Zombie companies are everywhere! But there’s a cure

It’s zombie season again! Not only was The Walking Dead back with new episodes this month, but neighborhoods around the country are about to be crawling with zombies (most can be staved off with a little chocolate).

In business, unfortunately, zombie season has been in full swing for some time. This is an era of digital disruption, and it’s completely changed the way business is done, but not everyone has gotten on board. Companies are persisting with outdated business models, investing in outdated products, and committed to outdated delivery methods. To me, these companies are zombies, dead without knowing it. They may be moving forward, but don’t let the motion fool you, they’re only moving toward obsolescence.

But there is a cure. Unlike TV zombies, companies can come back to life and take themselves off the path to oblivion. Many, in fact, have already done it by innovating and getting ahead of trends. Think of IBM’s evolution: The inventor of the mainframe invents the PC, and is now inventing cognitive thinking in robots. But for every IBM, there’s more than a few Wang Laboratories. To me, companies today can avoid Wang’s fate by opening their eyes wide to the realities of a cloud-first world, and then embracing the interconnection that powers it.

What makes a zombie?

The term “zombie company” was born in Japan in the 1990s to describe businesses that were still generating cash, but only enough to service the interest on their debts. They were alive, but not really. The same holds true for companies over-invested in business models and technologies that today’s trends and innovations are quickly superseding. An example would be a hardware company that builds physical appliances critical to an on-premises corporate data center, maybe network load balancers or routers. Yes, there are still plenty of companies relying heavily on that hardware supplier, because most companies (an estimated 60 percent of them) still run their own data centers. But how long can that last?

The problem with a corporate data center is that it’s centralized and too far from the counterparties it needs to exchange data with out at the edge. Partners, customers, employees and other users today are dispersed all over the world, and companies need to be close to them to deliver the high-performance interconnection users and businesses rely on. Companies that lock their IT away in a centralized corporate data center simply won’t be able to achieve the proximity they need to compete, and more are beginning to see that. The hardware businesses depending on the corporate data center model to endure in a global digital economy are zombies.

Those same companies that have a hard time letting go of their legacy on-premises data centers may also be holding tight to the outdated business models that support them. Maybe they just aren’t down with the “as-a-service” delivery model yet, which the cloud has made the default mode for service providers, consumers and pretty much all digital businesses globally.

The major appeal of cloud for the enterprise is that companies can get the computing power or storage capacity they need when they need it, without making the huge capital investments in a corporate data center to supply it. But to benefit from this “pay-by-the-drink” model enabled by cloud, major IT transformation is needed to ensure robust interconnection to counterparties everywhere, and some companies aren’t ready to embrace it, even though the economics really don’t leave them a choice. Those companies are also lurching toward a scary future in Zombieland.

The role of interconnection

Interconnection is the private data exchange between businesses, and it can help companies avoid falling into a zombie state, or even cure entrenched zombieness. Interconnection has several intrinsic qualities that are key here: It’s direct, it enables many-to-many interconnection, it brings counterparties as close to each other as possible, and it’s delivered via globally distributed exchange points out at the edge.   

Why do these qualities matter? Take the inexorable shift to cloud as an example. Interconnection optimizes cloud services by ensuring they are consumed:

• directly (and securely)
• close to whomever and whatever needs them, no matter where in the world they are
• after seamless collaboration between multiple services (if needed or desired)

Companies that build IT architectures that emphasize interconnection first can position themselves as dispersed and agile as the various parties they are exchanging data with. (Does “agile” sound like your typical zombie?) Interconnection helps companies connect with and deliver cloud services that meet the performance expectations of their users around the world. It frees companies from old, inflexible, centralized on-premises data center models. They can virtually take their businesses anywhere. They’re ready to innovate and move into the future.

Shifting away from traditional business models can obviously be painful, because it can initially mean a real hit to revenues. Hey, companies making buggy whips probably had several good years after the first cars hit the roads, even though they were full-on zombie firms. Still, the world changed and forgot the buggy whip, it’s changing faster now, and cloud provides companies the dexterity to keep up with it. Combining an interconnection-first model with a cloud-first model will make the transition easier, and companies won’t find themselves marching among the walking dead.