Digital Transformation in the Cloud
Disruptive competitors are chipping away at traditional businesses using technology and innovative business models. To counter the wide-sweeping impacts, traditional businesses must also transform. Just as Airbnb has widely disrupted the hotel industry in several short years, ride-hailing services such as Uber and Lyft are also disrupting the taxi industry. These examples also demonstrate the potential speed of disruptive models, putting additional pressure on the competition.
A 2018 survey of 1,300 CEOs by KPMG showed that 71 percent of them are personally ready to lead a radical organizational transformation.
However, the evolving technology landscape has added complexity to the leadership’s plate. Established companies are forced to think and act like start-ups to maintain their competitive edge.
Despite the fact that priorities will vary from company to company, industry analysts and business leaders agree that digital transformation is key to delivering an enhanced customer experience, even if that is still a work in progress.
Applications and services have to be highly available, flexible, and scalable. A robust IT infrastructure is a fundamental requirement to meet the demands of connected customers.
CLOUD-BASED SERVICES HAVE EVOLVED AS THE UNDERPINNING OF DIGITAL TRANSFORMATION.
Businesses can run their applications on internal company infrastructure or host them with a cloud service provider. However, the reality for companies not born in the cloud is likely to be a hybrid solution — offloading certain applications to a trusted cloud service provider while the rest of the applications continue to be managed in-house.
What Does Digital Transformation Really Mean for an Enterprise?
Simply put, digital transformation is how your business will evolve and transform.
At its core, digital transformation involves the process of leveraging technologies to transform the way a business operates. This requires companies to roll out new digital capabilities holistically to deliver desired business outcomes.
Use cases for digital transformations span the enterprise, mid-market, and small business markets. Here are some everyday examples:
- FINANCIAL SERVICES - Digital cheque deposits and online trading portals.
- RETAIL - Mobile checkout, online prescription glasses and frame fitting.
- UTILITIES - Smart meters and smart factories leveraging IoT.
- AGRICULTURE AND FARMING - Digital livestock tracking and autonomous farm vehicles.
- FOOD SERVICES - Digital menus in restaurants, online grocery sales and delivery.
- ENTERTAINMENT - E-tickets, streaming music and videos.
According to market intelligence firm IDC, “Worldwide spending on digital transformation investment is growing at 17.5% CAGR and will soar to $7.4 trillion over the years 2020 to 2023.”
Many businesses have kicked off their digital transformation without realizing it. Subscribing to a CRM application such as Salesforce.com or moving an on-premise company email server to Office 365 can be deemed as first steps into digital transformation, enabling productivity gains and employee mobility.
WHAT’S IN A NAME?
Digital transformation, sometimes abbreviated as DX, focuses on using digital technologies such as cloud computing, big data and artificial intelligence to make foundational changes in the way your organization operates. It is not about turning a traditional process into a digital one, but the goal is to completely transform the way your organization uses its technology, people and processes to become more efficient and effective.
LOOK BEFORE YOU JUMP
Technology is only one piece of the digital transformation puzzle. Ensuring a sound digital future for any company involves identifying the right technologies, people, processes, and partners. The technologies and platforms that a company chooses will depend on the nature of its business, its current state, and the outcomes it expects to drive.
Employees with the right skill-set are critical to the success of any digital transformation initiative. Processes need to be tweaked or created to support the technology and people. Organizationally, there is a need for a cultural shift to ensure that the new systems, tools, and processes are utilized to ensure success.
It’s important to remember that any good cloud strategy will allow you to capture more of your IT team’s strengths and focus them in areas of your business that will help drive growth.
A partner who can help with identifying technology solutions that fit the company’s needs and objectives can be an essential element of a digital transformation journey.
While global leaders may face similar challenges, a recent Microsoft study in the UK points to key challenges faced by leadership.
How Can an Organization Kickstart its Cloud Journey?
ALL SOLUTIONS START WITH A PROBLEM.
Business decision makers have to answer many questions before they can kick off a transformation project.
- What are the right investment choices that align with the defined business goals and outcomes?
- What is the primary driver behind the initiative? Is it cost reduction? Productivity improvement? Innovation? Security?
- Are there impending events that need to be factored in such as a data center closure? Is there end of life software that needs to be considered?
- What is the measurement of success?
- Are there skilled internal resources who can handle the transformation?
- Are there services that need to be outsourced to a partner?
Wrong choices can be financially and operationally catastrophic. Understanding the complexity of new and existing environments along with the detailed plan of the migration is key to avoiding costly mistakes.
NOT AS SIMPLE AS A TO B
Knowing where to begin can be a problem for many companies planning a digital transformation. While technology, people, and processes are the main pillars of a digital transformation, the technical aspects alone can be daunting.
Choosing the right infrastructure, network, and the applications that run on it are key technical considerations that go into a successful and sustainable transition plan.
The process can be complicated for businesses with older applications and legacy infrastructure. However, this can also be true for modern workloads. For example, native kubernetes in Azure or AWS cannot be easily transitioned between platforms.
Different workloads may require a different strategy to modernize.
Decisions on retaining, repurchasing, or retiring workloads have to be made. When moving to the cloud, some workloads may need to be re-platformed and others refactored.
With digital transformation, it all starts at the top of your organization.
Approval and direction from the C-suite will enable cross-functional alignment and buy-in — also crucial to developing and executing a successful strategy.
There must also be a clear understanding of the technology gap that the organization is trying to bridge in order to deliver benefits to the business. Every team involved in the transition must be aligned and supportive. At the outset, measures of success and ROI goals have to be clearly defined, allowing you to evaluate the project’s progress and make adjustments as needed.
DIGITAL TRANSFORMATION SHOULD BE VIEWED AS EVOLUTIONARY RATHER THAN A SINGLE LARGE PROJECT.
IT’S NOT “ONE SIZE FITS ALL.”
Naturally, every business and industry has different requirements from the next.
Cloud computing, Internet of Things (IoT), big data analytics, machine learning (ML), artificial intelligence (AI), and other overarching technologies are viewed as crucial elements to digital transformation.
And while there is no shortage of technology to enable digital transformation, there is also no requirement that all the options be applicable in every business context. Big data may be essential to an advertising agency, for example, yet they may not see the same relevance in IoT and edge computing.
Cloud and Digital Transformation Go Beyond Technology
UNDERSTANDING YOUR OPTIONS AND OUTCOMES.
Companies launching digital transformation initiatives need to have a clear understanding of different cloud services and how to best leverage them. From IaaS to SaaS, the cloud is complex and there are many variables to consider. When looking at different solutions and comparing cloud products, it is essential to be working from a set of standardized definitions.
Refers to a computing environment running on dedicated hardware serving a single client. Private clouds can be run in a company’s data center or outsourced to a Managed Private Cloud service provider. Private clouds are ideal for legacy applications or applications that require special handling or data residency requirements.
A group of computing services offered by a third-party provider over the public internet. Public cloud services offer global scalability and high resiliency for mission-critical applications.
HYPERSCALE CLOUD COMPUTING
Distributed computing environments that can add large numbers of servers and computing resources on demand. Amazon AWS, Microsoft Azure, and Google Cloud Platform are examples.
For most established businesses, a hybrid IT environment comprising a blend of on-premise, third-party hosted, and one or more cloud platforms may end up being the reality. Hybrid can also include the network connectivity services that are a fundamental enabler.
While cloud is an essential component of digital transformation, it is necessary to acknowledge that not all applications are optimized for the cloud space.
DIGITAL TRANSFORMATION IS NOT AN ALL-OR-NOTHING CHOICE.
Businesses should take a deliberate project-based approach to digital transformation which will allow them to prioritize applications, test, and learn from the initial projects.
By first moving non-critical workloads to the cloud, impacts to ongoing business operations are minimized. Applications and services can then be tweaked and optimized.
DISASTER RECOVERY: USE CASE FOR AN INITIAL CLOUD MOVE.
A mission-critical application that runs in a company’s data center would need a disaster recovery (DR) set-up, which can come with a high price tag. A fully paid-up DR instance, deployed on the company’s infrastructure, sits idle until it is evoked in a disaster situation.
Moving that DR instance to the cloud can be an excellent first digital transformation move. The cloud-based DR can be set up in parallel without impacting the production infrastructure. While a baseline is still required for storage, network transit costs, and minimal compute, the increased resources in a cloud DR are only billed when the recovery is initiated – which results in lower business continuity costs.
DIGITAL TRANSFORMATION INITIATIVES WILL VARY BY BUSINESS.
A true and effective digital transformation will require a comprehensive approach that breaks up the transition into manageable projects with clear business outcomes and timelines.
Cloud-based services and cloud-native applications are at the forefront of digital transformation and will have to be an integral part of the organizational change.
However, navigating the complexity of options and ultimately making the right investment choices will be the difference between reaping the full benefits of your digital transformation, or encountering pitfalls that may threaten business objectives.
Hybrid environments will be the reality for the majority of businesses as they transform, and partners who understand this complexity and have the services to support it are critical.