How Uber & Airbnb made billions through cloud computing.
Business agility has become crucial for today’s organization. In the past, companies had time to evaluate and change course because they knew the competition had certain limitations in terms of establishing infrastructure. The introduction of the cloud has changed the dynamics. Today it’s easy for any new company to replicate infrastructure on the cloud. So businesses need the capability to adapt quickly without spiraling into inefficient practices. Business agility on the cloud provides the adaptability and cost-control necessary to stay competitive.
Real-World Examples of Cloud-Powered Business Agility
Every day new organizations are using the cloud to develop agile businesses. They are disrupting the status quo across every industry. Uber and Airbnb serve as the top example of this phenomenon. Both are using Amazon Web Services (AWS) to disrupt established industries.
Uber
Uber has changed the taxi industry forever. Even though it is a ride-sharing service, it doesn’t own cars. Instead, it works as an interface to millions of customers across the world and manages rideshares through automated services. Traditional taxis still depend on manual dispatch processes that can’t compete with Uber’s cloud-based automation. During peak times like Halloween or New Year’s Day, Uber’s demand for infrastructure resources grows 50–100%. A classic taxi service can never handle such spikes efficiently. But Uber handles the volume through auto-scaling on AWS. This agile approach has contributed to Uber’s explosive growth and the decline of the traditional taxi.
Airbnb
Airbnb has also used the interface model to disrupt the hotel industry. It doesn’t own any real estate. Instead, it allows businesses and homeowners to rent their places directly. Airbnb uses AWS services like EC2, RDS, DynamoDB, S3, ElasticCache and more to keep their interface system agile. While hotels were grappling with their IT to provide reliable customer bookings, Airbnb was able to build their massive system to serve 25,000 cities across 192 countries in 5 years. Only cloud-based infrastructure gave Airbnb the agility to overcome the giant machines behind the hospitality industry.
Benefits of Cloud-Driven Agile Businesses
The massive successes of Uber and Airbnb show the possibilities of building a cloud-based agile business that can adapt easily to new realities. Here are some reasons for using the cloud to achieve business agility:
Operational Efficiency: IT staff has to worry less about infrastructure maintenance and concentrate more on product improvements. Organizations can use DevOps principles to develop products faster. In a cloud environment, the development team has more control over production than traditional IT operations.
Scalability: Cloud provides unprecedented business expansion capabilities. Before the cloud, it was unfathomable that businesses like Uber and Airbnb could survive. Even if these businesses could get their operations running, they would have failed to scale up their infrastructures fast enough to keep up with demand. Under high growth, the companies would have failed due to bottlenecks. Cloud computing has given businesses the superpower of adapting to rising and falling demands at lightning speed.
Cost-Effectiveness: Businesses can better manage their costs with the cloud. In a traditional IT infrastructure, once a company buys new servers or data centers, they are stuck with it even if demand falls. Cloud-based businesses have the option to use only what they need. This kind of agility gives them more control over cost management.
Risk Mitigation: Cloud allows businesses to take more calculated risks. If a business wanted to build a new product or service, they had to go all in and create an expensive infrastructure. A failure could have been catastrophic. Now organizations have the option to experiment more without introducing high risks. They can easily build Software-as-a-Service (SaaS) for a selective group of customers without heavy investment in new infrastructure. So cloud-based development is helping businesses innovate more.
In Conclusion
Organizations can’t afford to ignore the effect of the cloud on business agility. Market changes are happening faster than ever before. Companies can achieve more in a shorter span of time. If an organization ignores the new reality of cloud computing and business agility, there is a higher probability that they will become irrelevant in the marketplace.
Originally published at https://yumfog.com on June 20, 2019.
