There’s been a lot of talk about cloud computing. Everyone’s saying it: why aren’t you using the cloud yet? You know that it won’t be long until you decide to make the switch. But you delay doing it for a variety of reasons. For one, migrating to the cloud is a tough business decision. It’s a big game-changer that could significantly benefit your company in terms of savings, recurring revenue, scalability and agility. All of these have been proven time and again but you know that there are considerable challenges involved. Some of the biggest challenges are cost, time and all the anxiety of dealing with change. And you end up asking yourself “Is it worth moving to cloud?”
And that’s why you think your company should wait until you’re ready.
The truth is, you will never be ready if you keep on waiting. Many companies already took the risk and found themselves in a better position to grow. They moved their legacy software to the cloud and are now running killer businesses. Here are some of the success stories of moving to cloud. Not just building apps on cloud at the inception but moving from legacy to cloud.
Netflix: from DVDs to Video Streaming
Netflix is in the headlines this week. The global streaming video service reached 40 million paid subscribers-way ahead of HBO’s 28.7 million new subscribers. The company’s earnings quadrupled, its shares rose.
In the first quarter of 2013 alone, Netflix streamed 4 billion years, a figure which nearly equals the viewership of the most-watched cable network, the Disney Channel.
So how did they do it? The company’s remarkable turnaround is not a secret. The giants in the cloud industry all knew about its great potential to succeed. Netflix made two very strategic business decisions to remain a market leader in video streaming.
First, it strategically transitioned from DVD to streaming. The critics, or rather cynics, thought that Netflix quickly and harshly killed its own DVD rental business when it began pushing cloud-based services. They even predicted the end of Netflix. But the company knew better, of course. While Netflix recognized early on the potential of a cloud-based streaming entertainment business, they carefully made the transition. In 2011, Netflix CEO Reed Hastings milked his outdated DVD business and used the cash to pay for his streaming business.
Second, Netflix aggressively promotes its cloud-based service. It’s expanding internationally, eager to dominate the streaming entertainment business worldwide. The move isn’t only aggressive but also creative. It’s starting to broadcast Netflix-only original TV shows. An original drama series, House of Cards won three Emmys this year.
If there’s one lesson to learn from the company’s success, it’s this. Pay close attention to the transition. And make the transition now. Your “core” product today will become obsolete sooner. Delay it and you’ll likely miss the market transition.
TurboTax: Bringing Tax Preparation from the Box to the Web
A long time ago, Americans used to march to Target, Best Buy or Costco to buy the latest TurboTax version. Like any other legacy apps, Intuit’s TurboTax comes in a box. It’s also cheap and very easy to use. Obviously, people need it and will definitely buy one every year.
If the boxed product worked and fetched profit, then why did Intuit shift to the cloud? And it’s not just TurboTax. Intuit does “simplify the business of life” by offering a host of cloud-based software: QuickBooks, Demandforce and Payroll Services for small businesses; Quicken Personal Finance, Mint Budgeting, Go Payment and many other products for everyone.
Now back to the question. Like Netflix, Intuit carefully planned its transition. It did psychological experiments and succeeded in encouraging people to try the cloud-based TurboTax.
First, people no longer pay up front to use the software. They just log online and pay after they file their taxes.
Second, Intuit made it easier for users to try preparing their taxes online. They can even get help from their tax professionals for free. Users can ask an unlimited number of questions by chatting or making a call.
Here is an interview with Intuit CEO, Brad Smith. When asked what makes cloud computing disruptive, Smith gave away three anchor points. Make sure to read that part carefully. He sums them up nicely in a sentence: “Cloud is changing business models, reaching broader array of customers and enabling them to participate in the process.”
Adobe’s Set of Tools: from Creative Suite to Creative Cloud
Adobe is known for its series of software suites used by creative professionals worldwide. It’s called Creative Suite and you’ve probably used a few of Adobe’s popular products: Photoshop, Photoshop Elements, Dreamweaver, Flash Player and InDesign.
But on May 6, 2013, Adobe announced that it has fully embraced the cloud. Adobe Creative Suite 6 will be the last version and it will be replaced by Adobe Creative Cloud, a subscription-only service.
A month later, the company reported having a total of 700,000 paid Creative Cloud customers. Two months later, it surpassed one million subscriptions.
Critics may continue to hate Adobe’s shift to cloud-based, subscription-only software. But from a technological perspective, Adobe’s move makes a lot of sense. Here’s a quote from David Wadhwani of Adobe’s Digital Media Business Unit:
“Embracing the cloud has given us the ability to think differently about our role in the creative world, and gives us a much broader canvas for innovation. New technologies such as cloud, social, and mobile have changed the creative landscape dramatically, and we are fully embracing the opportunity this gives us all.”
The software giant knows that going cloud isn’t easy. But Adobe skates to where the puck is going to be. CEO Shantanu Narayen, in an in-depth interview with Mashable, anticipates the eventual shift to its cloud-based products: “A few years from now, people will say, ‘How could I even imagine a Photoshop that was not connected to the cloud?”
And the same goes for other boxed software. Just think of it as an inevitable and necessary process of creative destruction. A lot of things need to be destroyed first if you want to build something valuable and, of course, profitable. Whether you are a Business owner or the CIO/CTO of a large Enterprise or a Software Architect who deals with legacy software reading this article, think hard, what is going to be your next move?