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Disruptive Technologies: Living in the Cloud

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"Never predict anything," film mogul Samuel Goldwyn said, "especially the future." Without regard to that sage advice, McKinsey & Company has updated its visionary prognostication of trends in our economy and society first issued three years ago, with an eye on disruptive technologies that are truly changing the way we live and work.

One of the more obvious trends -- and one that has been picking up speed for some time -- is the simple decision to rent or lease basic goods and services instead of buying them. We see it in action every day with the Zip Cars used by a growing number of consumers who really do not need, and perhaps cannot afford, to own a vehicle. If two-wheel locomotion is your preference, you can put a few coins in a meter and ride off on a bicycle. Many companies with more capacity for hauling freight than they need or excess office space are going into the leasing business, putting their unused resources to work for them.

Obviously, information technology (IT) is a field where creative thinking is a basic component. The rising cost of buying and maintaining IT capacity is a major impediment to many businesses, especially small ones trying to get off the ground. One solution growing in popularity is to adopt cloud-based IT services in which the company acquires use of vital software from external providers. This outsourcing of much of your IT services is a brilliant way for companies to maximize resources. You can save money and let someone else worry whether your software is becoming obsolete -- which it is.

All across the commercial landscape, companies are offering to rent just about everything from tools to clothing to textbooks. How many of us have expensive tools in our garages or backyard sheds that we bought for some long forgotten purpose years ago and that are now collecting dust. Home Depot will gladly sell you tools, but today it will also lease them to you for a short term, saving you money and also freeing up space -- which you and your family will no doubt use to store other unneeded stuff.

It is IT that makes all this doable and profitable, and the cloud is a prime example of what is possible. "While we and others have written about the importance of cloud-based IT services for some time, the potential impact of this trend is in its early stages," McKiney & Company said. "Companies have much to discover about the efficiencies and flexibility possible through re-envisioning their assets, whether that entails shifting from capital ownership to 'expensed' services or assembling assets to play in this arena, as Amazon.com has done by offering server capacity to a range of businesses. Moreover, an understanding of what's most amenable to being delivered as a service is still evolving -- as are the attitudes and appetites of buyers. Thus, much of the disruption lies ahead."

The cloud is the wave of the future. Business must either get on board or get left behind.

Jerry Jasinowski, an economist and author, served as President of the National Association of Manufacturers for 14 years and later The Manufacturing Institute. Jerry is available for speaking engagements. June 2013

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