How Cloud is Shaping the Digital Native Ecosystem
The digital-native businesses represent a nascent group of organizations that originated during the digital-native era (post-2000). IDC defines digital native businesses (DNBs) as “companies built from the start around modern, cloud-native technologies, leveraging data and AI across all aspects, from product development to logistic operations and customer engagement.” These entities exhibit a marked emphasis on technology and allocate a significant portion of their budget towards it, given its integral role in their business model. With the exponentially growing number of digital-native businesses across the world, worldwide digital-native tech spend is forecasted to reach $500bn in 2026.*
Being born in the digital age, digital natives have the ability to leverage technology to disrupt traditional industries by expanding and scaling fast. Beyond that, they are also able to offer innovative products and services to unearth whitespace opportunities and even develop new markets by embracing emerging technologies such as AI and ML.
“For DNBs, the use of emerging technology is crucial for their business strategy. B2B- and B2C-oriented DNBs set the pace when it comes to product innovation and development, and through efficient use of IT, they are able set new standards in customer intimacy and customer experience. Tech-driven DNBs that develop new and innovative tech solutions drive innovation across the board. Today’s economic climate forces DNBs to become even more focused on efficient use of technology and to leverage technology in their route to profitability.”
Simone de Bruin, Research Director, Worldwide Digital-Native Business, Start-Ups, and Scale-Ups at IDC.
Since many digital native businesses start as tech startups, they need to refine their fundamental value propositions to attract and sustain VC investments. This rigorous process has compelled digital natives to clearly define their distinctive value proposition to consumers, such as the convenience of grocery delivery in minutes, the easy accessibility of rental cars or shared rides, or the immersiveness of a C2C content platform. IT teams at digital natives aspire to optimize their budgets and time to market for delivering distinctive functionalities that are relevant and valuable to their users.
The cloud has played a crucial role in the growth of digital-native companies, providing them with the flexibility, scalability, and agility required to keep their customer experience promises and stay ahead of the curve. Today, cloud services encompass a wide range of offerings, including software development and testing support, security, governance, compliance processes automation, AI and ML platforms, and tools to enable various value-adding capabilities such as AR/VR and robotics.
In this blog, we will explore how cloud technology shapes the digital native ecosystem, helping DNBs deliver exceptional customer experiences, streamline operations, and drive business growth.
1) Streamlined Innovation
The success or failure of digital native businesses hinges on the swiftness and excellence of their innovation, that is, developing applications that are quickly adopted and outpacing competition.
Digital native businesses must continuously enhance their productivity and momentum through transferring routine tasks (i.e., enroll new users, send order notifications, and scale the core systems) to the cloud through which DNBs could also increase development teams’ bandwidth and allow them to focus on differentiating propositions.
Cloud provides DNBs with the infrastructure they need to rapidly develop and deploy new products without investing in expensive hardware upfront, supporting DNBs to experiment at a lower cost and innovate faster vs. on-prem.
Additionally, cloud services can easily be integrated with 3rd party software, allowing customization in the IT infrastructure. As digital native businesses can easily provision new resources and services without having to wait for hardware to be installed or software to be configured, they can respond much quicker to market opportunities and customer demands.
This agility is a catalyst for staying ahead of the competition and driving growth.
Cloud provides the elasticity for businesses to quickly and easily scale their infrastructure up or down as needed, supporting them to respond to changing market conditions and customer demand in real time. For example, if a company experiences a sudden increase in traffic or sales, it can quickly scale up its resources to handle the increased load and then scale back down once the traffic or sales return to normal.
Another important benefit that the cloud brings is process automation. Since the cloud automates DevOps processes (i.e., resource provisioning, monitoring, and management), scalability can be done without hassle as automated processes take over the resource allocation and management tasks from teams.
3) Cost Savings
Cloud eliminates the need for DNBs to invest in expensive hardware (i.e., servers, storage devices, and networking equipment) and software infrastructure. This reduces upfront costs and ongoing maintenance expenses and allows DNBs to optimize their TCOs, particularly when resources are not used during off-peak times.
Hyperscalers also offer tiered credits and incentives to startups for supporting them in building quickly with greater confidence. An example is the “Google for Startups Cloud Program“, which includes Cloud cost coverage (up to $100,000 for each of the first two years), technical training, business support, and Google-wide offers.
Beyond that, pay-as-you-go pricing models offered by the majority of hyperscalers allow DNBs to pay only for what they use.
Digital native companies often experience rapid growth, which comes with a requirement to scale IT resources quickly. Cloud provides this stability without requiring significant capital investments.
Cloud enables digital native businesses to access their data and applications anywhere worldwide, as long as they have an internet connection, helping companies become more flexible and responsive to customer queries and making remote work and collaboration feasible. Digital native teams can collaborate on projects and share data, access files and documents, and communicate with team members in real-time, regardless of their physical location.
5) Security and Reliability
Cloud-based infrastructures provide DNBs with advanced security features such as encryption, firewalls, and access controls. Since major cloud service providers heavily invest in security, have built-in security measures to protect data from theft, loss, and unauthorized access, and are equipped with the utmost security expertise that supports minimizing the risk of security breaches, DNBs are assured that their sensitive data, systems, and intellectual property are protected.
Cloud service providers typically have robust backup and disaster recovery systems in place, which can help ensure that businesses do not lose critical data during an outage or other catastrophic event.
Major cloud service providers offer distributed architecture, which means that resources can be spread across multiple data centers and regions, enabling companies to distribute their resources geographically and improve the performance and availability of their applications. This distributed architecture also facilitates scalability in specific regions or data centers as needed.
6) Personalized Experiences via AI and ML
Digital natives dedicate most of their efforts to developing features that enhance the customer experience and create unique and innovative capabilities over more typical offerings. These businesses recognize that their customers value practical benefits such as receiving personalized book suggestions, finding the perfect gym while traveling, or accessing insightful book reviews, above all else. AI/ML tools are essential for delivering personalized experiences that are highly relevant to each individual. Businesses can gain valuable insights into customer behavior and preferences and create tailored experiences that meet their unique customer needs.
The cloud has revolutionized how digital-native businesses operate in today’s fast-paced world. The inherent advantages of cloud technology, including scalability, flexibility, and cost-efficiency, have empowered digital natives to adapt quickly to changing market trends and customer demands. As we embark on an increasingly digitized future, embracing the cloud becomes imperative for digital natives to maintain their competitive edge. By harnessing the potential of the cloud, digital-native businesses can optimize their operational efficiency, augment productivity, and enhance the overall customer experience. It is evident that the cloud will remain a disruptive force in the digital native ecosystem and is poised to shape the future of commerce for years to come.
Collaborating with a reliable cloud provider can grant you the advantage of having access to cutting-edge technologies and industry-leading methodologies, as well as the ability to scale your operations seamlessly and efficiently as your business grows. Furthermore, you can rest assured that your data and applications are protected with robust security measures. If your organization is considering further cloud adoption, please contact us to learn more about how we can help your business.
Kartaca is a Google Cloud Premier Partner with approved “Cloud Migration” and “Data Analytics” specializations.
What is a digital native business (DNB)?
What kind of role has the cloud played in digital native business (DNB) growth?
How does cloud technology help DNBs deliver exceptional customer experiences, streamline operations, and drive business growth?
- Streamlined Innovation
- Cost savings
- Security and Reliability
- Personalized Experiences via AI and ML