Tuesday, 8 February 2011

Could education learn from the Google docs business model?

Building on a blog post ive written discussing the notion that flow of resources is key to life. A colleague helped me understand how the same can be said for business models and can explain how to make money in this new connected age. How services like google docs could make good money and education could scale itself. 

In this case we're talking about how google can build a business by selling their tools. Gmail and gdocs are just their tools. Gdocs doesn't contain adverts so where's the business model?

To start with you can by extra space when youve used up the free allowances But that doesn't explain how they can stay competitive. We had to look a little deeper to realise that cloud providers can do things that local organisations and individuals find difficult. Real economies and practices of scale. 

We realised its actually just like the economy being built from banking. If every person withdrew all their cash the banks couldn't actually give it back. They only hold what's necessary to give people what they need day to day. They resell the money they hold and that's how they make money.

This is because it's cheaper for restaurants and car manufacturers to focus on what they do well and pay someone to look after their wealth. It's nore profitable for banks to see their cash as stock and resell it than to lock it up. That's just how the economy and most mature industries work and thrive.

So that's how google make a profit in software and tools. It's too expensive and a waste of effort for every company or individual to build and maintain their own web based office suite. Better to use one from a brand you trust. To make it profitable Google will not have the capacity for every person to use all their allowances at once. It's too expensive to actually buy and maintain the hardware and resources to support this. And also no one uses all their allowance all the time. It also doesn't matter if each persons data is in one place or distributed all over the place. 

All that really matters is the current demand. As long as Google can pull it all together and present it in the way the customer wants and expects they're happy.

So Google have so many customers they'll work on trends. They see documents and tools as data and customer traffic as data traffic and requests for data. Each day an average amount of new data storage is required. It will vary over time but this can be predicted with certain contingencies in place to cater for unpredicted events.

Once you master this you can build a reputation for global reliability. You always "just work". The price you can charge and the loyalty you gain for such reliability and dependability is huge. And this approach to it is cost effective and thus profitable. Thus it's a business model.

That is why I want to bring this to education. This is enterprise structure with enterprise profitability with an enterprise approach. It's what education needs. A platform and infrastructure that's built to scale to modern standards using time honoured approaches of achieving scale. Stand back and see things for what they are. Honesty, no warts. Go back to what you're good at and what people want. Reapply all you know but with a modern focus.
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