In a packed room at the New York Academy of Sciences, the focus of the 2016 Monetization Summit EAST was how to stay competitive in an entrepreneurial landscape. MGI Research’s assertion is that it is all about business agility. Strategic vision and product innovation won’t be enough – modern tools (cloud-based), agile teams and process flexibility are necessary. Especially as we move into unchartered markets such as intelligent energy.
GE is one company that is fully embracing the future. Current, powered by GE, is revolutionizing the way the world thinks about energy. PJ Nelson took the stage and talked about how GE thinks Energy-as-a-Service is the next big ‘as-a-Service’ transformation. There are four pillars to Current’s Energy Management System (EMS) – the ability to control energy assets, gain insights on the assets especially around usage, optimize the assets for energy efficiency and ensure the cost of energy consumption. In other words, intelligent energy.
Cost ensurance is the exciting part of EaaS. “For anyone who has spent any time looking at energy tariffs, especially at an industrial scale, would be put to sleep at page one. This stuff is complex with complex rating structures,” said Nelson. “If we can take all of the energy usage of smart energy assets, rate and accurately charge based on the complex tariff tables in near-real time…we are talking in 5-minute intervals…we are not going to only save millions upon millions of dollars in accurate billing, but in energy efficiencies.”
Although Current by GE very well could have decided to build the rating platform, they chose to go with a solution already on the market. Nelson stated, “The robustness of the chosen platform, TRACT by goTransverse, was beyond what we could have built in the timeframes we are looking to launch and quite frankly, we have other microservices to develop. It also goes beyond charges by tariffs, but into future business models we want to support, such as the virtualized power plants. This is the power of partnering with goTransverse, pun intended.”
Digitally Enhanced, not Transformed
GE, which is thought of as a traditional company, is clearly a bleeding-edge visionary with Current and their intelligent energy initiatives. But becoming a digital company is hard – especially for legacy businesses. So Bruce Rogow and Bill Kelvie from IT Odyssey talked about the need for companies to focus not on transforming, but to strive to be digitally ‘enhanced.’
According to Rogow, legacy businesses can never be digital businesses because fundamentally they were never conceived, designed, organized and funded from scratch to be digital. They have legacy customers, channels, products, policies, etc., that must be always taken into consideration. The bimodal approach IT organizations take is neither realistic or feasible; one mode operates at a traditional pace of automating known business processes for efficiency where the other mode operates at a rapid agile methodology. They don’t match nor is there a bridge.
Therefore, he argues, legacy businesses should strive to enhance their business, not transform. Digitally Enhanced Businesses (DEB) adopt aspects of the digital business model for new or augmented offerings while leveraging evolving digital technologies to enable these business models. This trimodal approach, if you will, allows an organization to move into the digital age more pragmatically.
The aforementioned example of Current by GE shows how a very large enterprise is approaching the evolution. Another great example is the move of on-premise, licensed software to Software-as-a-Service (SaaS) in the cloud.
Wall Street values the Cloud
Terry Tillman of Raymond James Financial has made it his business to understand, analyze and advise his clients on publically traded application software and SaaS companies. Some would argue that we are finally at a point of critical mass when it comes to adoption of cloud-based software solutions in the business environment, especially when it comes to finance and billing.
However, Tillman finds it interesting that some folks don’t understand the cloud, particularly in the investing world. In their estimates, the public cloud services have a compound annual growth rate (CAGR) of 16%, with cloud adoption still in its earliest stages. For the companies he analyzes, the rewards have been positive. Many companies selling for 3-8x revenue multipliers and stock pricing pop because of revenue growth. Wall street and other investors, particularly private equity, are now understanding the large up-front spend on customer acquisition for the long-tail payoffs of recurring revenue.
So what’s next? The biggest area for growth, according to Tillman, will be mid-sized organizations that will be leveraging cost-effective cloud-based software to automate many back, middle and front-office workflows that used to be out of reach. He believes this is a huge area of growth for SaaS vendors that can cost effectively scale at the volume and velocity of this segment.
“Death of On-Prem”
MGI Research believes that the push for velocity, new business and pricing models and digitization of business and supply chains will be the death of the on-premise applications. The modern view is one of cloud-based monitzation platforms that enable both native digital and digitally enhanced businesses to move into the next era of pricing, packaging and extensibility with all the security, transparency and regulatory fiscal compliance expected of all companies.
Looking to digitally enhance your business or have a ‘as-a-Service’ offering like intelligent energy from GE? Talk to our monetization experts to learn how your business can fast-track your initiatives today!