The Business Model Gap

Much of the work we’re doing now is focused on helping companies migrate their business to the cloud.  In a recent survey we conducted, in industries like telecommunications, banking, retail and manufacturing, anywhere from 60 – 75% of the companies surveyed said they are planning on migrating 10% or more of their IT spend to the cloud. This represents a significant shift in spend, particularly when you consider the fact that most companies spend 64% of their IT budget on running existing infrastructure, 21% of spend on growth initiatives, and only 15% of spend is allocated to transform IT.

As we peel back what’s happening with this spend, we see a large portion of it focused on expanding existing initiatives, particularly in industries such as Telecommunications and Banking where companies (and the software vendors that serve them) have already been piloting cloud initiatives, particularly focused around SaaS. In other industries such as manufacturing, there is a focus on beginning to test and pilot and more evenly balanced between IaaS and SaaS.

But what’s interesting is that when you talk to these companies and their vendors, most talk primarily about how they are working to stand up cloud infrastructure, and testing the technology components of the offering. Few if any really get into, or are even considering the dramatic business model changes they will face as they transition from POC’s and Pilots to market deployments.

It seems to us that there’s a wave of business model change coming across a range of industries, and very little understanding or focus on what that’s going to mean for the core business. In future blogs we will explore what we feel are some of the important dimensions of this change.

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