There’s a lot of buzz—good and bad—around the “sharing economy” right now. The top seven sharing economy companies had a combined market capitalization of US$113.5 billion in 2015, accounting for 83 per cent of the total valuation of all billion-dollar-plus companies in the sector, according to a February analysis by industry data collectors Jeremiah Owyang and Philippe Cases.
This new economy is undoubtedly triggering a business and IT transformation across all industries, and the results are visible to all of us in our daily lives, whether it’s using Uber for rides across town, or Airbnb for our next vacation.
At the core of the sharing economy is innovation in business models and use of technology by companies like Uber, Airbnb, Coursera, WeWork etc. As these innovations change consumer behaviors and their expectations of products and services, companies are feeling a strong sense of urgency to either adapt to this new world, or risk being disrupted by new entrants.
At the center of this disruption is the massive amount of data (specifically, unstructured data) that the sharing economy vanguards are generating. P2P, B2B, B2C, C2C—all these categories are creating data that, when captured, stored and analyzed, will be both indicative and predictive of business value, and can help drive growth.
Few companies today are equipped to handle the massive onslaught of unstructured data generated today. Data is the lifeblood of this business model, and in a market where companies can be as quick to fold as they are to rise, actionable insights can make all the difference between sinking and swimming.
So what lessons can traditional organizations draw from this phenomenon??
To begin answering that question, it’s important to set some context.
The sharing economy was made possible in large part because of the advent of the cloud. Due to their ubiquitous usage around the world, companies like Uber and Airbnb harness a massive amount of IT infrastructure to ensure a smooth experience for their customers.
Thanks to the cloud, previously inaccessible technical capabilities and infrastructure can now be harnessed by such companies, as well as startups looking to disrupt existing business models without the sizable capital investments that would have had to be made in previous eras of computing. In other words, small players can successfully use technology as the centerpiece of their bid to meet hitherto unmet needs in new ways.
However, writing “cloud-native” apps requires a very different approach compared to building traditional applications (sometimes referred to as Platform 2 applications). To begin with, these cloud-native apps have characteristics that require a different kind of architecture, relying on micro-services to disaggregate different components as opposed to the largely monolith architecture used by traditional applications.
Next, these apps are built using open source components like Hadoop, MongoDB and PostgreSQL. All of this requires a new approach to thinking about technology, what data centers look like and, most importantly, the collection and analyzing of data.
For these reasons, going “cloud-native” tends to be a much harder shift to make for more mature companies than it is for startups that are born in the cloud. IT teams in mature businesses must deal with existing infrastructure that is complex to maintain and grow, as well as siloed data.
As a specific example, let’s take at how traditional taxi companies have responded to Uber. Many of them now have apps that provide customers with a far better experience that they did before Uber gained popularity. However, creating a mobile app is not enough – many of these apps are bolted on top of legacy infrastructure (call centers, dispatch systems and radio).
In addition to incurring high ongoing costs compared to sharing economy companies, these systems also don’t help facilitate capture and analysis of customer data. Ultimately, many of these apps are Band-Aids that will only delay the inevitable, unless these companies make the necessary investments to actually transform their business model.
It is critical that incumbent businesses realize that trying to co-opt the sharing economy is not a check-mark activity, but one that requires a transformation in all parts of the business. The company’s IT infrastructure is no exception to this.
The sharing economy is dominated by a few key players right now—but it won’t stay that way for long. As more companies grasp the value of new business models from the ground up, the sharing economy will become a jackpot of new services and opportunities for businesses and customers alike.
(About the author: Manuvir Das is a cloud expert at EMC)
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