09/01/2015

By Sean Catlin, CTO, Canopy

In 2015, organisations will need to rapidly turn their attention to how cloud computing can support top line revenue growth as part of their digital transformation strategy. For years companies have been focused on the promise of cloud reducing costs and moving IT spending to an OPEX model. However, organisations across all industries are beginning to realise the benefits of strategically investing in infrastructure to improve financial performance, and deliver services faster than their competitors.

Digitalise or die?

To take advantage, CFOs will need to support CIOs in digitally transforming their businesses or risk becoming increasingly irrelevant in the market. Bricks and mortar music retailers remain the most pertinent example, losing market share and revenue to online music streaming services and digital only stores.

Customer demands are changing. They want to increasingly bank via their smartphones (Barclays is responding to this demand by developing video banking applications), compare product prices before making a purchasing decision, and shop online with rapid pick-up in-store options (Argos and eBay announced the expansion of their click-and-collect partnership ahead of this Christmas).

Clearly there is still a need for the high street but consumers expect responsive, reliable websites which complement the in-store experience, suggest relevant promotions and offer great customer service. If customers enjoy their digital experience, they will spend more, recommend your brand to others, and become an advocate on social media.

Canopy recently spoke to almost 1,000 CFOs, CIOs and Business Decision Makers in mid-market and large enterprises, 59% of which were listed companies, across the US and Western Europe. This was to explore the progress of digital projects in their business and how they are responding to these changing consumer habits. 75% of the CFOs estimated that their business is missing out on revenue opportunities by not having the right cloud applications and infrastructure in place to support digital business transformation, which they fear will lead to un-competitiveness by the end of 2015.

With the ferocious pace of start-ups, legacy businesses need to ensure their digital strategy is high on the board and business unit agenda. The risk of losing competitiveness is not in the future or theoretical, it is happening now and across all industries.

Navigating the digital pathway

Organisations must scrutinise their operating models. They must analyse how they can use real-time analytics to make more accurate targeting decisions or improve customer experience. We spoke to a large insurance firm recently who is adeptly using big data to improve policy pricing accuracy and using cloud to create new offerings, based on emerging trends and early adopter customer behaviour.

If companies procrastinate, digital up-starts will eat their lunch in a matter of months. Uber and Netflix are two disrupters making taxi rides and video streaming fun and accessible. More recently, Uber has partnered with Spotify to allow passengers to personalise their ride with their music choice, another example of how digital innovation can improve a company’s product or service, differentiating it from rivals.

The €120million question

There are huge rewards on offer for companies that get their digital transformation right. CFOs estimate they could grow their revenue in 2015 on average by around 10%, a staggering figure of around €120M (for a typical company averaging global annual revenue figures today of €1.14bn). This would be if they implemented a more flexible cloud infrastructure and agile development of applications to support digital transformation.

Why cloud in particular? Because as companies across industries (automotive, apparel, retail, industrials, and finance) transition themselves into software businesses, it allows them to sustain and accelerate the pace of this evolution.

For retailers, using the cloud they could consider developing a smartphone app that connects the digital and physical in-store experience for the shopper, ultimately to sell more products. If you’re an online bank you can deliver smaller but smarter updates to your website so consumers find your service transparent and competitive so you build market share. If you’re a restaurant you can deploy interactive software like e-Table so diners can do their own ordering, making the service fun yet efficient, so more covers are achieved per night.

These examples equate to top-line revenue growth and this is the prize worth fighting for in the digital battleground. At Canopy, we find that our most innovative customers have achieved a sharp gain in agility and the ability to refocus resources away from internal IT and towards growth. We will continue to see winners and losers as pioneering firms successfully make the transition to software businesses and digital disruption ripples throughout our economies.