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How the cloud fuels digital disruption

Ray Wang, principal analyst at Constellation Research, sounded the alarm on digital disruption at the recent Oracle CloudWorld conference in Boston and explained how cloud can help companies go digital.

BOSTON -- The digital disruption of traditional business models is all around us, from Netflix's assault on network TV, to Uber's customer-centric answer to calling a cab, to the industry-decimating power of the iPhone.

"[The iPhone] destroyed 27 business models," said Ray Wang, principal analyst and founder of Constellation Research. "Where do you get your flashlight? Where do you go for GPS? Where do you get your photos developed? Where do you get your music?"

The question for IT leaders is how can they help their companies successfully navigate the digital shift, Wang said. A keynote speaker at the Oracle CloudWorld conference in Boston last week, Wang outlined the hallmarks of some well-known digital disruptors and laid out why the cloud is the foundation for helping companies go digital.

Ray WangRay Wang

Wang said the first thing IT leaders need to understand is that the digital shift happening right now is not about the cloud or about technology per se but about technologies being applied to business models, and in particular, to improving customer service.

"We are competing for experiences and outcomes in this digital business revolution," Wang said. "We're talking about delivering things that people get excited about." If companies can provide experiences that customers get excited about, the traditional customer metrics -- conversion rates, referrals, customer loyalty, reducing customer acquisition costs -- will follow, Wang said. "[These are] the outcomes we're trying to bring with customer experience."

How cloud helps

Cloud computing helps companies deliver a seamless customer experience in several ways, Wang said, by removing  many of the barriers blocking companies from engaging with customers, as well as the barriers blocking customers from finding and engaging with the information or services they need.

The worst thing you can do is replicate the same crap that you did in the other system in the cloud.
Ray Wang, analyst

The time saved by the cloud's capacity to speed up IT implementation leaves more time to think about improving the delivery of these services, from design to rollout.

"You want to spend the time you would not have had before to design the experience, improve the quality of implementation, to get your project plans done correctly -- to  use that opportunity to do it right," Wang said. "The worst thing you can do is replicate the same crap that you did in the other system in the cloud."

Cloud also makes more frequent upgrades possible, without disrupting the work flow, Wang said. The standard upgrade cycles of every two years or every year keep getting shorter.

"There's some consumer software that you use that gets updated every day," Wang said. "If you had 365 upgrades and you waited until the next year to do that on premises, how far would you be behind? That's the pace of change. You cannot fall that far behind."

Employees are your customers too

Wang said it's not only important to deliver a seamless experience to customers, but it's also important to use the cloud to deliver an experience to your employees that will ultimately make them more productive. And he said you do that by giving them access to the information and tools they need when and where they need them.

"You want to take away the barriers [for employees] of engaging in your systems; you want to bring information up to democratize data [and] ultimately to democratize decision making," Wang said.

Wang likened it to walking into the room and knowing what was on everyone's mind so that he could better gear his presentation to answering their questions and concerns. The same would be useful for employees: If each employee had all he or she needs in front of them -- and just what they need -- they would be more efficient at problem solving -- and better yet at disrupting the status quo.

Let us know what you think about the story; email Kristen Lee, features writer, or find her on Twitter @Kristen_Lee_34.

A new company and an old one use technology to deliver an impeccable customer experience

Uber is an example of a company that has applied new technologies to effectively reinvent an industry. The controversial transportation company leverages the cloud, big data, the IoT, mobile and social to deliver a highly personalized experience to its customers, Wang said. Customers hail a cab via a mobile app and rate drivers using social media. (Drivers also rate customers in the same manner.) On the back end, Uber uses sophisticated analytics to optimize its pricing to reflect outside conditions which drive up demand, such as rainy weather. It also takes advantage of sensors and GPS to track its drivers and customers.

Disney is an example of an old-school business disrupting itself with new technology. The entertainment company's much-publicized Magic Bands give customers a seamless experience while visiting the amusement parks, functioning as a room key, credit card and their pass to various rides. Additionally, Disney knows where everyone with a Magic Band is, what they're buying and what rides they're riding at all times. Customers pay more the convenience, while at the same providing Disney with a trove of data to mine, Wang said.

Next Steps

Read more about digital disruption:

How CIOs can harness digital disruption

Disruptive innovation vs. performance improvement

Is your company on the way to digital disruption?

Dig Deeper on Digital business management

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How has the cloud improved your customer service?
The biggest change I noticed was less dependency on instant messaging. We used to wait for e-mails or faxes to come in. Instant messaging changed everything, but it still didn't help much for storing files or sharing with groups.

Cloud sharing reinvented the wheel. I don't know where we would be without it, because our company grew with it. Take a step back, we may need more staff to handle our newly developed client base.