Cloud-Based Platforms for the Sharing Economy – Opportunities and Challenges

The sharing economy offers consumers and workers new ways to monetize their assets and labor while changing our perspective of resource use. It provides entrepreneurs and established businesses alike access to new markets while opening up hidden value.

As transaction costs and XaaS business models continue to drop and accelerate, executives need to understand the ramifications. Here are some.

What are the Opportunities?

Sharing economy companies have introduced novel forms of business that empower consumers, lower costs and provide access to products and services they wouldn’t normally enjoy – such as Uber, Airbnb and Zipcar. Their success has given rise to household names like these three giants.

These firms leverage data to provide value to both customers and investors. They collect, analyze and leverage user information in order to develop new services or enhance existing ones.

Consumers, established firms and new entrants all benefit from the flexibility and lower costs provided by the sharing economy. Utility companies seeking grid flexibility could pay consumers to reduce energy usage during peak demand periods to ease grid capacity constraints.

Sharing economy companies could use the same model to provide transportation, housing, retail and other services – including storage-as-a-service for B2B businesses – without incurring unnecessary server equipment costs. B2B firms that utilize sharing economy models could offer software-as-a-service that helps businesses optimize processes, reduce costs and increase efficiency while using predictive maintenance sensors detect machine reliability before costly repairs are needed; or they could offer storage-as-a-service instead.

What are the Challenges?

The sharing economy offers individuals a way to monetize underutilized assets such as cars and rooms through digital technology platforms that facilitate sharing. It has led to significant shifts in how various established businesses operate while creating household names like Uber and Airbnb.

These new businesses rely on online ecosystems to connect consumers to providers, moving away from traditional business-to-consumer models towards consumer-to-business models. Furthermore, these organizations operate under a new economic paradigm which sees assets as services rather than tangible objects with fixed ownership rights.

Cloud-based platforms offer B2B firms opportunities to take advantage of underutilized assets and spare labor. For example, companies with data centers can share their computing resources with businesses who require extra capacity. This has the potential to reduce capital expenditures while simultaneously decreasing operational expenses; additionally it could facilitate more agile decision making while helping mitigate risk exposures.

What are the Alternatives?

The sharing economy has created household names like Uber and Airbnb, but it also holds great potential to disrupt established businesses. When implemented sustainably, it could transform business models while unlocking hidden value by monetizing underutilized assets–from capital to human effort–which might otherwise remain dormant.

Internet and smartphone applications have transformed sharing into a marketplace that connects consumers, vendors, and providers. People can now rent out cars, homes, personal services and even personal items through websites with rating systems, reviews and payment mechanisms for one another.

The sharing economy resembles an evolution of barter and gift economies, using technology to add a digital layer that supports new types of exchange. Unfortunately, its economic benefits may be offset by large tech companies siphoning off most of the profits; to counteract this problem, one way could be for individuals to contribute computing power directly into the grid in exchange for credit or cash–similar to how homeowners with solar panels contribute during peak hours and earn additional income as part of this model.

What are the Future Trends?

Few industries will remain immune from falling transaction costs and the advent of sharing-economy business models, so executives should assess how this trend could impede industry exposure or alter strategic options for their own companies.

Cloud-native applications that are always on, failsafe, and easily updatable will soon revolutionize many daily commercial activities into “sharing as a service (XaaS). Companies such as Zipcar and Car2Go offer car sharing programs which reduce ownership and maintenance costs; consumers could rent clothing or accessories through Rent the Runway or Boatbound rather than purchasing them outright.

Platform firms such as Uber, Airbnb, TaskRabbit and Handy are revolutionizing industries by connecting “producers” with customers. While this may displace or threaten existing, often regulated services like taxis and hotels, in other cases it formalizes previously less organized work such as shoe assembly in factories or creating YouTube videos and smartphone app stores.