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How to Stay Ahead in a World of Disruptive Innovation: Part 1

Date posted: 28th October 2015

Our ongoing series “How to stay ahead in an world of disruptive innovation” will analyze the past 50 years of IT disruption and innovation as the history is the best indicator of how things will move in the future. Today’s part 1 analyzes how a Seattle Bookstore’s cloud washed away the human network.

Part 1: Learn how to swim before the rain clouds wash you away…..

“Innovation distinguishes between a leader and a follower.” –Steve Jobs

It’s no secret that the buzzword of the moment in IT is “the cloud”.  The cloud has empowered businesses of all types to improve flexibility, agility and achieve competitive advantage by staying ahead of the “disruption curve”. The high levels of automation and self-service present in the cloud have even gone as far as shifting the spending power of IT to business stakeholders with departments such as finance and marketing now projected to drive increased technology spend.

You as an IT leader are busy fighting fires and “managing” an unmanageable list of IT tasks tied to Old Guard OEMs (OGOs)

While this is happening your business is buying technology on demand opened up by easy cloud availability and the need for what they need it when they need it!

So in this new world how can you as an IT leader re-position your department to become the growth engine of your business rather than a road-block on the way to progress?

Embrace disruption before your competition does!

Staying ahead of the disruption curve by fully embracing cloud migration, employee mobility, social influence and big data analytics will pave the way for your business to transform from a market follower into a market leader. This in turn makes you, the leader of the IT department the disruptive business growth engine rather than the road-block stopping progress.

Case in point, OGOs which have been the gold standard of networking and data center for years. The largest OGOs rode the wave of the internet boom and 2nd internet boom (and really even 3rd boom) to dominance in the networking infrastructure. Companies small and big use OGOs to power their network because as the old saying goes “nobody ever gets fired for choosing an OGO!”

But has anyone ever been promoting for firing OGOs? Yes, and that is where the cloud and business transformation comes in but before we get to the cloud I should go back about 30 years.  Stick with me for this history lesson.

Since the mid-1980s corporate data center and networking including your infrastructure has been built around solutions installed by “value-added resellers” (VARs) combined with hardware technology from OGOs .  The OGOs typically provided significant discounts to sell through VARs in exchange for the sales and holding costs of the paper provided by the VAR. This model has enabled OGOs to enjoy a high margin, high volume business temporarily becoming the most valuable company in the world back in 2000 and still maintaining a market cap of $150 billion here in 2015. VARs also prospered in parallel to OGOs with several of the top VARs in OGOs partner network becoming billion dollar enterprises themselves.

However OGOs of 2015 has a huge problem, THE VAR IS DEAD and the Cloud delivered the fatal blow

How a Seattle Bookstore’s cloud drowned the human network….

Amazon Web Services (AWS) has become the MVP of Amazon’s macro business. Beating Wall Street estimates by generating over $521 million in Q3 2015 operating income it has now come to par with Amazon’s “legacy” .com ecommerce platform.  (It’s of course not really a legacy business but driving the point home folks)

The idea for Amazon Web Services dates back to 2003 when engineers realized the automated, web-based infrastructure used to power their website could be sold as a service to other developers. This seemingly minor 12 year old idea has turned into a multibillion dollar business which up until recently has been relatively quietly putting the VARs and major OGOs of IT in mortal danger. The recent AWS re:Invent Conference in Las Vegas is arguably the shot heard round the IT world though as Amazon went feature-by-feature to take on the giants and stay ahead of the disruption curve.

No one including our prior example of OGOs was spared from the wrath of Amazon at re:Invent. From enhanced security, to mobility, to database migration to OGOs future in IoT Amazon has brought out disruptive features that erode VAR value but even more dry up the IT “old-guard and vendor lock-in” competitive advantages entirely. Basically with or without knowing it Amazon’s cloud platform and enhanced features have put the death blow to VAR’s former value in installing networking gear and lately and more material they may have setup OGOs for a slow painful death themselves.

Promote yourself by “firing OGOs” and your VAR…

As mentioned earlier historically a common saying in IT is “nobody ever gets fired for choosing OGOs”. Well let’s flip that and promote yourself by firing OGOs and fire your VAR while you are at it. Migration to the Cloud, Mobile, Social, Big Data platform combined with IT service automation will bridge the gap to “just-in-time” delivery of IT services making you the hero of your business and promoting yourself from IT leader fighting fires to IT leader improve business profitability.

Finally to wrap things up a brief missive on how the mortgage crisis and great depression relate to this discussion….

Toward the end of many business cycles the first sign that an imminent change is forthcoming is the struggle of dependent businesses. The mortgage crisis seen in America in 2008 started with the collapse of retail lenders and MBS hedge funds in 2007, expensive gas prices in the 2000s killed SUVs, the consumer bank pull out of the late 1920s foretold the Great Depression, and of course it now sounds like the great cloud rain storm of 2015 has killed VAR value and has the potential to take OGOs leaders with them in the upcoming years.

Disruptive innovation is not new in information technology though, if you’ve been in this industry for some time you’ve seen this cycle play out over and over again. Arguably the best way to predict the future is analyze the past and thus I wanted to take some time to highlight my decades of experience in IT boom and bust cycles to help you as an IT department leader maintain and gain competitive advantage in this world of never ending disruptive innovation and opportunity.

My posts starting with today will go all the way back to the mainframes and punch cards of the IBM dominated 1960’s, travel through the shrinking compute of the 1970s and PC dominated 80s and 90s internet boom to leave us in the world today of Third Platform Cloud, Social, Mobile and Big data analytics making IT the dominate growth engine of the enterprise. Follow our Netfast blog and LinkedIn as we travel back in time to see where we’ve been and how this can help us determine where to go.

Part 2 (the 1960s): Coming Friday 10/30, how IBM’s 3rd generation never came back from the moon 

About Author

Joe Asady is the founder and CEO of Netfast Technology Solutions ( Netfast is a leading Cloud Managed Services provider for New York City area mid-market business enabling customers to accelerate Digital Business Transformation with managed cloud and mobile solutions.