Hi, I’m Jared Hillam,
In the 1960s and 70s, Toyota coordinated their manufacturing and supply chain in a way that nobody had ever tried before. Rather than keeping a massive inventory of parts for their assembly line, they optimized their suppliers to deliver parts just-in-time to be assembled onto the car. This efficiency gave Toyota a major edge against its competitors. Over time, however, just-in-time manufacturing became a normal part of the automobile supply chain.
A similar transition has been occurring in the cloud. In the not so distant past, when enterprise software was being procured, it looked the same as purchasing equipment. Often that software came in a box with CD’s for installing it. If you wanted maintenance and support you had to buy that separately. Additionally, companies had to commit to buying servers where that software could be installed.
The cloud completely changed that model. Companies like salesforce.com eliminated the complexity of upgrading software and provisioning hardware. This effectively threw the software industry on its head. Suddenly, on-premise software vendors could no longer compete with software as a service in the cloud.
This transition is happening even today. Many legacy solutions still carry the baggage of their on-premise past. I have a video that talks to some of the less obvious baggage called “Why born in the cloud matters”.
But now there’s yet another transition that is occurring in the Cloud that goes beyond the efficiencies of software as a service. See most software as a service providers deliver their solutions on a per user basis. This method of delivering a solution requires customers to hold a license for the agreed contract duration of the service. Usually, these durations have discounts for longer time commitments. However, if the customer doesn’t use these licenses, they are stuck with those named users effectively wasting that money. The software as a service vendor, on the other hand, reaps the benefit during that year of non-usage as no compute resources are used during that period. Like the pre-1960s manufacturing days, this means that organizations often hold inventories of licenses which go unused creating inefficiencies. However, even the cloud isn’t what it used to be during the initial release of salesforce.com.
The cloud today provides an elastic allocation of storage and compute resources without requiring organizations to take ownership of physical or even virtual hardware. What this means is that software can now be designed to request just-in-time compute and storage resources. Meaning the organization can request computation resources on demand just when they need them, then turn them off when they don’t. This licensing model is creating yet another tier of competition between cloud vendors, and I believe will be the next wave of efficiency. This model will drive a commitment to customer-centricity which surpasses the traditional software as a service approach. This is because the software vendor’s incentives will be completely aligned towards usage. If the customer doesn’t use the solution then the software vendor won’t make money. This also means that the per-user licensing model will fall behind the aggressive just-in-time compute model.
Intricity has built a practice around helping its customers identify technologies that closely align with these high levels of customer-centricity. If you would like to read about one such use case take a look at my whitepaper linked in the video description. Also if you’re evaluating data solutions, I recommend you reach out to Intricity and talk with one of our specialists.
Here is the link to the whitepaper: https://lnkd.in/evaRRcH
Here's a link to talk with an Intricity Specialist: https://lnkd.in/ecr5VXw