Coping Strategies for Leveraging the Payoffs of Cloud-Based Business Models: Evidence of Lessons Learned From Two Incumbent IT Service Providers

Even a small thorn can cause great pain - Irish Proverb The above Irish proverb states a simple truth which rings no truer than in the current digital technological landscape which is characterized by rapid fluctuation and turbulence. A landscape where a multitude of new and incumbent information technology (IT) organizations are attempting to embrace and leverage emerging technological advancements. One such nascent technological development is cloud computing. Forester research estimates that companies will spend $191 billion dollars on cloud services by 2020, compared to $72 billion in 2014¹. Cloud computing enables IT service providers (ITSP) to virtualize their computational resources and concurrently provision them, via a service orchestration process, typically in the form of Software-as-a-Service (SaaS), or Platform-as-a-Service (PaaS), Infrastructure-as-a-Service (IaaS)² and more recently Anything-as-a-Service (XaaS). However, there is evidence to suggest that incumbent organizations attempts to leverage the business model payoffs of cloud technologies is proving challenging (Winkler et al, 2014) whereby the cloud is the latest example of Schumpeterian creative destruction: creating wealth for those who exploit it and leading to the demise of those that dont #7583;. As cloud computing is often heralded as the silver bullet that can provide business benefits regardless of their size and geographical scope, it is no wonder that many incumbent corporations simply accept these assumptions as true (Winkler et al. 2014). In order for larger organizations to derive cloud related business model payoffs they often have to challenge these assumptions and cultivate their own pathways to cloud success. This article describes nine specific coping mechanisms operationalised by two global multinational ITSPs in their endeavours to reap the payoffs of cloud-based business models (Figure 1). For the purpose of this article, we pseudonymously refer to the two companies as case A and case B. We present these coping mechanisms as key lessons learned.