On July 5th, 1994, Jeff Bezos went to his friends in the financial community and said, I’m going to build the biggest and best mall in America and we’re going to call it “The Amazon”. By April 1995 Jeff had managed to raise $1.2 billion in order to build the largest, most comprehensive and amazing mall in the entire United States. By August 1997, the mall was completed, and The Amazon opened its 24 entrances to an enthusiastic public. Based on day 1 traffic, this mall was going to be a huge success.
Expansion and investment in the early years
Jeff Bezos was getting written up in every business magazine. In those magazine interviews he often spoke about continued growth and expansion of the model. He expected to open additional peripheral services and products that he believed would help continue the differentiation he already enjoyed and would create even greater stickiness because of the deeper community and ecosystems. Some in the financial community worried “shouldn’t Jeff be more worried about making a profit than continuing to look for investment in order to expand into new areas outside his original business model?” However, Jeff didn’t listen, he got the investments and he continued to expand.
Between 1997 and 2004 Jeff Ruled the world of shopping in Malls
During the first seven years after opening The Amazon’s doors, it seemed Jeff Bezos, the Wunderkind from Wall Street, could do no wrong. By 2003 he was starting to grow profits and had expanded his mall strategy into several new geographies. In fact, as The Amazon grew, their IT systems became more and more of a burden for the internal team to manage. Many in the industry and even in the internal executive team could be heard whispering “maybe it’s time to outsource this mess to HP, Dell or Perot.” Finally, in January of 2005 Jeff agreed that “IT isn’t our core business and we should let someone else manage these systems so we can focus on the business”.
After two painstaking years of moving equipment and applications into HP data centers, The Amazon company was finally out from under the burden of their IT infrastructure and back-office applications. The Amazon did decide to maintain teams of developers who could keep web pages current and work on applications that might enhance shopper and or community/ecosystem member experiences.
West Field Malls moves to America in 2006 and at first, they are nothing more than a bit of noise. West Field talked about being digital and instead of building malls, they used their IT to build platforms that would allow for their customers to enjoy real time shopping and extended experiences from the comfort of their home, car or office. By 2008 the idea was beginning to catch on and the West Field platform was gaining real traction with customers, but still Jeff wasn’t worried because The Amazon was where everyone wanted to shop. By 2010 West Field had not only grown in the online space, they had innovated on their platform and created a new service for others to share (buy) called WFWS (West Field Web Services). The benefits of WFWS were multifold, not only were the developments there bringing in new revenue streams, the platform was providing market intelligence and helping West Field run their original business even more efficiently.
End of an Era
In 2013 The Amazon filed for bankruptcy and by 2015 had closed all its malls and sold a few of them to West Field as combo warehouses and data center space. HP was sad to see The Amazon’s IT business go and remarked at how “We took great care of their systems and charged them a fair price”. Some were heard to ask, “what did they do wrong” and others suggested maybe owning their own IT more effectively might have provided innovation opportunities. Regardless of what The Amazon could have done, West Field continued to grow by adding even more digitally supported services to their existing IT footprint. Ironically, many of these services were perfected by seeing how customers on WFWS were running similar services.
Moral of the story
Every company is Amazon, Paypal, Netflix, Google, Microsoft, ebay, etc., etc. Each of our businesses must make strategic decisions about what we will become in the age of being digital. Giving up all of manufacturing or all of modern manufacturing (IT) runs the risk of leaving you exposed to those who would elevate their use and ownership strategy of IT and then innovate on top of it. The relatively new introduction of “Edge” as an opportunity space potentially further illustrates that having the ability to address new opportunities with strong IT strategy is critical. The ability to address edge intelligently, is important, as the big suppliers are unable to satisfy unique Edge needs today.
Can giving your digital tools to someone else preclude you from reaching your vision or maybe leave you in the dark on “lost opportunities” or will it free you to truly fly? My belief is, you won’t know what you might have had with your IT if you aren’t doing your best to extract the value in your IT staff and systems. If you assume IT is a cost burden, it will show in how you build teams, how the teams are trained and what milestones you expect. If you’ve failed to determine the best way to utilize IT, then you might be giving away a perfectly profitable gold mine that you were just mining with the wrong tools and leadership strategy.
P.S. This is not an anti-public cloud article, this is a pro best use of IT article. Thank you for reading.