TechnoVision 2016 – Elastic Business

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Applications Unleashed #3 – Elastic Business A business is ‘elastic’ when it can explore new activity areas easily, scale at will and gracefully shrink back when needed. It can rapidly try new things and explore new business models while remaining connected to the basics of the enterprise. To be truly elastic often requires building on the […]

Applications Unleashed #3 – Elastic Business
A business is ‘elastic’ when it can explore new activity areas easily, scale at will and gracefully shrink back when needed. It can rapidly try new things and explore new business models while remaining connected to the basics of the enterprise. To be truly elastic often requires building on the next generation of (SaaS) cloud applications, but fully incorporated into the existing IT landscape. Being agile and flexible at the edge requires integration at the core. The IT department that enables business users to test and learn with new services at will, while staying connected to their core data and applications, is uniquely positioned as a digital partner to the business.

For large, existing, traditional businesses, the new digital world can seem full of risks and challenges. Big enterprises are undoubtedly slow to change, hindered by long-established processes and operating models that have been built for efficiency — not flexibility. New, disruptive competitors emerge in no time, born in the cloud and unconstrained by years of carefully planned capital investment.

Yet these same risks can provide tremendous opportunities for those that can find a way to harness them. New business models at the edge of an organization are likely to use Software as a Service (SaaS) cloud applications – but also mobility and advanced analytics – to ‘test and learn’ new business propositions. These organizations are the disruptors — not the disrupted. They are the elastic businesses.

Elasticity implies flexibility and the ability to expand quickly and then shrink back just as fast. For a business, this means rapidly scaling up in response to managing peak demands, such as the launch of a new service, or a holiday promotion, or supporting the fast development of prototypes and new concepts. Central to this fleetness of foot is the ability to harness cloud applications, exploiting new opportunities at a speed, previously unseen.

The real trick is to link and integrate these elastic, agile, ‘edge’ investments to the core business strategy and a well-governed Digital Transformation. Capgemini’s still on-going, collaborative research with the MIT Center for Digital Business shows that, over time, the businesses that get this right (the ‘digital leaders’) can be up to 26% more profitable than those that spend just as much on their digital technologies. These ‘Fashionistas’ crucially fail to coordinate, extend, and integrate across their broader business.

The truly elastic business doesn’t respond to change, but leads it. This requires a number of components: a clearly defined digital strategy, governance across the C-Suite, willingness to test and learn (including making mistakes and the courage to shut initiatives down), adoption of ‘outside-in’ customer-centric thinking, use of data-analytics to support and prove hypotheses, and integration of all new services within existing back-office IT systems. Certainly, businesses shouldn’t build new initiatives without knowing how they fit into the current IT landscape and use (and enhance) customer data.

Organizations that establish the right IT principles of adopting new digital services can become truly agile at their ‘edges’. They can set up new services quickly and test them out in small (but real) areas, such as in a single store with one customer segment, or with a proportion of website traffic (A/B testing).

This isn’t just a ‘nice to have’ flexibility — it’s absolutely essential for the future integrity of the business. It’s all too easy for business users to adopt new SaaS services, or employ niche agencies to write cool mobile apps. But this can lead ‘the edge’ to becoming a series of islands of innovation. Eventually, the customer sees a disjointed mess, and the concept of a seamless ’omni-channel’ experience is long forgotten.

Need an example? A $7B Fortune 500 global manufacturer and distributor – present in almost 100 countries worldwide – faced a massive ERP upgrade for one of their large global divisions. In their quest to standardize and optimize processes across their global sites on one hand and lower costs for subsidiary countries on the other hand – while drastically improving local agility at the same time – they evaluated the next generation of flexible cloud solutions, notably NetSuite. An elastic blueprint and strategy were developed, based on considerations such as gap/fit analysis of processes, subscription costs, implementation costs, total cost of ownership and ROI comparisons for alternative solutions. The scope of this elastic strategy is currently set for 21 countries with more than 25% savings projected.

Indeed, the cloud is a main driver of elasticity. But given the bewildering array of cloud services and providers available, many organisations struggle to work out how to take advantage of the cloud. To help navigate this virtual jungle filled with options, you may want to have a look at approaches such as Cloud Choice, a way of bringing clients the best of the ecosystem along with tools and commercial frameworks to deliver that all essential agility.

The elastic opportunity is here. Regardless of industry, there is no time like the present to take next steps. Start stretching!

Expert: Fred Landis   
Part of Capgemini’s TechnoVision 2016 update series. See the overview here.

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