Appirio is an organization that was founded about 10 years ago and provided software services to different companies. It has three founders who are willing to accelerate a transition to the cloud and make IT less complex and costly. The leaders of the company believe that the movement to the cloud is likely to provide them with enormous success in a long-term perspective.
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They think of the strategic partnership opportunities and possibilities to increase revenue and become recognized. Still, the founders are concerned that that large company will not trust them and will not follow them to the cloud. They are afraid that some cataclysmic event may affect their current success adversely. That is why they think of possibilities to ensure stability and growth. For now, the company’s leaders are determined to reach $10 million in annual sales. They believe that such alternation can be reached only if adopting a range of changes.
Appirio is willing to increase its revenue from zero to $10 million, $40 million, and then to 100 million in revenue with the help of strategic partnerships with Google, Salesforce.com, and Amazon.com. Thus, the company starts a 20-year transition period. Still, they wonder if it is enough to be a cloud-only start or it will be better to resort to traditional services systems that are in the focus of the majority of Appirio’s competitors as well. All in all, Appirio believes that it can reach a great advantage if it turns into a traffic cop, reconsiders competencies of emerging technology, and thinks of new approaches that can be used to get value from the cloud (see Exhibit 1). In this way, the company does its best to provide clients with outstanding IT services and inspire them. Other companies can implement these changes as well. However, they need to remember that the traditional approach is not considered by Appirio.
Basis for Recommendation
It will be advantageous for Appirio to reconsider IT services and implement changes that relate to them because it will be possible to reduce IT costs, increase revenue, and enhance personnel performance. A range of advantages will be observed by both partners and client companies. Appirio will not only reach payback but also get additional benefits in the future. Its competitors will not be able to maintain the same success as they are focused on traditional IT services.
Appirio has an opportunity to focus on traditional IT in addition to innovative services so that they are addressed in the same way or to avoid changes, as the company does not face any critical issues yet. However, it will be better for it to focus on new IT services, as they allow to improve constantly (see Exhibit 2).
The company is going to build agile systems and develop IT solutions. It will focus on the possibility to grow continuously, differentiating its services so that they can be recognizable. It will think of possible future improvements that were not reached yet. Appirio is going to do its best to ensure that large companies will migrate their business into the cloud. The leaders of the company believe that it is possible to rethink IT over and over so that the opportunities for improvement can be limitless.
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|Traffic Cop||The company operates as a traffic cop because its expenses are based on the manpower in the majority of cases. It is identified how many people are needed to cope with the task and then the money is provided to this group of personnel. Unlike previously utilized user-driven cloud approaches, the majority of costs dealt with the marketing department and time commitment. Today’s automation system allows launching software almost directly. The company can reach success if adopting this option because its personnel is technically savvy and does not require much attention. It is also advantageous that the company does not need to use any portfolio tracking systems that require additional investment. As employees can maintain their life/work balance, they can continue working.|
|Competencies of an Emerging Technology||The implementation of a new IT services delivery model presupposes the necessity to provide related services to the representatives of the general public and different organizations. However, Appirio manages to cope with this issue. The personnel builds good relations with Google’s employees and ensures that it is proper. For Salesforce, the company develops an ideas package that is unique and can appeal to the clients. In the framework of Workday, it gets involved in sales and service managers.|
|Value from the Cloud||The organization spends up to 3% on IT, which is not a critical expenditure. However, it is likely to reach great improvements in tools and equipment provided to personnel, maintaining marketing collateral, financial measurement, sales projections, and revenues. The opportunity to reach these targets can be obtained due to the cloud platform that is not difficult to use and the possibility to work with personal technology directly. As a result, maintenance mode increases, reaching 100% innovation mode.|
|Option 1||Option 2||Option 3|
|Description of Option||Focus on new IT services and technologies||Equally, combine traditional and innovative IT services and technologies||Do not implement any changes|
|Overall Assessment||Recommended because of the opportunity to increase income, improve reputation, become recognizable, and differentiate provided services||Do not recommend because of the increased competition (traditional services systems are not rare)||Do not recommend because existing concerns regarding the lack of trust and inability to grow will not be addressed, which can have an adverse influence on the organizational performance|
|Strategic Fit |
|Focus on the ability to be a traffic cop, implementation of innovative technologies, and the value obtained from the cloud is likely to allow Appirio to improve its performance and attract clients, capitalizing strengths and minimalizing weaknesses||Appirio is likely to lose its identity if it applies traditional services because this approach is a basic one and it is offered by numerous competitors. As a result, it will be difficult for potential clients to decide which company is the best||Currently maintained analysis of Appirio’s performance shows that the company does not have any critical issues that require alteration so that it can continue performing on the same level. Still, this option does not allow to cope with founders’ concerns that can affect organizational performance adversely|
|Financial Attractiveness||In the long-term run, the company is likely to reach $100 million in revenue. The initial increase is $10 million. The second one reaches $40million||An opportunity to get additional income is limited because of the lack of unique services. Traditional ones can be offered by competitors||No alterations in the framework of income and expenditures are expected|
|Noteworthy Risks||No discussion of the competitor’s reaction. Possible issues in a short-time run||Lack of differentiation||No competitive reaction|