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The snowball effect of digitization on go-to-market strategies

Stephen_Spector

Guest Post:  Xavier Poisson Gouyou Beauchamps, VP, Cloud Computing, HP EMEA 

 

Looking around us, we can see the growing impact of the digitization effect. Software is increasingly becoming a core component of products and services. Ranging from cars to houses, from healthcare equipment to education processes and even global transformation of cities and utilities, software is now everywhere. In most enterprises and organizations, the design of a new product or service will inherently include a proportion of software, ensuring specific end-user functions.

 

As part of their business mandates, R&D teams now incorporate software as an essential product element. As a result, organizations need to ask themselves how they will overcome new challenges, such as:

  1. How will they manage, re-use and protect all the software components which become core assets to them and to their value on the market?
  2. How will they at once improve and accelerate their internal software development processes, while shifting to software-based services components in their products?
  3. How will they handle the life-cycle management of these new assets taken individually?
  4. How will they control the life-cycle management of the software combinations included in a final product or service?
  5. How will they leverage the presence of these software components in their products and services to create new business models and distribution strategies for their offerings, while taking into consideration the inevitable, growing security and data privacy issues coming from this digitization effect?

It is interesting to see that organizations on opposite sides of the spectrum from a size perspective – both start-ups and large enterprises alike (even if part of a longer journey for the latter) – are profoundly transforming to cope with the first four questions above:

  • All major organizations, seriously addressing area number one, are creating digitalization offices.
  • Business units are starting to shift their development processes to use cloud native and agile development tools that rely on open source, to free the application from any infrastructure contingency and create “services” that can auto scale by design, expanding or shrinking according to user demand.
  • To tackle areas two and three, more advanced organizations are implementing enterprise service catalogues. This heralds a paradigm shift from an enterprise vision, in which applications and associated data are strictly correlated and dependent of the underlying IT on which they operate, to one in which there is a population of abstractions, i.e. cloud services made of applications, links to data, links to infrastructure, yet independent from the underlying IT infrastructure.
  • A growing number of organizations are leveraging DevOps, designed to automate the comprehensive value chain from software development to test, integration, and push to production phases to respond to area four. With DevOps, the ability to regularly update products with new software versions designed to adapt to end-user needs or expand product capabilities continues to progress – a process all the more critical for mobile products or services.

Area number five, however, remains to be explored: R&D and innovation teams have the opportunity to expand the digitization process implemented in the product definition and engineering phase, impacting how this new generation of software-filled products will be distributed and sold.

 

Via a traditional go-to-market model the software components would be embedded into the product or service, with the associated data generated by the interaction between the user and the product staying inside the product. The price of the product would be fixed, a sum of its different physical and virtual software components.

 

A fresh approach would be instead to separate these products’ costs into two parts. The first amount, referring to the physical components of the product or service, would still have a fixed price. The second portion, the software one, would have a price linked to the usage of the product, or “pay per use.” In this case, the shift from an old to a new-generation product would be incentivized and would match the consumption pattern of the product’s users.

 

Cloud technologies can help to enable, control and secure this new model, if the software components of the products are delivered as a cloud service by a service provider:

  • The cloud service provider would be responsible for delivering, monitoring consumption, and billing customers for the software part of the product or services, as well as providing the product supplier with the end-customer consumption fees.
  • The cloud service provider could pre-purchase a certain quantity of the product or services’ software components, which would have been packaged as a cloud service, from the supplier.
  • The cloud service provider could act as the life-cycle management engine for the product supplier, in terms of all related software updates, as well as the data generated by the software components, or cloud services.

In order to achieve this new go-to-market framework, enterprises could build this cloud service provider function in-house. This would need to be studied carefully, as the telecommunications, security, business continuity, and IT infrastructure issues handled by a cloud service provider are very different from the ones of an enterprise IT department. The costs to build this function and manage the associated risks may be too high to drive long-term return on investment: Short-term profitability is most often expected from these new products and business models, touted as offering more agility.

 

According to the product or service usage, data privacy issues may also constrain the overall process, especially when data generated by the product or service needs to be hosted in one location or another. A company with a datacenter in one country, for global sales and usage of their products or services, may not be in the best position to overcome these issues; hence, the idea to delegate this part of the process to a specialist – one or multiple cloud service providers.

How then can an enterprise or an organization easily access multiple service providers and launch such a go-to-market structure for their new offerings? How can they publish the software components of their products and services as cloud services in a central service catalogue, while keeping the delivery of these cloud services local?

 

Cloud 28+ (www.cloud28plus.eu) helps answer these questions. This initiative groups cloud service providers, software vendors, system integrators, and cloud service certification agencies across different countries to publish a common catalogue with hundreds of cloud services. It also enables local execution of these services, if requested, by Cloud28+ community members. Collaboration, interoperability, open standards, cloud native application creation, and improved service management and distribution are amongst the community members’ core shared values. By learning about the community’s capabilities and engaging with its members, enterprises and organizations today have a means to start creating and implementing new go-to-market models for products and services in which software plays an increasingly critical component.

Senior Manager, Cloud Online Marketing
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About the Author

Stephen_Spector

I manage the HPE Helion social media and website teams promoting the enterprise cloud solutions at HPE for hybrid, public, and private clouds. I was previously at Dell promoting their Cloud solutions and was the open source community manager for OpenStack and Xen.org at Rackspace and Citrix Systems. While at Citrix Systems, I founded the Citrix Developer Network, developed global alliance and licensing programs, and even once added audio to the DOS ICA client with assembler. Follow me at @SpectorID

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