SaaS, FaaS etc. The general abbreviation theme is XaaS, where X denotes a cloud service, for example, Software, and the aaS stands for as a Service. It is this cloud-based business model which is creating the next software revolution.

Both enterprise and ordinary consumer-focused companies are driving a wave of growth in this area, with around $2 billion of venture capital pouring into cloud computing in the United States each year since 2011. In 2008, the top 10 public cloud companies had a total market capitalization of less than $25 billion. In 2015, that had risen to more than $170 billion. Almost 700% growth in just seven years!

It is a phenomenally powerful business model which has simplified the creation of billion-dollar businesses as can be seen by the number of unicorns prancing around in the American startup scene. Where it will go in the future is difficult to predict but we are already seeing some exciting developments in a number of unexpected fields. More details can be found in my forthcoming book Innovation Tools (click here).

Part of this was an excerpt from my forthcoming book Innovation Tools, to be released 5 July 2016 on Amazon (click here).