Cloud Computing: Technologies and Strategies of Ubiquitous Data Center - Essay Example

? SPOTIFY Table of Contents Executive Summary 3 Introduction 3 Developing Enterprise Strategy 4 Strategic Tools 5 The Five Forces Model 5 Three Generic Strategies 6 Value Chain 7 Evaluating Enterprise Strategy 7 Formulation and Evaluation of Alternate Strategies 9 E-Marketing 9 Customer Relationship Management 10 Supply Chain Management 11 Conclusion and Recommendations 12 Reference 14 Executive Summary SpotifyTM is cloud based music streaming service delivered via desktop and mobile phones. It was launched in October 2008 and offers subscribers access to vast database of music via internet. It faces strong competition from the like of Amazon, Google, and Apple which also offers cloud based services. In such a situation it is very important for SpotifyTM to formulate a clear and focused strategy in order to be successful and offer its services efficiently to subscribers. By integrating enterprise’s strategy with information system strategy, SpotifyTM will be able to implement a successful business model. Introduction SpotifyTM provides cloud based music streaming service delivered via internet mobile phones which helps subscribers to access vast database of music at any place without bothering about storage capacity of physical media. The cloud based business model is structured to store enormous amount of data in virtual space without requiring physical storage devices like hard drives. The data stored by subscribers can be accessed from any remote location if the internet is available. By formulating and integrating organisation strategy with information system strategy, SpotifyTM will be able to increase their subscriber base as cloud based technology will help to reduce cost, provide faster access to any remote location, and manage existing resources efficiently (Miller, 2011, pp.8-20). Developing Enterprise Strategy Strategic planning is the process of formulating, implementing and assessing long term mission and vision of an organisation. Strategies are generally developed at the top level of the management and are implemented throughout the enterprise with the help of technology, human resources and process (Doyle, 2001, pp.2-14). SpotifyTM is cloud based music streaming service delivered via desktop and mobile phones. It was launched in October 2008 and offers subscribers access to vast database of songs via internet. The word ‘enterprise strategy’ implies the mission and vision of SpotifyTM which express where it wants to reach in future and how it expects to get there. (Source: OnbileTM, 2012) SpotifyTM aims to provide unlimited access to its subscribers with vast database of songs through internet using cloud based technology. Thus, the strategy according to the business model of SpotifyTM is to provide unlimited choice of songs database to subscribers at shortest time and affordable price. Technology and information system can help the SpotifyTM to achieve its goals. As the company offers cloud based technology to deliver services to subscribers, with the help of technology it will be able to reach customers at anywhere in the world. In addition to that, cloud computing is technology which can store unlimited amount data in virtual space. This means that while existing technology requires customers to carry some sort of memory device to transfer data from one site to another, cloud technology requires user to have only access to internet. The files can be downloaded and saved in any network with the help of remote access (Franklin and Chee, 2010, pp.45-62). Strategic Tools The Five Forces Model Threat of New Entrants - SpotifyTM will be able to provide their subscriber unlimited virtual space to store and stream music at affordable cost with the help of cloud based technology. Cloud computing is a relatively new technology and requires experience, knowledge, and proper database organisation to offer uninterrupted services to customers. The technology of SpotifyTM has sufficient experience and expertise to implement their strategy and hence it is unlikely to face any threat from new entrants. Bargaining Power of Suppliers – Unfortunately the bargaining power of suppliers is expected to be high since some suppliers may prefer brands such as Apple or Google over SpotifyTM. Bargaining Power of Buyers – Cloud based technology does not require additional investment of time and money by subscribers. Also the services to cloud technology are segmented into corporate clients, SME clients, and general end customers. This means that the bargaining power of buyers will be limited to the extent of market demand. Threat of Substitutes – Other IT based alternatives like traditional open source computing, web portals and music streaming sites offers services but they are much slower compared to cloud technology. While the SME clients may prefer substitutes, switching over to alternative technology is unattractive since cloud technology is cheaper. Competitive Rivalry – Rivalry among existing market players like Apple, Google, and Amazon do exist but SpotifyTM clear mission and vision backed by its organised information technology is expected to provide the required market edge. Thus, SpotifyTM clearly has advantage over existing competitors. Thus, using Porter’s five forces model it can be said that the industry is attractive for SpotifyTM to implement its strategic goals (Henry, 2008, p.69). Three Generic Strategies Cost Leadership - In order to reduce cost and make business more efficient, SpotifyTM makes continuous process improvement and innovative business model. By adopting such strategies the technology would be able to realise higher sales volume by higher music streaming and also reduce cost of customer acquisition and retention. The biggest advantage of cloud based technology elimination of investment in servers and storage cost. Differentiation – The differentiation strategy most suitable for SpotifyTM would be to differentiate their offering based on different market segment and requirement of users. For instance, to penetrate into developing economies, SpotifyTM can offer services at low cost because the average per capita income of developed economies is higher than developing economies. Focus – The main focus of cloud computing remote access, improve manageability, less maintenance, and meeting unpredictable demands. Value Chain The value chain analysis of cloud based business models aims to identify and create value for each process. While open source computing is more standardised, cloud technology is more interoperable. Cloud technology is more sustainable to its cost effective business model. The primary value will be added from the music streaming services of SpotifyTM while secondary or supporting values would be added from various departments including Human Resource, Accounting and Finance, Research and Development, and Purchases department. Evaluating Enterprise Strategy The role of information system in strategic planning of SpotifyTM is concerned with management of resources like software, hardware, networking and data. Hardware is the list of components required for implementing the system. It is also associated with physical location and storage of data. The software is list of programs, applications or utilities that will help the subscriber to interact with the SpotifyTM system. It also decides what hardware should be installed in the system. Networking is a logical diagram of how the various components of the system interact with one another, where and how the nodes will interact, location of transportation media, and so on. Data are simply the bits of information physically in the system which needs to be organised in order to get meaningful information (Henry, 2008, p.69). Business strategy drives information strategy and organisation strategy. They are aimed to support business goals and objectives. According to the business diamond framework, there are four key components in SpotifyTM system namely business process (Cloud based technology and services), value and beliefs (value addition through business process more efficiently at affordable cost), management control system (flat structure with limited hierarchy since business is mostly driven by subscribers’ feedback), and task structure (it is modelled according to business process and organisation strategy). Using the information system SpotifyTM can increase the efficiency of each of these components by identifying where impact of these components are most likely to occur. Also, cloud based technology requires limited maintenance which can be automated using information system. The information system will help SpotifyTM to locate target market to deliver its services. Well organised database will make data access by subscribers much faster and the enormous amount of virtual storage capacity online needs to be indexed otherwise system may slowdown and lead to lost customers (Heracleous, 2003, pp.27-33). These issues can be efficiently handled by integrating information system with the strategy of SpotifyTM. From the above discussion, the information system strategy can be defined as the plan that an organisation uses in order to provide information services more efficiently to their clients. It acts as a supporting tool to implement organisation’s strategy. Hence, information strategy must be complemented with the business strategy which might otherwise affect both business and organisation strategies. SpotifyTM uses cloud technology to reach its customers easily and hence reduce distribution cost of business. The technology has focused on marketplace restructuring through disintermediation (Laudon, 2011, p.66-77). The biggest advantage in virtual teams is that geographically dispersed co-workers can assemble with the help of information technology and telecommunication. Formulation and Evaluation of Alternate Strategies E-Marketing E-marketing is concerned with direct transactions between the suppliers and business or business and customers through internet. Using the e-marketing the organisations are able to eliminate many intermediate suppliers and distributors. Such a strategy helps to reduce cost of product or services since the services can reach the target customers directly. It also saves time and brings more transparent product pricing (Chaffey, 2008, pp.336). (Source: Greenfields Partners and Associates, 2011) From the above discussion it can be said that the advantages of implementing e-marketing strategy are reduction in cost of purchase, reduced time to reach market, better pricing, reduced inventory cost, better demand prediction, and introduction of new services at less cost. Customer Relationship Management CRM strategies focus on enhancing enterprise’s awareness about customer choices and preferences through improved customer interaction. It is often considered as one of the strongest and efficient approach for developing and maintaining customer relations. Bonding with customers is a strategy that drives the business towards success by maintaining customer loyalty. The actual need of the customer is better understood by creating a bond which in turn helps the organisation to serve customers in better way (Sugandhi, 2003, p.9). (Source: M Star Inc., 2012) The CRM strategy analyses the historical data about all acquired and potential customers regarding their likes or dislikes, search patterns, correlations, etc. in order to foresee future customer needs. The CRM system of SpotifyTM can be grouped according to type of service, location, customer demography, and so on. It will help SpotifyTM to focus on every market segment and manage customer needs accordingly. The advantage of implementing CRM is that it is cost effective, requires less paper work, and less staff to manage resources. In addition, all customer details are maintained in central database which is available anywhere at any time. Supply Chain Management A SCM strategy aims to coordinate all parties in the supply chain of the organisation starting from external suppliers to end customers that are involved in delivering services. The need for managing supply chain arises when organisations want to improve their operations by setting appropriate level of outsourcing. The need for SCM may also arise due to increasing transportation cost, globalisation, increasing importance of e-commerce, managing inventories and so on. (Source: Corporate Serve, 2009) Thus, the SCM strategy focuses to balance the supply side of market with the demand side. In cloud based technology both the supply side and the demand side parties may be widely dispersed according to their geographic location, but with the combined application of internet, information system, telecommunication, and IT, SpotifyTM will be able to implement SCM strategy successfully and deliver services to subscribers efficiently. Thus, creating an effective SCM involves developing a business strategy with obtainable objectives and then integrating and coordinating them into implementable activities (Ross, 2002, p.118). SpotifyTM can also form strategic partnerships in order to source services locally in foreign countries. By implementing SCM companies like HP and Walmart have been able to cut cost and increase their profit margin. SpotifyTM will be able to implement SCM successfully by creating trust among trade partners, maintaining effective communication, and keeping transparent pricing model. Conclusion and Recommendations Different organisations follow different strategies depending on their scale of operation, organisational structure and maturity level. Effective and efficient services can be offered by an organisation when it has the correct employee ability, organised information system and focused strategy (Lucey, 2004, p.31). SpotifyTM strategy focuses on cost efficiency, operational efficiency, and informational requirements. To make business effective, SpotifyTM uses its scarce resources of organisation with information system in order to take informative decisions. In order to develop their operations and services further in future it needs to allow its customers to participate in implementing strategic goals of the firm. This can be achieved by using a flat organisation structure with not more than two hierarchy levels. It also needs to maintain a well organised information system by managing subscriber data. In order to provide faster, timely services to subscribers, the cloud based technology should be continuously updated with latest technology. With ever growing security breaches, data theft, and data misuse by third parties, SpotifyTM would have to implement strong security management technology to protect subscriber data. It can be done by implementing Information System Management, System Access Control, or Telecommunication Security technique which ensures data integrity, data confidentiality, and protection from unauthorised access by third parties. Reference Chaffey, D., 2008. E-Business and E-Commerce Management. 3. New Delhi: Dorling Kindersley (India) Pvt. Ltd. Doyle, S., 2001. Information System for You. 3. United Kingdom: Nelson Thrones Ltd. Franklin, C. and Chee, B. J., 2010. Cloud Computing: Technologies and Strategies of Ubiquitous Data Center. United States: CRC Press. Henry, A., 2008. Understanding Strategic Management. New York: Oxford University Press. Heracleous, L., 2003. Strategy and Organization: Realizing Strategic Management. New York: Cambridge University Press. Laudon, K. C., 2011. E-Commerce: Business, Technology, Society. 4. New Delhi: Pearson Education India. Lucey, T., 2004. Management Information System. 9. London: Cengage Learning EMEA. Miller, M., 2011. Cloud Computing. New Delhi: Pearson Education India. Ross, D. F., 2002. Introduction to e-Supply Chain Management. United States: CRC Press. Sugandhi, R. K., 2003. Customer Relationship Management. New Delhi: New Age International. Read More