In this book you will learn how the public cloud is significantly changing the cost structures of digital business models and thus existing markets. The relationships between the cloud architectures used, the organization of the company and the price and business models that are possible as a result are shown clearly and so that they can be used in your own company.
The authors explain how, one after the other, more and more markets are becoming digital markets and what role marginal costs play in this. They describe how cloud-based IT is disrupting classic IT. This enables small teams to build scalable business models worldwide at zero marginal costs with little investment. The economic effects are clearly illustrated using specific examples. In addition, technical laypeople get an overview of which factors are particularly important for the competitiveness of their digital business models and how managers can influence them. Finally, the book gives practitioners specific guidelines on how the cloud transformation can be carried out in their company.
The book is aimed primarily at executives and employees in the specialist departments and IT who want to drive the cloud transformation in their companies.
This book is a translation of the original German 1st edition, Cloud-Transformation by Roland Frank, Gregor Schumacher and Andreas Tamm published by Springer Fachmedien Wiesbaden GmbH, part of Springer Nature in 2019. The translation was done with the help of artificial intelligence (machine translation by the service DeepL.com). A subsequent human revision was done primarily in terms of content.
Author(s): Roland Frank, Gregor Schumacher, Andreas Tamm
Publisher: Springer Gabler
Year: 2023
Language: English
Pages: 278
City: Wiesbaden
Foreword
Preface
Contents
List of Figures
List of Tables
1: Do You Remember Daimler, RTL and Siemens?
1.1 Introduction
1.2 The Innovator’s Dilemma Can Affect Any Company
1.3 Disruptive Technology – Public Cloud
1.4 The Aim of This Book: Surfboard Instead of a Lifebelt
1.4.1 Methodological Approach
1.4.2 Guide through the Book
References
2: Everything Becomes Digital
2.1 Technical Digitization
2.2 The Consequences of Digitisation: Decentralisation, Communication, Convergence
2.2.1 Digitization as a Condition of Decentralized Working
2.2.2 Digitisation as a Social (Communication) Phenomenon
2.2.3 Convergence of the Media
2.3 The Complete Digitalisation of Value Creation
2.4 The Platform Economy – Data Is the New Oil
2.5 Conditions for the Successful Operation of Digital Platforms
2.5.1 Big Data
2.5.2 Data Leveraging
2.5.3 Winner Takes All
2.6 Success Factors for the Use of Digital Platforms
2.7 Conclusion
References
3: The Road to a Zero Marginal Cost Economy
3.1 Big Is Beautiful
3.1.1 Economies of Scale and Experience Curves
3.1.2 Marginal Cost Analysis
3.2 Zero Marginal Cost Business Models
3.2.1 Comparison of Zero Marginal Cost Business Models and Classical Business Models
3.2.2 The Model for Analysing Disruptive Market Changes Towards Zero Marginal Cost Business Models
3.3 When Is It Worthwhile to Start Using Digital Technologies?
3.4 Big Stays Beautiful
3.5 Artificial Intelligence for Editing
References
4: Cloud – The Automated IT Value Chain
4.1 It’s the Software
4.2 The Classic IT Process
4.2.1 Creating Software
4.2.2 Operating Software
4.2.3 Scaling Software
4.3 The Stack – IT and Its Value Chain
4.3.1 The Levels of the Stack
4.3.2 Variety of Components Creates Numerous Dependencies
4.4 The Cloud Transformation in IT
4.4.1 The Cloud as a Trend Term
4.4.2 What Is the Cloud?
4.4.3 The API as a Game-Changer
4.4.4 Not All Clouds Are Created Equal
4.5 The Cloud-Based IT Process
4.5.1 Creating Software
4.5.2 Operating Software
4.5.3 Scaling Software
4.6 Public Cloud vs. Private Cloud
4.7 Security in the Public Cloud
4.7.1 Fraud Groups and Examples of Threats
4.7.2 Countermeasures by Cloud Providers
4.7.3 Shared Responsibility Between Customer and Cloud Provider
4.8 Case Study: A Misunderstanding in the IT Purchasing Department of a Major Corporation
4.9 From Traditional IT to the Cloud – Explained on One Page and in One Picture
References
5: Cloud IT vs. Classic IT – Calculation for Controllers
5.1 A Practical Example: Outsourcing Invoice Management
5.2 Features of the Classic Application
5.2.1 Architecture and Fixed Operating Costs
5.2.2 Structure and Expansion of the Application
5.2.3 Average and Marginal Costs
5.3 The Cloud Transformation of the Application
5.4 Features of the Cloud-Based Application
5.4.1 Fixed Operating costs and Total Costs
5.4.2 Structure and Expansion of the Application
5.4.3 Average and Total Costs
5.5 An Overview of the Advantages and Disadvantages of Transformation
5.5.1 Comparison of Financial Factors
5.5.2 Comparison of Functional Factors
5.6 Conclusion
References
6: Mastering Software as a Core Competence
6.1 Everything Becomes Software
6.2 Why Software Is Such a Challenge for Managers
6.3 Virtualization Layers
6.4 Sourcing Options
6.5 Software Architecture
6.5.1 Monolithic Architectures
6.5.2 Distributed Systems
6.5.3 Cloud-Native Architectures
6.5.4 Comparison of Monoliths and Cloud-Native Architectures
6.6 Process Flows
6.6.1 Agile from the Idea to the Development of the Code
6.6.2 Agile Software Development with Scrum
6.6.3 Automated Software Testing and Deployment with CI/CD
6.6.4 Covering the Entire Process with DevOps and Feature Teams
6.7 People and Organization
6.7.1 Employee Management
6.7.2 Corporate Culture
6.7.3 Employment Situation
6.8 Practical Example ING DiBa
6.9 Conclusion
References
7: Falling Transaction Costs and the New Network Economy
7.1 Transaction Costs Hold Traditional Value Chains Together
7.2 Excursus: Internal Transaction Costs Slow Down Economies of Scale in Production
7.3 Integrators, Orchestrators, and Layer Players – How Transaction Costs Influence Economic Structures
7.4 Fast Communication and Simple Automation – The Transaction Cost Levers of Digitization
7.4.1 Decreasing Communication Costs
7.4.2 Automation of Business Processes
7.5 New Make-Or-Buy Decisions Through Digitalisation
7.6 The Impact of the Cloud Revolution on the Transaction Costs of Software Use
7.7 Practical Example: How Software Purchasing Via the Cloud Reduces Transaction Costs
7.7.1 The Purchasing Process of a Classic CRM System in Your Own Data Center
7.7.2 Use of Software Services (SaaS) for CRM
7.8 Towards the Network Economy
7.9 Conclusion
References
8: The Cloud Transformation
8.1 Scientific Models for Digital Transformation
8.1.1 McKinsey’s Three Horizons of Growth
8.1.2 Zone to Win by Geoffrey Moore
8.2 The Three Levels of Cloud Transformation
8.3 Transforming the Infrastructure Model
8.3.1 The Typical Migration Scenarios for Applications
8.3.2 Plan – Analyze Applications and Obtain Commitments
8.3.3 Building – Preparing the New Landscape
8.3.4 Performing Migrations
8.3.5 Further Development – Keeping the Landscape Up to Date and Safeguarding It
8.3.6 Summary – Cloud and Modern Software Approaches
8.4 Changing the Operating Model
8.4.1 Focus on Business-Relevant Applications
8.4.2 Resilient Handling of Errors
8.4.3 Customer Focus and Data Analysis
8.4.4 Machine Learning and Artificial Intelligence
8.4.5 People and Culture
8.5 Changing the Business Model
8.5.1 Transformation as the First Management Task
8.5.2 Zone Offense – Acting as a Disruptor
8.5.3 Zone Defense – Countering Disruption
8.6 The Impact of Cloud Transformation on Potential Employees
8.6.1 Developers – The New Paradise
8.6.2 Cloud Architects – The Scarcest Resource on the Market
8.6.3 Traditional IT Specialists – Real Threats and Great Opportunities
8.6.4 Middle Management – Pressure and Fear of Loss
8.6.5 Specialist Departments – Freedom, Chaos and Responsibility
8.6.6 Top Management – Financial Ratios, Threats of Disruption and New Ways of Doing Things
8.7 A Successful Cloud Transformation – Explained in One Picture
References
9: Cloud Transformation – How the Public Cloud Is Changing Businesses
9.1 Businesses Fail – Even When Managers Seem to Do Everything Right
9.2 Digitalisation as a Defining Trend in the Economy
9.3 Marginal Costs Determine Competitiveness
9.4 Cloud as a Key Technology of Digitization
9.5 Classic Applications Can Be Migrated to Cloud Technologies
9.6 Becoming Competitive for the Digital World with Software and Cloud Skills
9.7 Sinking Transaction Costs Lead to More Outsourcing and Change the Economy
9.8 Cloud Transformation Affects All Companies with Digital Value Creation – On Three Different Levels
9.9 Conclusion
Index
