Podcast: Agile IT & the Rush Toward Digital Transformation - Sponsored by SAP

Scott Ferguson
11/6/2018
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For the last several years, CIOs and IT professionals have been wrestling with two specific issues as they work toward a cloud-centric future: Agile IT and the rush toward digital transformation. While enterprises want to keep innovating, finding a starting point and knowing which projects to tackle first remain a major obstacle.

To get a better handle on Agile IT and digital transformation, Light Reading Managing Editor Scott Ferguson recently spoke to two experts in these fields: Dan Kearnan, senior director of marketing for cloud at SAP, and Roy Illsley, a distinguished analyst with Ovum.

Scott Ferguson: Well, good morning, good afternoon, or good evening depending on where in the world you find yourself today, and welcome to this special podcast from Enterprise Cloud News, a Light Reading publication. My name is Scott Ferguson and I'm the managing editor for both Enterprise Cloud News and Light Reading. Thank you so much for taking a few minutes out of your busy day to join us for this special podcast.

Today's two topics are ones that CIOs and IT professionals have been wrestling with for some years now. We're talking about agile IT and the rush toward digital transformation. To get a better handle on agile IT and digital transformation, we have two special guests joining us today.

Our first guest is Dan Kearnan, and he is the senior director of marketing for cloud at SAP and we also have Roy Ilsley. He is a distinguished analyst from Ovum and he'll be providing us with some insights as well. Before we get started with our questions for today, Dan, can you just tell us a little bit about what you do at SAP and kind of where your expertise lies?

Dan Kearnan: Sure. Scott, thanks for the intro. I play a marketing role at SAP and which we try to help our customers and prospects understand how the value and the solution mix of our cloud solutions, specifically our platform as a service, all the SAP cloud platform, that is available to both the SAP and non-SAP customers in the market.

Scott Ferguson: That's great, Dan. Thank you so much. And Roy, I know we were talking before our recording started here and you were just recently promoted to distinguished analyst at Ovum. Can you tell us a little bit about what you look at Ovum and where your kind of expertise is in regards to enterprise IT and the cloud?

Roy Ilsley: Yeah, sure, Scott. I lead Ovum's cloud research and I've worked for many, many years as an analyst, but prior to that I worked in industry running data centres and doing a number of jobs. So I look at cloud from the strategic point of view for our customers by talking to them about what's important about cloud, how you move to cloud, what you should think about when you're using cloud in terms of getting the best value out of it and how it affects the organisational structure and processes. So, it's an all-encompassing view of cloud that I can bring.

Scott Ferguson: That's great, Roy, thank you so much. And I guess that kind of leads us into our first question, because at least in the way I look at the market, you can't have digital transformation without the cloud. They seem part and parcel of one another.

And in this fast-paced digital era, digital transformation is obviously something very critical, something a lot of enterprises are looking at. It's one of the hottest buzzwords out there today. So Roy, if we're talking about digital transformation, can you kind of talk a little bit about the role that IT needs to play, being the innovator as you go along in this journey?

Roy Ilsley: Yeah, sure. I mean I think Canadian Prime Minister Justin Trudeau at Davos this year, made the statement that resonated with me where he said the pace of change has never been this fast and it will never be this slow again, and what that means is that everything's going to happen quicker, faster and continue and accelerating and the role IT has got to play in enabling innovation in enterprises is it's got to get the core environment correct. It's got to be secure. It's got to be compliant and it's got to be adaptable. It's got to work at the speed the business wants, not at the speed of IT.

One of the analogies I quite often use here is you know, it's like a mobile phone. You have a mobile phone. You take it everywhere with you in the world and you expect it to work the same wherever you are on just about whatever phone you have. It's the service that you consume and use and the innovation is built on top of that and that's exactly what the role of IT is to do. It's to oversee the safe adoption of technology that a line of business can use and innovate in ways to address business challenges that they see, but do it in a way that is not putting the business at risk. It's not breaking any compliance regulations and it's not sort of doing something that's far too expensive for what they're actually trying to achieve.

Scott Ferguson: Thanks, Roy. And that's a great point that you bring up, the changing role of IT and this kind of gets into my first question for Dan because we know that it is now working a lot closer with each individual business units. They're not so isolated and siloed anymore. And so, Dan, from your perspective, how does IT and business, how can they work together to sort of lead organisations on this road to making themselves, to this digital transformation that they need to undergo in order to be competitive?

Dan Kearnan: Well, that's a good question. I think there's always been a balancing act between IT and business, in achieving any kind of business or corporate goal. And that is, IT tends to be the purveyor of governance and security of data assets and infrastructure. Business wants to achieve results quickly and they want to be agile in meeting market needs. And in order to do that, they often rely on IT to deliver what they need in a fast turnaround.

And this puts a lot of pressure on both IT and business in this kind of delicate dance that they do. But with the advance of new technologies, especially things like cloud technology, we see that there's the promise of being able from IT to deliver to the business what they need in a much more agile and fast turnaround time.

However, that does not, you know, it puts IT in an even more precarious spot because they still must maintain the role of governance and security of data assets and yet still deliver on the promise to business of meeting needs in a much more fast turnaround time. So this means that it must be kind of more business knowledgeable and define the architecture that balances the come to the needs of the business but also satisfies corporate governance and security policies.

So, I think the skills required by IT to deliver this level of service is a mixture of deep technical knowledge and abroad awareness and appreciation of the business that I think is definitely more relevant today than it has ever been in the past.

Scott Ferguson: Well, thanks Dan. That's certainly interesting. And so you were talking a little bit about architecture and you were talking a little bit about you know, the underlying infrastructure. And I want to shoot a question back over to Roy for a second. Roy, when we're talking about digital transformation and what IT needs to consider in order to equip the enterprise to be ready for this journey, what do they need to focus on, in terms of new technologies?

Everyday, there's a new announcement. Everybody's got something new that's coming out, but you know, in general, what do IT need to focus on in order to build the groundwork for this digital transformation that they want to go on?

Roy Ilsley: Well, I'd say the key technology is cloud computing currently, because what cloud computing does is it democratises the innovation process. It enables the line of business to adopt things rapidly and then, fail them just as fast. It does it in a way that provides a direct relationship between the cost of what they're doing and they can see the value that they're getting out of it and it's almost instantaneous.

They can sort of try something, see it working, see the value it brings in, and if that's successful they can scale it and they can grow it to the size they need for the period of time they want it and then they can collapse it and go after something new.

Cloud also fits in with a mobile world, where we live in an access of accessing any place anytime, anywhere, and the fact that you can employ people around the world means as a company, you can get innovation and talent from all four corners of the earth working for a company. You do not have to be based in an office, in a city, in a country where the headquarters are. That whole democratisation approach that that cloud brings is the fundamental ground-rail of building on top of with other technologies.

Scott Ferguson: So that's a great point Roy, but I know like when we talk about cloud, cloud can mean so many different things to so many different people. There's so many different components to cloud and you know, X as a service. Can you talk a little bit about specific cloud technologies that sort of ... that you're seeing in the market that are helping to kind of enable the agile IT approach and the journey towards digital transformation a little bit more specific on which one of these services can really help that out?

Roy Ilsley: Yeah, sure. I mean, what we see is its platform as a service and that's the fastest growing segment of the cloud market. According to our research, it's got a compound annual growth rate for 2021 of 22%. And that compares to infrastructure as a service which has a growth rate of about 16% and software as a service, which is even lower at 14%. And if you look at it in terms of money, the platform as a service market is going to be worth circa $47 billion by 2021 and it's the key ability of a pass layer that blends the accessibility but within a framework of governance. So it simplifies the ability of both IT and the line of business to adopt and use new things rapidly.

Scott Ferguson: Well, Dan let me ask you that, picking up on Roy's point that he just made. I'm sure platform as a service pass is not lost on SAP. It seems like it's a pretty important part of what SAP wants to do in the cloud, offering it to customers. Can you talk a little bit about some of your pass offerings and where this fits into your larger cloud strategy?

Dan Kearnan: Sure. It's interesting because I think sometimes the market perceives SAP is providing enterprise resource planning, enterprise software, as its mainstay. But over the last 10 years, SAP has heavily invested in a variety of cloud technologies. Not only software as a service offerings, but also a platform as a service offering called the SAP cloud platform and our SAP club platform is an open platform as a service provides our customers and prospects, unique in memory capabilities as well as core platform services and unique business services that collectively help companies either build brand new applications in the cloud, integrate both on premise and cloud applications or help people extend their existing applications to provide new capabilities and offerings based on that extension.

So it's a very unique offering in the market in that we have a broad partner ecosystem that help build applications based on our platform. Our platform as a service, so therefore you can help customers pick and choose maybe existing apps that they want. We also are heavily invested in kind of the open, robust multi-cloud environment so that our services can run on a variety of different infrastructures, cloud infrastructures, such as Google or Azure. It makes for a unique set of offerings in the market.

Scott Ferguson: And Dan, kind of keeping with that theme, can you talk to us a little bit, you know, give us some specifics about how your customers are using this SAP cloud platform and the pass platform that goes along with that as part of their digital transformation journeys.

Dan Kearnan: Sure. It's interesting. We have, I mean, over 10,000 customers across every kind of industry, both running SAP applications and not SAP applications when they choose to use the SAP cloud platform. I'll give you one example of a company that you might not expect as one that would use the cloud platform in their everyday business.

This is a nonprofit conservation company called Rainforest Connection. And their goal was to help communities in rainforest areas, help mitigate illegal chainsaw and deforestation in the region. So they built AI, with the use of recycled cell phones and solar panels that would sit high in tree tops with audio devices, they would enable the services of the SAP cloud platform to predict different noise levels in the forest that would be indicators that illegal deforestation and chainsaw action was happening, which would then send alerts to rangers in the area to help in a predictive way get ahead of this problem before it happened in the past.

So, there's an example of one company leveraging services from the SAP cloud platform to do something in a very innovative and unexpected way, that we were impressed by, we didn't even see that they were doing this. A story just popped up on our radar about a year ago. But this is one of many examples of how companies can or do use our platform as a service to solve business problems or do things in very innovative ways.

Scott Ferguson: And Dan, that's a really great example of just a company and an organisation using cloud as you said, in a very innovative way and something you normally wouldn't think about when you sign the contract and they take the software from you and get going. I want to ask both of you a question. I'll throw it to Roy first and then Dan, maybe we can have you follow up.

Since we're talking about pass and how essential that is to companies as part of digital transformation and agile IT, what are some of the barriers to adopting this particular cloud technology? What's kind of getting in the way of more folks getting on this particular bandwagon and Roy, I'll throw it to you first. Can you talk a little bit about what you've seen in the market about how folks are kind of waiting and seeing, about getting involved with platform as a service?

Dan Kearnan: Yeah. Sure. I mean, for me, it's down to sort of three key attributes that come across from the customers we speak to. And the first one is always security. What they're looking at is, they're looking at, is the pass layer secure? Does he provide a degree of isolation that they require between running an adjacent sort of platform, the services that are running? So can the data be private?

And then that brings us on to the second one, which is compliance. Do these PAS layers operate and conform to the multitude of different regulations, governance policies, that either they operate under from a company point of view or from a market perspective.

And then the final thing that they look at is how easy is it to use? What's the simplicity of using PAS? Is PAS easy to adopt? Because let's be honest, CIOs get a little bit weary of hearing everything is easy and everything is simple. So, when another technology comes along and people say "It's simple. Look, it's easy to use." They'll go, "Yeah, I remember hearing that about 5 million times before from every other technology that anybody's come out with."

So they need a little bit more convincing on that. And then I think finally for me it's about will it maintain its relevance and provide an environment that can support new technologies because as new technologies come on, people want to adopt them, so the PAS layer has got to be able to demonstrate that it's relevant to the growing new technologies and you can adopt them using the PAS layer and not rip it up and completely replace it.

Scott Ferguson: Thanks, Roy. We appreciate that. So Dan, same question back over to you. What do you see as far as the barrier to adoption when you're talking with, whether it's SAP customers or potential customers? Is it the reluctance of the CIO security or do you see something else out there?

Dan Kearnan: Well, I think for us sometimes it's one of two things. First of all, a lot of even though we think cloud technologies and the benefits in using those are widespread, I still think there's a lot of companies that I still don't understand the true value of the cloud and how that can help them achieve some of their goals or overcome some of their challenges. Sometimes it's just lack of knowledge. So it's a lot of education that happens.

But for those that are cloud-savvy and are more open to adoption and I find it's, it's trying to find the right use case and mapping that to their challenges that I think sometimes is the problem. So they see that yes, cloud technologies can help in some way. They just need to identify the right use case, the right scenario, to start on their cloud journey.

And once that one's been proven out, then I find it becomes much more easier to help other business units once you've identified a single business, a problem that you've solved with the cloud. So I think those are the two I find are part of the reasons for the lack of rapid adoption of cloud technologies and specifically this, especially platform as a service.

Scott Ferguson: And in keeping with that, talking a little bit about, you know, companies that are ready. So I'm a company, I'm ready to ... I definitely want to adopt PAS. So, Dan, from your perspective, like if I'm the client, what do I need to consider before I sign the final contract and I bring PAS on board? What are some of the factors that have to go into my thinking before I'm ready to adopt?

Dan Kearnan: Well, that's a good question. I think there's a variety of cloud platform as a service vendors out there. So, there's lots of choice. I think there's a couple of things to consider.

First of all, when you've identified the one or more use cases that you think a platform as a service can help overcome or provide a benefit for, you then have to look at the breadth of cloud services that particular vendor provides and see if they map, not only to the current challenge at hand, but to the future challenges and applications that you may want to build in the future.

So it's almost looking ... because everyone has a different set of services they offer as part of their platform as a service. Different services offer different needs, whether you might be a small business or an enterprise. So it's really mapping those services and finding the best fit.

Another is, is there's a variety of different pricing options, flexible pricing options that are out there. Obviously. That's always a consideration when comparing services and cloud vendors. And another is I think openness. Some companies are afraid of vendor lock in. So, working with a cloud provider of platform as a service that has more of an open, multi-cloud environment so that not only do you take, get the benefit of their own cloud services within their cloud platform, but often with an open cloud environment, you will have the benefit of working alongside other cloud infrastructure service providers such as Cloud Foundry, Google Cloud Platform, or Azure.

So how nicely do this vendor in question and their cloud services align with and embed in other cloud infrastructure providers, so that you don't have vendor lock in. So, there's some considerations that I would call.

Scott Ferguson: And Roy, is there anything that you would add to that as you go out and talk to clients and you see what's happening in market?

Dan Kearnan: No, I think Dan's covered that one perfectly. I mean, I think the point about being open and adaptable are key. And I go back to the three points to look for is the security, the compliance and the simplicity. But, no, I think that's covered it off perfectly.

Scott Ferguson: And Dan, one more question back over to you when we're talking about PAS. When you're looking out, and I don't know how far you look out, if you look at three months, six months, 12 months. What are sort of some of the capabilities that you see coming down the road, that are going to be added to these PAS platforms that are going to make them better, going to help out with that digital transformation, going to convince customers a little bit more that I should be adopting this? Kind of, where's the market headed with as far as features and new technologies?

Dan Kearnan: Well, that's a really good question. It's great to predict into the future and it's always fun to do that. I see there's a couple of areas, both technology or trends that will change the way platform as a service solutions are delivered. One of them is server-less computing. This is something that allows developers to build, run applications and services without worrying about managing or operating service.

This, I think, will help not only with the ease of cloud building, cloud application building, but it will also increase cloud usage and cloud use cases because you don't have to manage and worry and spend a lot of your time on the infrastructure. Server-less computing also improves efficiency by allowing developers to connect and extend cloud services to easily address their applications in a multiple use case. So I say server-less computing is one area of innovative growth that you will see.

Another is cloud container as a service. Cloud container as a service I think will become mainstream. This is an alternative to virtual machines and allows for apps to be deployed in a quick, reliable and consistent, straightforward manner. So I would say you'd see there's a growth of that capabilities that vendors will provide.

And I mentioned this before, but I still think multi-cloud strategies, using one or more computing services across a mix of different infrastructure as a service, public infrastructures and environments is going to be a mainstream approach to how platform as a service capabilities are delivered. So, those are three areas I think you'll see innovative growth in and become mainstream throughout 2019 and beyond.

Scott Ferguson: And Roy, same, same question to you. Where do you see the market going? What new features are going to be added onto these PAS platforms?

Roy Ilsley: Well, I wouldn't disagree with the three Dan have got. I think they're perfect, but I think other ones that I will add into that are I think there's going to be an increased use of AI and machine learning and the way that's going to be built into automation and how it's going to enable the PAS layer to become much more business-focused without it being a bespoke developed solution.

I think building on that specialisation of PAS, I think that AI and ML is going to help PAS to become sort of more meaningful to sort of certain markets. It's going to have a standard set of capabilities, but it's going to support sort of market segmentation. So, if you're a healthcare provider, you can get specialised PAS services just for healthcare.

And I think the final thing I'd put my finger on and say whether it's 2019 or whether it's a bit later is this whole notion of microservices and composable services, where you've got the idea that actually the PAS layer and the infrastructure layer eventually come together under the PAS layer and it becomes a cloud services platform where the services are developed, deployed and consumed.

And people don't talk about IAS and PAS like they do today, but I think that's probably a few years down the line as PAS starts to sort of become the dominant use case, but it will be blended in with, okay, now I'm using that, really the infrastructure part of it, doesn't come into any equation, but how can I build the services and how can I deploy these services more quickly in a multi-cloud environment that is efficient and meets my needs?

Scott Ferguson: So a true merging of all these different cloud services into one sort of overall arching platform, then for the enterprise?

Roy Ilsley: Yeah. I mean, I think, and you can see there's some work going ahead at the data layer that will enable data movement from the edge to the core of the cloud and there's lots of work, as Dan said, with containers and server-less that mean workloads are now portable, so it's becoming a much more even playing field and the vendor locking capability is being sort of broken.

But what you've got to imply onto that is then, well, you know, there is certain places where I want to run something. There's certain places where I want to run something else and I want to make these services as quick and adaptable as I can and I want to do it in a way that is simple for business users to do it, rather than have to hire specialist developers and programmers.

Scott Ferguson: Well, it'll be interesting to see how all this develops in just the next few years. And that kind of ends our discussion for today. Roy, Dan, thank you very much for joining me on this podcast. Really appreciate the insights from both of you. We'll see which one of your predictions kinda comes true in the months to follow.

And then once again, I'm Scott Ferguson, I'm the managing editor for Light Reading and Enterprise Cloud News. Wishing you a very good day. Bye for now.

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