Overcoming the Digital Dilemma

What is your strategy for digital transformation?

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Rene Reichelt

“Silicon Valley is coming,” says Jaime Dimon, CEO of JPMorgan Chase, “and they want to eat our lunch.”

Why is the CEO of the largest bank in the United States worried about software startups with no experience in banking? The answer is simple: digital disruption is changing everything.

Consider the following examples:

  • Uber, the world’s largest taxi company, owns zero vehicles
  • Alibaba.com, the world’s most valuable retail company, has zero inventory
  • Facebook, the world’s most popular media company, creates zero content
  • Airbnb, the world’s leading provider of accommodations, owns zero real estate.

What these organizations have in common is that the value of what they’re creating lies in software. In his well-known Wall Street Journal essay, “Why Software Is Eating the World,” Marc Andreessen foreshadowed a new wave of software innovation that would disrupt every market in the world. That day is here, and no industry is immune. As organizations continue to use software to spur innovation, competition and disruption continues to advance from places other than the traditional pool.

Every company in the world must undergo a digital transformation to meet the demands of customers, partners and employees. So, why isn’t every organization addressing this need today?

Confronting the Challenge

Many organizations today confront the same challenges: the lion’s share of their IT budgets are spent on activities that maintain the status quo— just “keeping the lights on.” But that’s not the only issue — they also struggle with creating innovative software. Traditional application development models take months or years to deliver new functionality. With digital systems at the core of all organizational processes, established businesses face a significant dilemma: how can their existing infrastructure be made more efficient — as rapidly as possible — while transforming application development and delivery?

One half of the answer lies in figuring out exactly where and how to get to “optimize” mode and lower the cost of existing enterprise applications. At a time when IT budgets remain relatively flat, this critical step can drive out cost and redirect savings to fuel “invest” mode and fund digital transformation initiatives. The second half of the answer lies in driving this digital transformation through a radical reinvention of how software is developed and delivered. To achieve the efficiencies required to deliver existing applications while at the same time enabling innovation and delivering differentiation through new apps, organizations need to pursue a cloud strategy– and not just a single-cloud strategy, but a multi-cloud strategy. Take the example set by Ford and General Electric, two well established organizations that are proactively disrupting themselves with multi-cloud initiatives in development and deployment that are successfully driving innovation to stay competitive in an ever-changing landscape.

A multi-cloud strategy

A multi-cloud strategy is the solution to the dilemma created by the choice between two approaches with differing priorities. Infrastructure as a service (IaaS) cloud solutions are the proven path to efficiency for traditional apps. IaaS will help reduce the amount of IT budget spend for just keeping the lights on. Platform as a Service (PaaS) cloud solutions are the path to differentiation through cloud-native applications. Cloud native changes the way applications and services are deployed and run by reducing the develop-to-deploy cycle time for innovative software. All organizations with existing investments in enterprise applications must employ IaaS and PaaS solutions simultaneously, and they will likely leverage both private and public deployment models. A multi-cloud strategy embodies the philosophy that the cloud is not a destination; it is an operating model.

Where do you draw the line?

To some audiences, the recommendation to pursue a cloud strategy conjures up visions of abdicating control of, and responsibility for, IT infrastructure—moving everything to a mega-cloud service provider. Let’s be clear: A multi-cloud strategy doesn’t mean rushing headlong to the public cloud. A crucial element on the road to digital transformation is keeping a laser-like focus on “the line.” Where do you draw “the line” between activities that truly differentiate your organization and those that are not adding unique value for your constituents? Cost, control, security, and speed requirements, along with consideration of existing investments, necessitate a nuanced approach. Workload-by-workload decisions should be made between on-premises and off-premises, public and private approaches.

Most organizations don’t generate revenue from selling software; they leverage IT to drive value into their core businesses. Which activities are driving value and which are just undifferentiated heavy lifting? As they pursue a multi-cloud strategy, organizations must give careful consideration to what should be built versus what should be bought. Do activities like racking and cabling, installing and integrating, versioning and scaling an infrastructure add value to the mission or would it be better to buy a turnkey IaaS solution? Should an organization deal with middleware and infrastructure complexity or refocus those efforts back into the core business by leveraging a turnkey cloud-native platform solution?

What should you do?

Digital disruption is inevitable. Will you be the disrupted or the disruptor? How can you maintain your existing services while innovating for the future? IaaS is the proven approach to drive efficiency into traditional enterprise applications. Achieving that efficiency will enable stable operations while freeing up resources for new initiatives. PaaS is the proven approach for accelerating the develop-to-deploy cycle for innovative new cloud-native applications. That innovation will create compelling services and new revenue sources providing the next source of growth. There is no one-size-fits-all solution. Your organization must pursue the right mix of traditional and cloud native, of private and public, of build and buy. Successful organizations are proactively pursuing digital reinvention by pursuing a multi-cloud strategy. Now is the time to “analyze your competitors in excruciating detail,” says Jaime Dimon, so you can learn what they are doing and develop your own strategy accordingly.

Bob Ganley is a senior marketing consultant for cloud strategies at Dell EMC.

Copyright © 2017 IDG Communications, Inc.