Written by Shawn Price, Senior Vice President for Oracle Cloud and Product Business Groups, at Oracle @ShawnPrice1000
Risk has always been, and will continue to be, an integral part of doing business. After all, it is only by taking risks that the greatest wins are made. But the nature of risk is changing. In the past, the pace of innovation and change was much slower than it is today. Major innovations in technology and business models would take months, if not years, to spread. This meant that cautious businesses could take a ‘wait-and-see’ approach and only adopt new business tools and approaches to working once they had passed the test of time. On the other hand, adventurous businesses could risk all by adopting early. They gained much if the risk paid off, but when it didn’t these businesses stood to lose everything.
Today, this model has been turned on its head. New services and even whole new companies are being launched every week, and what is revolutionary one month is passé the next. In our fast-moving digital world, the biggest risk for companies is doing nothing and watching their customers and market share flow to more agile competitors. It is surprising, therefore, that in a recent Oracle study
of global enterprises, 33 percent of respondents state that their companies are risk averse when it comes to developing innovative business applications. With a further 24 percent of stating that they do not know just how risk averse their companies are, the real figure could be much higher.
Risk aversion and application development
These findings are concerning: in a world which favours the quickest and most inventive, many businesses are opting for a cautious approach towards what is a key mechanism for innovation – application development. When looking at the causes of risk aversion in this context, the study showed a variety of factors are at play. Chief amongst these are fears that the cost and time associated with application development is simply too high to risk failure, and a belief within businesses that they don’t have access to the right data insights to create innovative applications. Institutional risk aversion was also cited by a significant proportion of respondents.
These are, in all fairness, perfectly good reasons to be risk averse. However, businesses today need to weigh up the risks associated with application development against the greater risk of failing to innovate. The modern business world is built on and fuelled by digital technology, both in terms of customer services and internal operations. Just as web and mobile applications are revolutionising how companies interact with and sell to customers, so too are they enhancing productivity and driving unheralded levels of efficiency through improved working practices. Companies that can continually innovate, enhance and scale these applications will become leaders in their fields.
The good news is that technology is increasingly able to make application development a far less risky, costly and time-consuming process. In many cases, test and development environments are required for each new application instance, which may mean buying new infrastructure and software resources. Additionally, the technology involved can be complex and needs IT to project manage the development process. Given the already busy schedules of IT departments, such projects can be delayed further and it can take several months or longer for a new application to be designed and tested.
What if, after all that time and money, it turns out that the application does not meet expectations? In the light of this concern, it is easy to see why some businesses are risk averse.
Enabling low-risk innovation
The good news is that this no longer need be the case. Businesses have for some years now enjoyed the flexibility cloud computing has brought to ‘off-the-shelf’ applications. Software as a Service (SaaS) has created a whole new era in computing, enabling businesses to pay only for what they actually use, while accessing the latest versions of applications on the market each and every time. Many of the characteristics that made SaaS such a success are now promising to transform the way business applications are developed and extended internally within organisations. As such, Platform as a Service (PaaS) promises to reduce the risks associated with application development and thereby help enable further rapid innovation and change.
With PaaS, businesses can get the resources and infrastructure they need for application development instantly as a service. This not only means the cost is moved from capital to operational expenditure, it also means that businesses can get the resources they need much more quickly, and that these resources will always be the best available at any given time. Moreover, cloud ‘hides’ much of the complexity involved, providing simple user interfaces that most people can use with minimal input from IT. As a result, the business department requiring the application can also lead on its development.
Importantly, PaaS further helps businesses by smoothing the migration from on-premise to cloud systems. Over the next decade, , businesses’ on-premise systems will coexist with cloud systems, and applications will be developed and used in both environments. PaaS will be important as it optimises this coexistence. The best PaaS solutions let customers view cloud and on-premise as a single unified system., allowing businesses to get the most from their existing on-premise investments while losing none of the agility benefits on offer in the cloud. As such, PaaS is a great tool for managing risk.
PaaS is therefore an enabler of the digital business; providing the means of testing applications and businesses models rapidly and at a dramatically lower cost, evaluating their worth and then either discarding them or implementing them. It provides cloud test environments that allow even the most cautious of businesses to start with small and targeted developments and thereby greatly reduce risk. It means businesses can innovate more, while worrying less.