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2016 Requires Bold Decisions on Cloud By @SarahLahav | @CloudExpo #Cloud

Cloud is very much about the consumers and what they do with the cloud services in their markets across the world economies

The companies that are succeeding with their use of public cloud services are sharing similar stories online and at industry conferences about what they consider to be the leading drivers of their progress. These are usually in the form of bold, strategic decisions that demonstrate different thinking to where they were some years ago.

These bold decisions reflect the changing focus on cloud to above that of the original Infrastructure-as-a-Service (IaaS) model and toward the NoOps, higher-order cloud services such as Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS). Decisions such as adopting server-less models, embracing an open source software (OSS) approach as part of becoming a "software company," and choosing to break with decades of IT supplier relationships - they all have a profound impact across the industry.

Who Is Succeeding in Cloud (and Why)?
It is over a decade since the first recognized cloud offerings appeared on the market and, like all new things, they faced headwinds in the form of "echo chamber" debates and resistance from the technology industry incumbents who were vested in the status quo. However, the single-minded, customer-oriented CEO of Amazon, Jeff Bezos, could see opportunity in the high-margin IT industry and rightly viewed these headwinds as nothing more than protectionist behavior that ultimately wasn't in the best interests of customers.

Today in 2016, cloud is very much mainstream and by the end of the year AWS will be in seventeen geographic regions and Azure claims to be in 140 countries, including partnerships. But cloud is not about the providers, even though they dominate the media headlines.

Instead, cloud is very much about the consumers and what they do with the cloud services in their markets across the world economies - "repurposing" cloud services as part of retail applications, betting applications, or banking applications, or using the enormous cloud resources to run ad hoc genome processing.

Finance companies such as Battery Ventures don't want to invest in you if you waste money on data centers and infrastructure. Organizations such as William Hill that have "transaction sovereignty" challenges are still using cloud and open source wherever they can. Royal Philips has made big strategic cloud bets and has taken the whole organization and their suppliers and customers with them.

These decisions, and the three outlined below, are bold because they have ripple-out impacts on not just the organization, but its suppliers and customers and perhaps on the future of the business in "the fourth industrial revolution of disruption."

1. Stop "Doing" Data Centers and Infrastructure
It has long been said that the time of doing "undifferentiated heavy lifting" has past, though many companies still do it, much like "courting" male praying mantises with their heads bitten off. Infor CEO Charles Phillips famously said "friends don't let friends build data centers anymore" and we are now seeing companies move to server-less architectures, cutting infrastructure out of their cloud equation.

In the past it was possible to be server-less by using PaaS, which would hide the infrastructure from you, or using SaaS that hides even more from you. Nowadays with Database-as-a-Service (DBaaS) and the new Events-as-a-Service (EaaS), such as AWS Lambda, there are even fewer reasons to deploy servers. Without servers there is no provisioning, patching, or maintenance. Plus, there are fewer virtual networks, less focus on storage attachments, and backups are now someone else's problem.

It is great news for cloud consumers but bad news for cloud infrastructure architects who do not work for public cloud providers, such as the armies of VMware Certified Professionals (VCPs) and other infrastructure-focused practitioners.

2. Start Using Open Source Software, If Only to Attract the Best Talent
In the old days, a bank, a car manufacturer, a video outlet, or a betting company were just those things and nothing more. To suggest that they should become software companies would have been met with raised eyebrows and derisory laughter. Today, all of these industries, and many more, continue to be disrupted by "software companies."

Blockbuster-killing Netflix is a famous example of making a bold decision to go all-in on open source and to pursue a "grow your own" talent and systems strategy. In 2009, Netflix CEO Reed Hastings published a Slideshare, Netflix Culture: Freedom and Responsibility, as a means to attract talent without using recruiters - going straight into the hearts and minds of software engineers.

Reed's slide deck was complemented by Chief Architect Adrian Cockroft who traveled the world, speaking at conferences, saying that Netflix embraced open source for two reasons, that:

  1. Off-the-shelf proprietary tools could not do what they needed (streaming movies at scale); this was the first warning shot across the bows of established technology companies.
  2. By creating the need for quality engineers to develop the Netflix cloud software, they also attracted the best engineering talent.

We are now seeing other organizations, such as one of the UK's oldest betting companies William Hill, follow suit. Their CIO, Finbarr Joy, is using the same approach of "OSS to attract and weaponize talent" to beat the competition. Game on.

3. Get the Grown-Ups Onside
Anyone who sees cloud as yet another technology industry fad is sorely missing the point. The impact of cloud across the $3.8 trillion IT industry is profound. Especially in the disruption of proprietary hardware and software vendors who have historically fattened themselves on high profit margin sales from their locked-in banking, manufacturing, retail, and gaming clients. But now the game has changed.

Enormous, traditional companies such as Royal Philips have made a bold decision to move to what they called a "consumption model." Alan Nance, VP Technology, explained in 2014 how he led the company, including the board, on a strategy to tell all of their suppliers that the era of enterprise agreements with up-front capital payments, multi-year commitments, and other lock-in strategies were gone. Instead, all suppliers must provide pay-as-you-go terms. All suppliers did agree to this, except for SAP, which lost their client relationship and was replaced with Atos which would offer those terms for SAP services.

Chief operating officers around the world are now questioning IT capital expenditure requests, with their fellow executives on the golf course telling them that "friends don't let friends build data centers anymore." Software companies such as Microsoft are completely pivoting away from enterprise agreements to consumption-based models, which is no mean feat for a forty-year old, 120,000 employee company with annual revenues of $94 billion.

Watch These Decisions Spread
2016 will see these bold decisions spread throughout the industry, with less use of infrastructure and greater use of higher-order cloud services, more open source, and a software engineering focus across all industries. It is a great opportunity for those companies, boards, and IT practitioners who "get it," but hard times await for those who don't.

More Stories By Sarah Lahav

As the company’s first employee, Sarah Lahav has remained the vital link between SysAid Technologies and its customers since 2003. She is the current CEO and former VP of Customer Relations at SysAid – two positions that have fueled her passion in customer service.

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