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January 9, 2015

Digital + Cloud First Strategy of Corporations and U.S Federal Agencies

by Ravi Kalakota

Digital transformation is driving disruption across all industries; transition from traditional on-premise to hybrid public/private cloud infrastructure; and need to balance business agility, mobile workforces with persistent security threats.

CloudsThe increasing adoption of cloud computing and penetration of mobile devices are the two inter-related digital trends transforming the IT industry today.

“Pure play” Cloud services for Google, NetSuite, Salesforce, ServiceNow, Workday, Oracle, SAP, IBM, Microsoft, and other technologies are taking hold to speed up digitization.

We are clearly in the middle of a once-in-a-decade transformation.  In the consumer and retail world, the movement to Web based cloud services, is being accelerated by the move to deploy social apps, mobile apps, location aware, real-time applications. Several business processes are being “cloudified”:

  • CRM: RelateIQ, Zoho, AgileCRM, Salesforce
  • Payroll: ZenPayroll, Xero, Workday
  • HR and Employee Benefits: Workday, BenefitFocus
  • Accounting: QuickBooks
  • Insurance and Benefits: Zenefits
  • Project Management: Jira, Asana, Basecamp
  • Servers: Amazon Web Services, Google Cloud, Blue Ocean
  • Storage: Box, DropBox
  • Communication: Slack, HipChat
  • Marketing Automation: Marketo, HubSpot, Pardot

Typical Cloud design goals include:


It’s increasingly obvious that old applications and technologies need to adapted —  Four different delivery models – IaaS, SaaS, PaaS, Private Cloud –  are emerging differentiated by service level agreements (SLAs). But, how do you explain “cloud services” to someone new to this space?  There are multiple ways of describing cloud services.

In this posting I highlight some useful taxonomies from various sources that I found useful in explaining Cloud Computing and Cloud Services. Depending on who you are talking to pick the relevant one.

  • Why Cloud?
  • Describing the Cloud to an Enterprise Audience
  • Describing the Cloud as Outsourcing 3.0
  • Describing the Innovation Roadmap unleashed by the Cloud
  • Cloud Taxonomy

Pivot to the Cloud… Why Cloud?

The current on-prem IT operating model is unsustainable.  There is too much technical debt piling up. The average age of IT infrastructure in many industries is over 15 years old (pre-Internet, pre-search, pre-social, pre-mobile and pre-cloud).  Over 80% of IT budgets are spent on maintenance.  Security and compliance are adding to costs and stress.

By 2025, 80% of Production Apps will be in the Cloud…. the trend is unstoppable.


Describing the Cloud to a Enterprise Audience

The easiest way to describe the cloud is to stick to the message that IT is maturing and becoming a on-demand, utility or even a commodity service for certain aspects.

This trend is already strong in the consumer side (pretty much everything we do as consumer at home runs in the cloud today – facebook, gmail, NetFlix, iTunes, Kindle, Spotify, e-commerce).

Different layers of IT – Software, Development Platforms and Infrastructure – are becoming service oriented at different speeds. The figure below describes this evolution aimed at leveraging shared infrastructure and economies of scale.

Chris Hoff presents this IT Stack disaggregation and re-integration below.


Describing the Cloud as Outsourcing 3.0

We’ve reached a tipping point in cloud as corporations rapidly adopt cloud solutions.  They can eliminate the undifferentiated heavy lifting of managing their IT infrastructure and instead focus on adopting new IT operating models.

Some IT services are becoming a commodity and are ripe for outsourcing.  Cloud is simply outsourcing in a new form.  So one way to describe the cloud is “what do you do”  versus  “what do you have a vendor do”.

The taxonomy below provides a roles and responsibilities view based on Private Cloud,  IaaS, PaaS or SaaS.


Describing the Innovation Taking Place in the Cloud Marketspace

Large enterprises are under pressure to innovate faster than ever, drive down costs, and deliver increased value to their organizations through more responsive and flexible IT. As a result, there are numerous entrants into the Cloud Marketspace.

The figure below from Open Crowd presents a simplified view of who these entrants are and what sector they are playing in.

Cloud Landscape

Cloud Landscape


Everyone in IT is pushing a “Cloud First” policy.

This is intended to accelerate the pace at which firms and government will realize the value of multi-tenant, subscription-based  cloud computing by requiring every firm to evaluate safe, secure cloud computing options before making any new investments.

The U.S Federal government is leading the charge. The goal is shut down over 1200 data centers.  The U.S government has 3200 data centers > than 500 sq ft. The Dept of Defense (DoD) modernization cuts are going to accelerate the move to the cloud services.  DoD, Dept of Homeland Security (DHS) and the Intelligence Services are extremely large buyers of computing.  If they start moving services to the cloud, I believe the cloud trend is going to accelerate creating a talent shortage in the government contractors.


Other Useful Sources

1) Opencrowd has a great taxonomy page with a lot more detailed insights:

2) Definition from National Institute of Standards & Technology:  “Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.”  




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