How the On-Demand Economy Has Created a Virtuous Data Cycle

The on-demand economy is expanding. What is it, why has it finally arrived, and what are the data implications for businesses?

By Sara Downey, Thought Leadership, Dell Technologies

My children have launched a crusade against waste. They’ve tapped into a zeitgeist that’s both socially and fiscally prudent and furthers the principles that we should only expend time and resources on what we actually need and use. This philosophy isn’t restricted to our recycling and buying habits—it’s shaping the world of business, too.

While economies around the world have suffered during the COVID-19 pandemic, the on-demand sector expanded rapidly, igniting a new wave of data-first, data-anywhere businesses, from home-exercise equipment with online streaming to virtual doctors’ appointments and remote learning.

Of course, subscription-based, service-led business models have been around for at least a decade, but the pandemic underscored its inherent value by helping businesses manage their finite resources during periods of volatility, so they can flex according to fluctuating customer demand. In time, I believe commentators will look back on 2020 and regard it as a watershed year for an on-demand economy.

The Data Feedback Loop

Among the pandemic’s many legacies, is an accelerated shift to decentralized data creation. Given the vicissitudes of a global remote workforce in flux, the creation of data is increasingly happening in the field and at the edge. This represents a security challenge that businesses will need to navigate.

Another outcome might be a greater appreciation of the power of data, and new initiatives to harness data to model for the future.

We can see all these reactions impacting businesses today. According to a commissioned study conducted by Forrester Consulting on behalf of Dell Technologies, nearly half of senior leaders (44 percent) with responsibility for data in their organization say the pandemic significantly increased the amount of data they need to collect, store, and analyze. Meanwhile, almost a third (30 percent) say they are doing more data modeling to predict changing customer demands/behavior/needs to overcome the impacts of the pandemic.

I posit that the increase in businesses creating and using more data (and doing so in pragmatic new ways) is the side-effect of more companies spinning up collaboration tools in a remote world of work, accelerating their IT transformation to go digital and offer personalized customer experiences (the 2020 Dell Technologies Digital Transformation Index revealed that 80 percent of businesses fast-tracked a digital transformation program last year), and turning to data to find answers and certainty in an uncertain world.

There is a fascinating cause and effect dynamic at play here, as well. On the one hand, the on-demand operating model is enabling this herculean effort by providing businesses with the flexible IT infrastructure they need to cope with the data influx and respond to fast-moving events. On the other, it’s instigating the creation of yet more data.

You see data-first, born-to-scale businesses typically pay for what they use and only use what they need. They create and capture an immense amount of data of which telemetry data is a particularly valuable asset. Their IT infrastructures then use this data to provide for their businesses accurately, flexibly, and dynamically.

In essence, the rise of the on-demand business model is both the product of and panacea for a society that’s creating immense amounts of data. It’s also perpetuating the growth of data-driven businesses by contributing to the data feedback loop.

Tension in the Twilight Years

The as-a-Service model may be affording businesses a new level of responsiveness and, in so doing, placing them at the front wheel of a burgeoning on-demand economy but, as with any vanguard group, these businesses are a minority.

According to the Forrester study, just 20 percent of companies have moved the majority of applications and infrastructure to an as-a-Service model. Even though most (six in 10, on average) see the many benefits of fully transitioning to as-a-Service.

For those businesses, still using manual processes and a centralized IT model in a decentralized digital world (where data proliferates at the edge where it’s created), data represents a burden, rather than a source of value and insight.

In fact, the second-highest barrier to becoming a data-ready business (as cited by senior decision-makers with responsibility for data in their business) is data itself, in the form of data silos (data marooned in hard-to-access, outlier areas of the business). The data silo problem is then exacerbated by business silos (52 percent say they struggle to share useful information with everyone who needs it).

The divergencies between a minority of on-demand businesses, and a majority of businesses that haven’t transitioned could create a new form of differentiation and division. The co-existence of the old guard (companies with traditional mindsets and manual processes) and the new (a data-ready culture, paired with a flexible IT infrastructure that extends to the edge), is already creating points of tension, which are manifesting as data paradoxes, as the Forrester study lays bare.

Dell’s Chief Technology Officer John Roese sees this divide playing out in the way that companies approach their cloud ecosystem. For some companies, their data silos will only grow and become more entrenched. Others will use today’s challenges as the impetus they need to create a software-defined, multi-cloud environment that gives them the flexibility required to succeed in an on-demand world.

“Today, we think about hybrid as public and private working together, but we have to start thinking about it as public working with private, working with edges, and working with telecom clouds because they’re all part of this end-to-end, multi-cloud topology. And the reality is: If you don’t have a common control plane, if you don’t have logical connectivity with SDNs, if you don’t have a pane of glass to visualize and analyze and understand the end-to-end multi-cloud, including the edge, you will create a set of silos that actually won’t be able to do hybrid IT—that the workloads and data pipelines won’t actually be able to execute because they won’t be able to actually use all the services of the different cloud topologies as a system.”

– Excerpt from the The Next Horizon podcast episode with John Roese, Chief Technology Officer at Dell Technologies, on predicting the future of technology. Listen here.

A Silver Lining That’s Here to Stay

Beyond periods of upheaval, businesses will always appreciate the greater elasticity, scalability, and management functions an as-a-Service model provides. Hence, I can’t see the industry reverting to a model where the business takes on all the risk and expense of an upfront commitment. Particularly as we wade deeper into the data decade, data begets more data, and data-driven emerging technologies are used in concert with one another—connected via a next-generation customizable fabric like 5G.

However, if this is the future what happens if you’re outside of the virtuous data cycle? In the next article in the series, we shine a light on some of the data struggles these businesses are experiencing today with the hope that more businesses will resolve the data burden conundrum by partaking in the on-demand economy.