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 major obstacles.

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: 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.

Our first guest is Dan Kearnan. He is the senior director of marketing for cloud at SAP. 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 today, Dan, can you tell us a bit about what you do at SAP and where your expertise lies?

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

Scott Ferguson: That's great, Dan. Roy, we were talking before our recording, and you were recently promoted to distinguished analyst at Ovum. Can you tell us about what you look at at Ovum and where your expertise is in regards to enterprise IT and the cloud?

Roy Ilsley: Sure, Scott. I lead Ovum's cloud research, and I've worked for many, many years as an analyst. 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. That 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. 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. Can you talk a little bit about the role that IT needs to play as an innovator as you go along in this journey?

Roy Ilsley: Yeah, sure. I think Canadian Prime Minister Justin Trudeau at Davos this year made a 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. What that means is that everything's going to happen quicker, faster and continue accelerating., The role IT has got to play in enabling innovation in enterprises is<&emdash;>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 that 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<&emdash;>wherever you are on just about whatever phone you have. It's a service that you consume and use.The innovation is built on top of that. That's exactly what the role of IT is. It’s to oversee the safe adoption of technology that a line of business can use to innovate in ways that address business challenges that it sees, 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 doing something that's far too expensive for what they're actually trying to achieve.

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

Dan Kearnan: 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. That is, IT tends to be the purveyor of the governance and security of data assets and infrastructure. Businesses want to achieve results quickly, and they want to be agile in meeting market needs. In order to do that, they often rely on IT to deliver what they need with a fast turnaround.

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 IT being able to deliver to the business what it needs in a much more agile fashion with a fast turnaround time.

However, that puts IT in an even more precarious Spot, because it must maintain the role of governance and security of data assets, and yet still deliver on the promise to business of meeting needs with a much faster turnaround time. This means that IT must be more business-knowledgeable and define the architecture that balances the needs of the business while also satisfying corporate governance and security policies.

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

Scott Ferguson: Thanks Dan. You were talking a bit about architecture and the underlying infrastructure. 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 does it need to focus on, in terms of new technologies?

Every day there's a new announcement. Everybody's got something new that's coming out, but in general, what does IT need to focus on in order to build the groundwork for digital transformation?

Roy Ilsley: I'd say the key technology is cloud computing, currently, because what cloud computing does is democratise 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 [people are] doing and the value that they're getting out of it, and it's almost instantaneous.

They can try something, see it working, see the value it brings in. 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. Then they can collapse it and go after something new.

Cloud also fits in with a mobile world, where we live with access any place, anytime, anywhere. 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 democratization approach that cloud brings is the fundamental ground-rail for building on top with other technologies.

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

Roy Ilsley: Yeah, sure. What we see is that it's platform-as-a-service. 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%. 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%. 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 PaaS 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: Dan, picking up on Roy's point., I'm sure platform-as-a-service (PaaS) 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 about some of your PaaS offerings and where they fit into your larger cloud strategy?

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

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

Scott Ferguson: Dan, in keeping with that theme, can you give us some specifics about how your customers are using the SAP Cloud Platform and the PaaS platform that goes along with it 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, running both SAP applications and non-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 to use the cloud platform in its everyday business.

It's a non-profit conservation company called Rainforest Connection. Its goal was to help communities in rainforest areas mitigate illegal chainsaws and deforestation in the region. So they built AI using 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<&emdash;>which would then send alerts to rangers in the area to help, in a predictive way, get ahead of this problem before it happened.

That'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. The story just popped up on our radar about a year ago. 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: Dan, that's a great example of an organisation using cloud as you said, in a very innovative way <&emdash;>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, Roy first and then Dan.

Since we're talking about PaaS 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 getting in the way of more folks getting on this particular bandwagon? Roy, can you talk about what you've seen in the market about how folks are waiting and seeing before getting involved with platform-as-a-service?

Dan Kearnan: For me, it's down to three key attributes that come across from the customers we speak to. The first one is always security. What they're looking at is: Is the PaaS layer secure? Does it provide a degree of isolation that they require between running an adjacent platform, the services that are running? Can the data be private?

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

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

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

Scott Ferguson: Dan, what do you see as the barrier to adoption when you're talking with either current or potential SAP customers? Is it the reluctance of the CIO, or security, or do you see something else out there?

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

Sometimes it's just lack of knowledge, so a lot of education has to happen. But for those that are cloud-savvy and are more open to adoption, I find it's trying to find the right use case and mapping that to their challenges that I think sometimes is the problem. They see that, yes, cloud technologies can help in some way.

They need to identify the right use case, the right scenario to start on their cloud journey. Once that one's been proven out, then I find it becomes much easier to help other business units once you've identified a single problem that you've solved with the cloud. Those are the two I find to be the reasons for the lack of rapid adoption of cloud technologies and specifically platform-as-a-service.

Scott Ferguson: Let's talk a bit about companies that are ready. So I'm a company, I'm ready to adopt PaaS. Dan, from your perspective, if I'm the client, what do I need to consider before I sign the final contract and bring PaaS on board? What are some factors that should go into my thinking before I'm ready to adopt?

Dan Kearnan: That's a good question. I think there's a variety of cloud platform-as-a-service vendors out there. So, there's a lot of choice and a couple of things to consider. First, when you've identified one or more use cases you think a platform-as-a -service can help overcome or provide a benefit for, you have to look at the breadth of cloud services that particular vendor provides.

Then see if they map, not only to the current challenge at hand, but to future challenges and to applications you may want to build. Everyone has a different set of services they offer as part of their platform-as-a-service. Different services offer different needs, whether you're a small business or an enterprise. So it's really mapping those services and finding the best fit.

There's also 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.

Another is openness. Some companies are afraid of vendor lock-in. Consider working with a cloud provider of platform-as-a-service that has more of an open, multi-cloud environment. Not only do you get the benefit of its own cloud services within its cloud platform, but often with an open cloud environment you have the benefit of working alongside other cloud infrastructure service providers such as Cloud Foundry, Google Cloud Platform or Azure.

How nicely does this vendor in question and its cloud services align with and embed in other cloud infrastructure providers, so that you don't have vendor lock-in? There are some considerations that I would call out.

Scott Ferguson: 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 the market?

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

Scott Ferguson: Dan, one more question to you when we're talking about PaaS. When you're looking out, say, three months, six months or twelve months. What are some of the capabilities you see coming down the road that are going to be added to these PaaS platforms that are going to make them better, going to help out with digital transformation, going to convince customers a bit more that they should be adopting this? Where's the market headed as far as features and new technologies?

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

This will help not only with the ease of cloud-application building, but it will also increase cloud usage and cloud use cases because you don't have to manage and worry or 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. Server-less computing is one area of innovative growth.

Another is cloud-containers-as-a-service. Cloud-containers-as-a-service will become mainstream. This is an alternative to virtual machines that allows for apps to be deployed in a quick, reliable and consistent, straightforward manner. You'll see a growth in that and the capabilities 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 where you'll see innovative growth, then become mainstream throughout 2019 and beyond.

Scott Ferguson: Roy, same, same question to you. Where do you see the market going? What new features are going to be added onto these PaaS platforms?Roy Ilsley: Well, I wouldn't disagree with the three that Dan has. I think they're perfect, but there are other ones that I will add in. There's going to be an increased use of AI and machine learning. There’s the way that's going to be built into the automation and how it's going to enable the PaaS layer to become much more business-focused without it being a bespoke, developed solution.

Building on that specialization of PaaS, AI and ML are going to help PaaS to become more meaningful to certain markets. It's going to have a standard set of capabilities, but it's going to support market segmentation. So, if you're a healthcare provider, you can get specialized PaaS services just for healthcare.The final thing I'd put my finger on, whether it's 2019 or a bit later, is this whole notion of microservices and composable services, where you've got the idea that actually the PaaS layer and the infrastructure layer eventually come together under the PaaS layer. It becomes a cloud services platform where the services are developed, deployed and consumed.

People don't talk about IaaS and PaaS like they do today, but I think that's probably a few years down the line as PaaS starts to become the dominant use case. But it will be blended in with, "Okay, now I'm using that." 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 it will be a true merging of all the different cloud services into one sort of overarching platform for the enterprise?

Roy Ilsley: Yeah. 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. There's lots of work, as Dan said, with containers and server-less computing that mean workloads are now portable. It's becoming a much more even playing field and the vendor-locking capability is being broken.

What you've got to infer from that is there are certain places where I want to run something. There are certain places where I want to run something else, and I want to make these services as quick and adaptable as I can. I want to do it in a way that is simple for business users, rather than having them hire specialist developers and programmers.

Scott Ferguson: It will be interesting to see how all this develops in the next few years. That ends our discussion for today. Roy, Dan, thank you very much for joining me on the podcast. I really appreciate getting insights from you both. We'll see which one of your predictions comes true in the months to follow. Once again, I'm Scott Ferguson, Managing Editor for Light Reading and Enterprise Cloud News, wishing you a very good day. Goodbye for now.

This transcript has been edited for clarity.

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