Start-ups of the Digital Era: Why Cloud is Pivotal Start-ups and SMEs in India are uniquely positioned to excel in digital transformation journey, and cloud is the key enabler

Way back in 2006, when Amazon launched its very first IaaS offering, it started off by peddling its wares to start-ups and smaller businesses. The reasoning behind the move was that start-ups and smaller firms are "cloud-native" and are quicker in adopting cloud as they don't have the burden of legacy hardware, unlike their enterprise counterparts.

During this phase, many such firms leveraged this strength and out-innovated their larger enterprise rivals, with the competitive edge they achieved by better use of cloud.

Fast forward to 2018, and we would see that there isn't a single organization—small or large, start-up or older firm—that does not leverage the power of cloud computing.

Interestingly, the industry is at a crossroads once again. A decade ago, it was about how organizations can redefine the way they implement and consume IT, through cloud. It's now time for organizations to redefine their entire business processes and consumer experiences through digital transformation journey. Will start-ups continue to have that competitive edge?

Cloud Defines a Digital Leader

Companies everywhere, of all sizes and nature, are embracing new technologies, processes and business approaches to be digital disruptors. Right from Amazon to Airbnb to Byju learning app, we have countless examples for this transformation.

Many successful digital organizations already acknowledge the importance of cloud as one of the ingredients for successful digital transformation.

According to the Microsoft Asia Digital Transformation Study, around 88 percent business leaders in India surveyed agreed that "cloud computing is an essential part of their digital transformation strategy, and that the cloud has made it more affordable for companies of all sizes to embark on their digital transformation journey.'

As Gartner aptly puts it, "The agility enabled by "as-a-service" cloud-based technologies allow an enterprise to embrace market and operational changes as a matter of routine."

The cost efficiency, scalability, and anytime-anywhere accessibility are some of the fundamental value-adds that cloud brings to digital transformation.

However, organizations are moving to a more matured phase in cloud consumption. The adoption of cloud-native applications (applications designed specifically for cloud architectures), for instance, is considered to have direct impact on an organization's digital journey. Market studies indicate that the share of new business applications that are cloud native will more than double in next two years.

Management of multi-cloud environment is another key aspect that organizations are focusing on, to enable the digital transformation.

The Start-up Edge

Start-ups and SMEs are once again uniquely positioned to leverage the digital transformation phenomenon. In fact, start-ups across the world are adapting to the digital wave in a much faster and effective manner.

A recent study from IDG communications is proof enough. The study reveals that start-ups (established within 10 years) are way ahead of traditional firms when embracing digital transformation.

The report shows that 95 percent of start-ups have digital business plans as compared to 87 percent of well established companies, while 55 percent of start-ups have adopted a strategy compared to just 38 percent of more established firms.

The start-up advantage of not having a legacy baggage—technologically and culturally—is a great boon. Innovation and adoption of new technologies & tools, to achieve better customer experience has historically been second nature to start-ups. The more established firms, on the other hand, will have to go for a complete overhaul of their well-established systems and processes.

SMEs, which are habitually considered as "digital laggards', are busting that myth, with rapid adoption of cloud and other third platform technologies like social, mobile and big data.

Case in point being the adoption of cloud-based ERP systems among SMEs. SMEs are the frontrunners in moving critical applications like ERP systems on to cloud environments. Considering that a cloud-based, intelligent and flexible ERP system is critical for the enablement of digital transformation, SMEs will gain a competitive edge over a period of time.

Introduction of GST will further bring the SME sector to the mainstream and drive cloud adoption and digital transformation.