At face value, it would be easy to view industry and vertical cloud initiatives by major technology companies as new marketing strategies. However, there is something bigger than a go-to-market strategy going on here. The impact will change industries and the technology market as we know it.
This market shift is driven by customers. What customers are looking for today is the ability to accelerate the growth of their overall business, not just automate individual functions. As a result, the customer value proposition shifts from functional value — I have a sales enablement challenge, or I need to automate billing — to a business growth value proposition. This change is driving the market shift to industry and vertical cloud solutions as well as co-creation between technology companies and industry leaders.
Amazon’s recently announced acquisition of One Medical and Oracle’s acquisition of Cerner reflect the vertical cloud approach taken to the next level. Google partners and creates value with manufacturers, through their Manufacturing Data Engine. Microsoft has announced a series of vertical cloud applications for healthcare, retail, and financial services. This is just the beginning.
Over the past six months talking to C-level, technology decision makers in enterprise and mid-market organizations, it’s clear that something new is happening. They are looking for more holistic and more effective technology solutions, with a clear mission of business innovation and growth. As this market transition accelerates, it will have a profound impact on the technology ecosystem as well as individual industries.
What is a Tech Company?
Legacy tech industry analysts love to debate whether a company is a “tech company” or not. I got into a long thread on Twitter recently with an analyst who argued that Netflix is not a technology company. My point is that this is no longer a relevant question.
Other than for investment categorization purposes, the designations no longer make sense. All businesses growing today have technology as a core competency or will have it if they want to keep up. Is Amazon a retail company or a healthcare company? Is Apple an entertainment company? A watch company? A car company? Ok, maybe I’m a little early on that last one, but don’t be surprised if sometime in early 2023, Tim Cook will show off a car with the Apple logo.
As industry-leading companies embrace technology and major technology companies delve deeper into industries, we will continue to see the distinctions about what constitutes a tech company blur and how confusion over how properly categorize industry-focused companies. The question to ask yourself is whether it matters and, as mentioned above, I don’t think it does.
The Return of Co-Opetition
in the early 1990s, Ray Noorda, the founder and CEO of Novell, coined the term “Co-Opetition” to describe the phenomenon of cooperation between competitors. Co-opetition helped fuel the early growth of the PC and LAN market but, over time, sharp-elbowed competitors drove consolidation.
Many people were surprised by the recent announcement of a partnership between longtime competitors Oracle and Microsoft. The partnership provides a one-stop shop of cloud services and applications for businesses, and it’s not the only cloud partnership announced in recent weeks and months. With all due respect to both Oracle and Microsoft, I think it’s safe to say that neither company has historically been known for being partnership-driven. This powerful cooperation between Oracle and Microsoft, however, reflects a profound change, driven by customer needs and market opportunities that a vertical and industry cloud approach will bring.
Buyers of New Technology
As technology decision making becomes more focused on overall business growth, we will see new consumers enter the buying process. In a vertical industry approach, those closest to customers and their needs become critical in the process of determining how technology can help.
As this plays out, we will see business unit management play an increasing role in technology decisions, many of which have no relevance or brand loyalty to legacy technology providers. These buyers will also expect vendors to have a deep understanding of their industry and how they can help accelerate the growth of businesses. Additionally, they will be less interested in the features of the technology than its impact on the company’s growth.
The Return of Hyper-Change
Every ten years or so, we see a step change in technology that ignites an era of extreme change. What used to take ten years, now takes two. What used to be a year, now takes a month. For business leaders, this radical increase in the pace of change can be overwhelming. We are in the middle of a hyper-change period and it is in the early stages of the curve.
In a recent special interview with Bob Evans, Bill McDermott, CEO of ServiceNow, said that “speed is the greatest asset in business today”. New market opportunities, customers and partnerships, new competitors, and changing economic, supply chain, and geopolitical conditions are happening faster and faster. Business leaders no longer have the luxury of slow conversations.
We are seeing the pace of change that is causing major challenges in various industries. As it speeds up, you’ll see more disruption. At the same time, you will see companies leveraging the power of technology taking advantage of hyper-change to accelerate their business growth. This leads us to…
The Have and the Have Not
History teaches us that in times of rapid change, organizations that prepare for and embrace change will distance themselves from their competitors. We have also seen examples of companies using hyper-change to enter and disrupt new markets, where competitors are not ready.
The reality is that companies that view technology as a nice-to-have can’t keep up. We are already seeing this in various industries. Furthermore, we will see more examples as businesses that have adopted a technology-based approach accelerate, and those that haven’t will fall further behind.
Solving Big Problems
As technology and vertical industries become inseparable, we’re starting to see companies facing big problems. The rapid introduction of Covid-19 vaccines that changed the course of a global pandemic is a good example.
Google recently announced that its Deep Mind group recently shared a tool called AlphaFold with scientists and generated predicted shapes for more than 350,000 proteins, including all proteins expressed by the human genome. , which immediately shifted the course of biological research. If scientists can determine the shapes of proteins, they will accelerate the ability to understand diseases, create new drugs, and otherwise probe the mysteries of life on Earth.
Microsoft has announced the Sustainability Cloud that promises to empower organizations to accelerate sustainability progress and business growth. We are entering an era where technology is taking exponential leaps and can be used to help tackle some of humanity’s biggest problems.
At the same time, vertical cloud solutions help solve more problems, such as supply chain disruptions. It’s clear that the traditional marketing model of demand-driven and supply-responsive operations is no longer working. We see demand distortion events in most every industry. Industry Cloud solutions help companies align supply and demand data in a more holistic view, reducing the frequency and impact of demand distortion events.
Industry Cloud is more than just marketing jargon. This is a fundamental shift in the way companies view, purchase, and use technology to accelerate growth and ultimately reshape entire industries and the technology ecosystem.
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