The cloud and the perfectly scalable enterprise

August 23, 2019

A blog post by, Amit Desai, principal, Deloitte Consulting LLP, Joseph Greiner, senior manager, Deloitte Consulting LLP and Sid Seshadri, senior consultant, Deloitte Consulting LLP

Take a look at those new, ultra-successful companies that have, seemingly, come out of nowhere. They may have started on a shoestring budget, with a skeleton staff, but they have the potential to scale rapidly, and almost infinitely, and to grow exponentially. They do things that older, more traditional companies sometimes can’t. Things that traditional companies wish they could do. They tend to respond to market demands more quickly. Their customer base is growing, while those of traditional companies may be on the decline. In many cases, influencers hawk products from these new companies.

Why? Because they are what many old-guard companies are not: they’re agile. Both traditional and new companies can anticipate changes in markets, but the difference is the newer, more agile companies can change direction quickly and seize opportunities. They often operate with higher margins and shorter lead times at earlier stages in their business lifecycle. Further, they can increase or decrease their tech footprint with growth or contraction and launch platforms and systems in new markets. Finally, they can manage their support systems from a single console anywhere in the world.

So, how do traditional companies deal with competitors they may not even see coming? They become perfectly scalable. And they do it quickly, before their competitors achieve the size and scale to dominate their sector. Here’s what that perfectly scalable enterprise (PSE) looks like. A PSE uses technology to leverage access to excess market capacity, align cost structures with growth, and efficiently use scarce resources to achieve economies of size and scale.

PSEs automate everything they can. They limit the impact of poor decisions and capture growth opportunities. PSEs also focus on avoiding waste and outsource wherever possible. Their financial resources are well-managed, and they target wide-moat competitive advantage plays to drive and sustain success.

PSEs can also launch digital products and services at a global scale with faster time to market. They use data-driven insights to enhance their agility, and minimize upfront capital investments, sunk costs, and technological obsolescence. Simply put: they epitomize enterprise agility.

How do companies become perfectly scalable? First they reimagine their business in a world powered by advanced technology. They redefine competitive barriers, realign partner networks, promote an innovation-based culture, and strive for operational and financial efficiency and flexibility.

For instance, a US-based health insurance startup leveraged the cloud to innovate by scaling its business and guiding customers towards better care by helping them more closely track their health. The company built and deployed its new cloud-based, HIPAA-compliant health insurance platform and analytics solution in less than three months.

They have been able to easily manage enormous usage spikes during open enrollment season, disrupting incumbents, and demonstrating the ability to scale to meet demand—and do it with a lean team to continually deliver value by better meeting business needs and improving the customer experience. The platform also afforded members to realize superior outcomes while reducing the associated cost of health care.

Clearly, the cloud is a key strategic choice that underpins the capabilities of a PSE and can help transform their business, and PSEs know that. PSEs value speed to market as a competitive differentiator, and they know that the cloud is the engine for that. It connects. It improves. It evolves. It integrates—at speed—enabling PSEs to start scaling quickly.

PSEs leverage the cloud to enhance their inorganic growth strategy. With cloud-based technology, they can acquire, integrate, and divest businesses more easily—and they can increase enterprise agility and simplify transformations—all keys to disruption. To that end, PSEs with an eye toward future M&A opportunities use cloud-based solutions to reduce future integration or divestiture costs, increase post-deal transition flexibility, enhance business agility, reduce risks, and facilitate a quicker exit when it’s time.

PSE’s use the cloud to make their technology operations more effective. They automate to drive improved productivity, increase accuracy, minimize waste, and enhance business results. PSEs use cloud-based automation technologies to improve operational spend and time-to-market by employing methods and tools that drive improved business outcomes—things like DevOps, self-service, auto-provisioning, integration platforms as a service, continuous integration and continuous development (CI/CD), microservices, and containerization.

PSEs also understand that deploying cloud solutions provides a quicker route for disruptive innovation, because it allows them to focus resources on finding solutions and delivering value, rather than engaging in capacity planning, procurement, and commoditized infrastructure management.

For example, a US-based financial services startup used the cloud—deployed by a lean team—to create an innovative, massively scalable securities trading app with strong built-in security and compliance features that supported hundreds of thousands of users at launch.

The app has disrupted the industry and is successfully competing with incumbents by offering no-fee securities trading capabilities, supported by a highly-scalable IT footprint. The startup is further exploiting the cloud to grow their online business, deliver and update their mobile trading app, securely store customer information and trading data, and perform advanced business analytics.

The bottom line? The competitive landscape is challenging. New, nimble companies are entering the market faster, with the latest technologies at their disposal—and potentially with little to no technical debt to prevent them from making significant strategic moves domestically and globally. Essentially, they are starting off as perfectly scalable enterprises.

Because they’re perfectly scalable, they have many choices—and limited downside if it doesn’t work out–which sometimes happens. Technology is a great equalizer, and acquiring the technology to become more flexible and scalable is critical to success. Getting smart on the cloud is a sound strategy to get perfectly scalable.