When people have asked me over the past year or two what’s the next big thing in cloud computing, my answer has always been, business transformation. Now I have a new, more specific answer: Frictionless Enterprise — also the title of a book I’m working on to publish next year [see disclosure].
I’ve always said it’s a mistake to focus solely on the underlying mechanics of the cloud. The bigger picture is the massive change in society and business enabled not just by cloud computing but by every aspect of the Web and its interplay with all of today’s incredible, connected, intelligent electronics. By far the most exciting aspect of this wider cloud of automated connectivity is the way it helps individuals and enterprises break down barriers, find new ways to interact, and create innovative new lifestyles and business models.
The unifying theme at the heart of all this potential for transformation is the simple absence of friction. In the cloud, on the Web, there’s no distance to slow us down, no custom infrastructure we have to build, no paperwork to get lost. We can make connections, harness resources and start interacting without ever having to wait for physical stuff to happen first. This on-demand access to information and resources has already transformed long-established industries such as bookselling, classified advertising and music publishing. And that’s just a foretaste of what’s yet to come.
Frictionless enterprise marks a total reversal from classic theories of the firm, which held that resources had to be contained within the enterprise because it incurred too much friction and cost to go outside for them. Today, the opposite is true. It takes too much time and expense to acquire or build stuff in-house if it’s already available on-demand from the cloud. The most successful, efficient organisations are those that can easily connect to and harness those cloud resources.
That’s why we see enterprises embracing social computing, so that they can interact more freely with customers, partners and employees. It’s implicit in enterprise adoption of smartphones and tablets, so that employees can access business resources and collaborate with colleagues wherever they happen to be. Frictionless enterprise is driving the proliferation of cloud applications and services as organisations seek to access more adaptable, convenient and cost-effective business resources. It’s encouraging the rise of more flexible, iterative and self-service approaches to business technology implementation, development and support.
One of the most interesting harbingers of the rise of frictionless enterprise is the emergence of what’s been called the subscription economy. Many of the ingredients of frictionless enterprise have come together to create the modern online subscription business model. A pay-as-you-go service like ZipCar would not be economic without smart devices, mobile communications, self-service web pages, a distributed workforce, real-time information updates and a cost-effective cloud infrastructure for automatically processing bills and payments. With all of those ingredients in place, many innovative new businesses become possible across a swathe of industries, all building on the game-changing foundations of frictionless enterprise.
That’s why you have to look beyond the technology and see the business transformation it enables to really understand the bigger picture today. I think Denis Pombriant put his finger on a crucial point in a blog post yesterday about the End of the On-Prem Paradigm. At a cursory reading, the post is about the impending, post-peak demise of the conventional on-premise software model. But I felt a broader resonance when I read his assertion that “the businesses with the smart money are getting out of on-premise and trying to figure out the models they need to survive as cloud companies.” It isn’t only software vendors that have to figure this out. It’s every player in every industry. The successful modern business is one that is not fixed in place, contained within its own ‘prem’. It has to transcend physical walls and boundaries, harnessing the cloud to share information, co-ordinate resources and interact with customers wherever they are. The new paradigm is frictionless enterprise.
(Cross-posted @ Software as Services Blog RSS | ZDNet)