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Cloud Supply Chain Can Learn From Auto Industry


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Often times, we can get a glimpse of where one industry is heading by learning from the changes in other industries. With the rising adoption of cloud computing, suppliers of IT products and services can take a page from the evolution of auto transportation industry in the past decade and get a sense of where the risks and opportunities lie ahead. Here are three lessons they can learn from it:


Lesson 1 – Customer buying behavior is changing

Instead of doing oil changes and servicing their vehicles themselves, a lot of auto owners have opted to take their vehicles to service stations or auto dealerships for oil change and maintenance services. In addition, the growing popularity of leasing vehicles instead of outright purchase further fuels the shift from do-it-yourself to pay-for-service.

IT vendors who has been selling hardware and software licenses to IT department might find their revenue declining as their customers shift their buying behavior from building and managing all IT assets themselves to consuming services from third party providers. With the emerging popularity of public cloud services such as Amazon Web Services and Google Cloud Platform, businesses are buying less hardware and software directly from traditional IT vendors and selectively source services such as compute or storage from cloud service providers directly. Traditional distributors and resellers of IT products and services must shift their business model to adapt to this new buying pattern. Otherwise, they might become the next Blockbuster. In my next blog post, I will go deeper into the risks and opportunities for channel players.


Lesson 2 – Retool and Improve Your Employee’s Skills

With the introduction of hybrid and all electric vehicles, consumers are increasingly adopting these new type of vehicles to enjoy the benefits of better gas mileage and environmental benefits. Of course, that does not mean the end of gasoline or diesel vehicles. In fact, there is still an abundance of those vehicles on the road today but the number of hybrid and all-electric vehicles are growing rapidly. What does that mean for the auto supply chain? New parts are needed for these new engines and technologies. Auto dealerships and service stations will need to purchase new parts and retrain their service technicians in order for them to service these new vehicles. For IT vendors, traditional system integrators, consultants and managed outsourcers will need to add to their current knowledge and skillets to understand how to plan, migrate, integrate and manage the hybrid environment spanning traditional IT and cloud native applications and services. If they don’t, they will lose the customers to someone who do.  


Lesson 3 – Your cheese have been moved. Adapt or die.

New players will emerge to take on new roles in the cloud industry – for bringing together new buyers and suppliers who can provide what buyers need, delivering value-added services and providing superior customer experience. Again look at the auto industry. Firstly, Tesla Motors is certainly gaining a lot of new customers with their beautifully designed all electric cars. Secondly, the rapid ascent of Zipcar and Uber are great examples of disruption that is changing the transportation industry. Tesla upgrades its functionalities and fixes issues with software grades. Zipcar allows you to have access to vehicles where you need them and pay by the hours or days you use with gas and insurance included. Uber is a technology-enabled logistics orchestrator matching the customer demand (riders) and the suppliers (drivers with their own cars) and delivering the service with superior user experience, frictionless end-to-end process and trust worthiness. Uber is now expanding to helicopter flights with its UberCHOPPER service. Finally, the recent $500 million investment made by General Motors in Lyft, a competitor of Uber, is an evidence that traditional auto makers are recognizing the shift in their industry. The current business model for traditional IT vendors is being disrupted and the roles of current supply chain players will change. IT vendors must understand who are the real competitors and then adjust their strategy to counteract those disruptive forces. Successful cloud vendors are those who can bring the services end customers need in a timely manner with superior satisfaction. Intermediaries that slow down the transaction process or don’t add value will fail or cease to exist.


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Traditional IT suppliers should carefully examine their current business model and adapt it to where the customers are moving to. It is imperative for them to invest in people, process and technology to serve new and changing customer demands. However, they don’t have to do it alone. Work with a trusted partner like Hewlett Packard Enterprise to access new opportunities and plan the transformation journey. Visit for more information.

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