The Cloud facilitates more efficient business models.
In Part 1 of this series I discussed how virtualization technology has been used to replace the traditional offsite data center model. In this article I want to describe how that environment is evolving and impacting the way organizations manage their internal and external relationships.
The Cloud has Layers
In the previous article I discussed one layer of the cloud – the physical layer, which is now distributed in a pay-per-usage model called Infrastructure-as-a-Service (IaaS).
I alluded to the second layer of the cloud but did not name it specifically. A Platform as a Service (PaaS) provides the ability to develop, test, run and host applications. Because Microsoft allows the customer to not only virtualize the hardware, but also provision resources, such as operating systems and databases, the Azure platform is better described as a PaaS. It provides developers with swift access to a full development and deployment environment.
The third layer is Software-as-a-Service (SaaS), which is a method of delivering software online through a subscription, rather than buying and installing it on individual computers. The SaaS model has been around for several years. In a Cloud setting it is just a layer in the stack that a user can access from anywhere, on any device.
The fourth layer of the Cloud is Business Process Outsourcing (BPO). While certainly not a technology layer, as I eluded to in the beginning of the article, the Cloud is about business models, not technology. What all the layers of the Cloud have in common is that it involves outsourcing services to a vendor, and hence BPO services are part of that ecosystem.
The Shamrock Organization
Irish academic and management author/philosopher Charles Handy believed that people were the most important part of any organization. He proposed in his book, The Age of Unreason, a model in which individuals would have one of three relationships with an organization. He called this model The Shamrock Organization, and each group of individuals was represented by leaf:
The first leaf of the organization represents the professional core. It consists of individuals whose skills define the core competencies of the organization. This group defines what business the company is in. They are essential to the continuity and growth of the organization and are compensated with salaries and benefits.
The second leaf consists of self-employed individuals who are hired on contract, or on a project-by-project basis. This contractual fringe is essential to maintaining the core operation, but the skills do not define the core competency of the organization. These individuals are generally not managed directly by the organization and receive fees, rather than salary and benefits.
The third leaf is comprised of contingent or peripheral workers, and this is expected to be most of the workforce. These contingency workers perform routine jobs, are generally part-time and flexible workers, that have little career path or scope for the development of the company.
Reimagining Organizational Structure and Workflows
Combining these two concepts, the Cloud not only makes computing resources readily available; it facilitates a readily available, on-demand workforce – i.e. the gig economy. As repetitive tasks are increasingly automated away via Robotic Processes Automation (RPA) and other technologies, it will become more difficult to find consistent, repetitive work. The Cloud will enable individuals to more efficiently place their skill sets to fill the contractual and contingent needs of organizations. This necessitates revisiting the cost structure and profitability models of most organizations.
I will discuss how to utilize Cloud technologies to facilitate a Shamrock Organization using Cloud Based technologies in the next article.