Competitive advantage

As I mentioned at the beginning of this chapter, cloud computing first rose to prominence in the IT industry in 2008, at
least with suppliers and the media, just as a financial crisis stunned the world, and I wrote about this coincidence at the time in my blog (Williams, 2008). Then in a later post I speculated on how cloud computing could give smaller companies a competitive advantage in an uncertain financial landscape:

New startups will not find investment easy to find so they will, by necessity, keep costs down and avoid capital expenditure
where possible. These new companies will naturally use pay-per-use, cloud computing technologies, and their staff will more often than not be contractors, working mostly from home. With their established competitors losing money and people, clever startups have a great opportunity to gain market share quickly

As for established companies that were around in the boom years before the credit crunch, they will have to adapt or die,and that means mimicking the business models of startups, writing off old investments and keeping their best people, even as contractors. (Williams, 2009)

Moreover, as was mentioned earlier in this chapter, enterpriseclass businesses are constrained by corporate governance
and internal policies so public clouds are often not a viable option; but smaller businesses usually have no such   strictions. Of course small to medium-sized businesses and enterprises are generally not direct competitors, but if there
are enough new entrants of the former variety into an industry where IT-enabled systems and innovation count, they can eat significantly into an enterprise’s market share. And with the capability afforded by many cloud computing  latforms to quickly develop scalable and feature-rich, customerfocused web applications (and integrated online workflow processes) without having to worry about IT infrastructure, there is great potential for market disruption.

Even in more prosperous times it pays for businesses to be agile, to be able to respond quickly to changes in market conditions and technological developments. The flexibility and scalability that cloud computing affords levels the playing field for businesses of different sizes. Small businesses can now afford enterprise-class IT systems so big businesses had better watch out!