Frictionless Business Models Using Cloud Computing

speed skierThe transformation of business is accelerating from the adoption of frictionless business models made possible using cloud services. Accordingly, CIO’s looking to become more of a strategic business leader must look beyond the data center to see the strategic value of cloud computing. This is because the real value of cloud computing lies in its ability to eliminate the friction in both internal processes and the friction your customers experience in doing business with you.

Misconception of Cloud Computing

The conventional wisdom on cloud services is that it is a strategy for CIO’s to reduce cost. Although true and sometimes significant, this is short sighted thinking intended for the mass consumption of CIO’s focused on how IT departments can use cloud services to reduce or optimize their IT cost basis. The conventional thinking on cloud services also focuses on business agility which is most often about IT being more responsive to the business than anything else.

The real wisdom on cloud computing is not in the technology, direct cost reductions or IT agility. Strategic CIO’s see the real value of cloud services in being able to create innovative products, reinvent business models as well as in creating entirely new markets (Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant).

Frictionless Business

Frictionless business is a straightforward concept of removing the opposing forces in your business. Most people also know that friction causes waste from the effort needed to overcome the opposition. Because friction is so universally understood, having a clearly negative connotation, friction it is a very powerful word to use. Friction is bad, frictionless business is good.

IT leaders rarely think of what we do as relating to friction but it is at the core of many projects. Yes, the process automation efforts of BPA or BPO initiatives can have the effect of eliminating friction but not always. More importantly for CIO’s looking to be more strategic I would suggest business process optimization is not nearly as galvanizing as a concept as frictionless business. I also believe that a frictionless business, or frictionless process, is entirely different than one that is merely optimized.

Cloud Computing & Friction

Just as a CIO can eliminate friction in IT services by using cloud computing, CIO’s can help the business re-invent friction loaded products and services to take advantage of the cloud characteristics: on-demand, broad access, pooled resources, rapid elasticity, and metered service to produce superior results.

Just look at how easy it is to establish a relationship and transact business today with a bank, brokerage house, or online retailer. No human intervention, no queuing (except shipping), and no friction. Many now infusing recommendation engines to go along with on-demand self service for everything from airlines to tee times. Even healthcare is finding ways to apply frictionless business models in their revenue cycle and in some aspects of delivering patient care.

Hopefully the connections are forming for you that the promise of cloud services arise from more fundamental principles which CIO’s can use to eliminate the internal process friction (re: waste) in their business and the customer facing friction (re: barriers) of their business model. If that takes you too far out of your comfort zone right now, simply adopt friction as your new cause and eliminate or overcome it at every turn.

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