Cloud for Transformation – Cloud for Mindset Change

Digital transformation means more than just migrating on-premise infrastructure to the cloud. It must also transform companies into innovative organizations that are unafraid to experiment, learn fast and scale up ideas worth pursuing.

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A prediction doing the rounds says that by 2023, half of all the enterprises in existence would have gone through some amount of digitization. This implies an investment of about US $1 trillion every year, for the next few years, towards the digital transformation of those enterprises. Half of that spending will be on Cloud.

When there are so many new digital technologies in play, how does the relatively mature cloud end up completely dominating the transformation narrative? To answer that, we must take a step back to understand what compels enterprises to digitize. Overwhelmingly, it is the desire to make costs variable, rationalize applications, automate operations and elevate customer experience; these goals become viable only when the enterprise ports its workloads, applications, data and systems to the cloud.

An enterprise starting its cloud journey is faced with several decisions, ranging from choosing the cloud type (public or private) and provider to laying out an agenda for migration. This is the first line of action – it is obvious and easily dealt with. Take the choice of cloud type, as an example. Every application has two parts to it – a system of record, which hosts operational data, processes and other back-office elements, and a system of engagement, which connects the enterprise to the outside world to enable experience delivery, customer service, collaboration with partners, and co-creation with ecosystems. A prudent approach, now accepted by most organizations, is to pursue a multicloud strategy where the systems of record are retained on a private cloud while the systems of engagement are migrated to a public cloud where they can interoperate with the rest of the world. This means the overriding benefit of agility from the public cloud, and the convenience and assurance of closely managed monitored that comes with the private cloud.

But what follows is trickier. Most enterprises assume cloud migration equals lifting their on-premise infrastructure and shifting it to an AWS or Azure server. Nothing could be further from the truth. For a true digital transformation – and what is the move to cloud for, if not that – an enterprise must first transform its processes to render them suitable for the cloud. (Typically, cloud-first processes are self-service friendly; they exchange data with external systems; are embedded with learning and healing capabilities; are extremely robust and scalable.) Another important step is to leverage automation and artificial intelligence to enhance cloud operations and outcomes with minimal human intervention. The transformation decision, including which partner to bring on board to facilitate all of this, is therefore the most crucial one, since this is what eventually justifies the enterprise’s cloud investment.

Transforming the enterprise workload is possibly the biggest chunk in the cloud migration activity of an enterprise. But migrating a humungous ERP legacy system that has been firmly lodged on-premise for decades is formidable and prohibitively expensive, not to mention tedious, since it requires the enterprise to liaise with a variety of cloud and cloud support services vendors. Daunted by the task, many organizations defer or even give up the idea. But now, cloud transformation providers are coming to their rescue with an accessible bundle of cloud subscription (from say, Azure), licensed software (SAP S4 HANA, for example) and transformation services, which flatlines the cost and takes out much of the cost from existing estates; the resulting savings can now be invested into transitioning the enterprise workload to the cloud and S4 HANA. Flexible payment options – by outcome or usage, for example – further simplify the migration.

With so many enterprises going the way of the hybrid cloud, they are also leveraging the Polycloud layer to manage the landscape. The Polycloud sits atop their clouds (public/ private) and manages the heterogeneous cloud ecosystems underneath while also bringing with it a catalog of services available for provisioning and an AI layer to help users make better cloud provisioning decisions.

These are some cues that can enable enterprises to leverage the cloud option to digitally transform into leaner, nimbler entities with infrastructure ramping up and down on demand, and in tune with market signals. It is also a great way to democratize access to intelligent automation and leverage it across functions in ways that are simply not possible when these capabilities are on-prem and almost entirely serving the needs of the CIO’s organization. But the transformation is incomplete if it does not ultimately change them into innovative organizations that are unafraid to experiment, much like the digital-native firms. The latter see cloud not just as an agility and efficiency lever but an environment that can power innovation – where it is viable for thousands of employees, to collaborate with AI, think out of the box, hunt for problems or experiment with new innovations in search of the few ideas that will finally work. This is why these firms run not only systems and applications, but their entire innovation engine on cloud; so, they may experiment at will, fail fast, learn even faster and rapidly scale up the ideas worth pursuing.

This is more a mindset than a provisioning tactic. And incumbent organizations will do well to adopt it as well. This is the bigger role for cloud in digital transformation, at the heart of their innovation framework.

Copyright © 2020 IDG Communications, Inc.