How Amazon & Google changed the way we do business
Amazon and Google have changed the way we do business forever with the cloud. We must change our ideas, perceptions and behaviours to have a relevant role in the coming years.
This is the call to action I have been using within my business for a couple of years. Initially all our attention was focused on cloud technologies from the view point of how we managed technology and technology services.
However, what has become apparent is that cloud changes everything and ‘the everything’ is not just everything in IT but everything in business too. For the all ‘C’ level executives, that change is well under way. There is a real danger that the traditional business executive will not grasp the wider implications of cloud technology on their business, or the underlying changes taking place in society and the potential to impact their business in unpredictable ways until it is too late.
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The common definition of ‘cloud computing’ is that the following characteristics have to be in place. Shared resources, available in a self-service model with elastic capacity paid for on an as used basis. This has been made available by the way Amazon in particular reinvented our computing model and drove into first the consumer and then the business world.
Some of the capabilities cloud technologies are bringing to traditional businesses have been around a while, but have been viewed as consumer rather than business capabilities. That picture has now completely changed and with that change a new challenge is emerging for businesses beyond their IT function.
That challenge for the executives of businesses comes from ‘cloud computing’ creating new business models and new business opportunities, as well as new competitors and a new way of thinking about organisation design, agility, effectiveness and innovation.
As an example, the relevance of a traditional business case cycle that takes months and multiple layers of management to get approved, can mean a new ‘cloud’ based business competitor is up and running and stealing a march on the market, while you are still worrying about whether to wait for the next budget cycle, or whose organisational toes are being trodden on.
Will the business old guard really accept that all businesses are becoming data and software businesses needing completely different client engagement models to those that have been successful in previous years?
Cloud has removed the financial and physical barriers to super computing in a digital world. I can remember when super computing was only available to governments and the grandest of global companies, now it’s available to next generation of employees and they are using it with a freedom and invention that is incompatible with current business thinking.
Right now, somewhere, there are people using these technological capabilities to reinvent your business and offer your company’s products and services in a completely different way, at a fraction of your current cost/price.
Cloud is changing business as radically as it is changing society. The way society changes will in turn further change the way our businesses operate. Different markets and geographies may be impacted at different times and are at different stages of adoption today, but they will all be impacted in the coming years.
I have been working with a vendor on a ‘lab for hire’ concept. Essentially using the cloud model of on demand shared resources, available in a self-service model with elastic capacity paid for on an as used basis and applying it to knowledge based services, in this case data analytics.
This type of business engagement model in areas such as consultancy, is a radical departure from past business models around consulting/knowledge style engagements. The vendor has a large organisation of skilled workers in various analytics software tools and use cases and these are available in the same way as Amazon Web Services are. I think we will see this model being adopted by more and more service based companies as they are forced to align to a completely new way of thinking about models of engagement with clients who are being driven by the impacts of the cloud technology model.
So, we can see that cloud technology is leading not just to changes in IT functions, but also in the reinvention of the business in the widest sense. Both the way businesses are developing their go to market products and services, and in the way businesses think about their overall organisation structure and commercial arrangements; cloud is fundamentally changing business models.
About the author
Matt Graham-Hyde, is the CIO of Kantar and has over 15 years’ experience as a CIO in major international businesses. Matt is the author of “The Essential CIO” (£14.99 Panoma Press) which is available from Amazon now!
M&A activity key lever for future tech sector growth
Despite the continuing uncertainty of the pandemic, the tech sector has witnessed soaring dealmaking activity over the past year, rocketing in the second half of 2020, with the last quarter of 2020 a record one for M&A activity, and momentum continuing into 2021.
Dealmaking in tech sector soars in past year
And the latest figures bear this out with the number of technology M&A deals totalling US$208.44bn globally in Q1 2021, according to GlobalData. While the US holds top spot both in volume of deals (1034) and total value (US$140.61bn), Europe ranked next with 649 deals (US$44.49bn) with the UK continuing its reign as Europe’s biggest M&A market with 204 deals.
In particular, megadeals – those valued at US$5bn or more – soared in 2020 representing 59% of all global technology sector deal value in 2020, up from 47% in 2019, according to the latest edition of the EY Technology Global Capital Confidence Barometer.
This tech sector trend towards megadeals is backed up by EY’s CCB data, with 16% of tech sector respondents planning to pursue transformative deals valued at US$5bn or more in the near-term.
While technology deal activity “all but stopped at the beginning of 2020 after fluctuating between historic highs and lows, companies pivoted quickly and tech M&A exploded in the second half of the year”, says Barak Ravid, EY Global TMT Leader for Strategy and Transactions.
M&A activity level for tech sector growth
Looking ahead to the future, technology executives are optimistic, with nearly half (47%) expecting profitability to fully rebound this year, according to CCB data, compared to 23% across all sectors, and with more than half (51%) planning to pursue M&A in the next year in order to sustain growth.
According to Ravid, M&A activity is increasingly becoming a key lever for growth as businesses look to recover.
“To position themselves for future revenue growth, tech companies are now adjusting their M&A strategy to focus more on a target’s business resilience, digital technology alignment and to gain market share through consolidation,” says Ravid.
However, with an increasingly competitive deal market and ongoing geopolitical tensions, the majority of tech execs expect to see more competition in the bidding process for assets over the next year, primarily from private capital.