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Digital Transformation & the Merits of an Evolving Hybrid Cloud Strategy

Digital Transformation & the Merits of an Evolving Hybrid Cloud Strategy
December 08, 2020

Darwin’s Theory of Evolution is ever so pertinent for human beings and businesses in the context of COVID19.

As the human race battles to survive the COVID 19 pandemic, the scientific community is aiming to develop the vaccine in record time. Governments are intensifying their capacity to diagnose and test COVID positive cases. Researchers in Cambridge University are running a sprint to create an Artificial Intelligence Mobile application that can identify COVID positive patients through their “breathing sound and cough patterns” captured through smart phone data. Imagine the unthinkable realities this world can achieve with ‘Data & AI’, powered by the cloud.

The times today exemplify Darwin’s Theory of Evolution more than any other. While humans naturally evolve to find ways to build immunity to face this pandemic, this race of the ‘fittest survive’ applies also to businesses and enterprises. Who are constantly being challenged to digitally transform or get outcompeted by younger and new businesses, whose immunity is defined by their adoption of digital technologies like cloud, data, AI and blockchain.

In Europe ‘Mobile App Only Banks’ like Starling & Monzo are challenging the Fortune 500 banks like UBS, Credit Suisse & DB. ‘Digital Only Online Portals’ are replacing the brick & mortar retail stores.

This evolving digital ecosystem has given rise to different unthinkable trends. Who would’ve thought that the biggest threat to footfalls of fine dining restaurants wouldn’t come from ‘Mobile App based food delivery startups’, but from digital entertainment portals like Netflix & Amazon Prime. These portals release shows for binge watching on a weekend, which is prime time for luxury dining.

Identifying these insights and threats to businesses was not possible without analyzing the massive amount of data that is being generated by every component in the digital ecosystem. As per an IDC report 175 ZB of digital data will be generated by 2025. This data will be generated by humans, systems, and new-age digital devices (sensors, wearables, quantum computing chips). 50 billion digital devices are estimated to be interconnected on this network of “Internet of Everything”.

Need for enterprise to transform into digital enterprises

Large enterprises and businesses who have well-established brands continue to have the trust of the consumers whom they have served over the last few decades. While a dozen startups are born in the cloud every day, only about 5% eventually succeed and many of these only solve point business solutions and do not have the trust and credibility of surviving over the years that large enterprises have. Many startups get eventually acquired by large businesses. The workforce of an organization is constantly changing. As baby boomers slowly retire, the younger workforce will bring the consumerization of the personal space into mainstream. The digital generation has grown up on Netflix, Amazon Prime, Uber & AirBnB and they expect the same digital experience while interacting with applications in their workplace.

Digital enterprises and cloud native startups are lean and adopt open ecosystems. The end consumer is imagined at the core of its business model and digital outcomes are defined around the needs of this consumer. API first and cloud first ensure interoperability and exchange of data and information, not only within the organization, but across its ecosystem of vendors and partners. Differentiating solutions are being analyzed, visualized and delivered at the point where consumer engages with digital channels using serverless technologies deployed as containers. These enterprises embrace AI for creating a culture of data-driven decision making. Using the power of technology these companies are changing the status quo.

Large enterprises will need to reimagine their core business processes, applications strategy while they digitally transform to differentiate themselves in this competitive world. Technology is no longer a cost center that supports the core business model but is creating business differentiation. While there has been a significant investment in legacy systems and processes over the years, these need to be redefined by embracing digital levers like cloud, data & AI to create the competitive advantage. This cannot be a disruptive strategy where all existing investments and solutions are transformed overnight and all solutions are migrated to the cloud; transformation must happen in a phased manner.

Digital transformation is a journey over a period of time that requires all elements of a solution: people, processes and the technology to evolve. People or the existing workforce need to embrace digital and not feel threatened by it. They should adopt new technological changes and augment their skills in an ecosystem of trust between human and machine. Existing application development processes based on the waterfall approach were suitable for the traditional monolith architectures. These architectures cannot simply keep pace with the volume and veracity of digital data and rate of change in the digital world. In an agile world built around microservices with open APIs, creating MVPs (Minimum Viable Product) in short sprints to demonstrate success has become mainstream.

Digital transformation needs an evolved hybrid cloud strategy to build applications which use a variety of technologies such as AI, Big Data and Blockchain.

Traditional support processes based on ITIL will have to give way to DevOps ensuring a consistent culture of CI/CD (Continuous Integration and Continuous Development). Technology of yesterday generally comprised of automation tools for keeping the lights on (element layer monitoring, scripting etc.) or automating tasks (Run book automation) to improve organizational efficiencies. Today, technology has already evolved to a point where it is not just about keeping lights on but about creating business differentiation. AI, data, cloud and blockchain are connecting people, processes, systems and applications and reshaping business models.

Hybrid cloud strategy in the context of disruption of Gartner’s Pace Layered Application Strategy

For large enterprises this digital transformation journey and a hybrid cloud strategy needs to be evaluated considering Gartner’s Pace Layered Architecture strategy, and is a very good starting point as it represented or represents various enterprises even today. This architecture categorizes applications into groups as per the pace of change of business in terms of its adoption of digital levers and the underlying cloud strategy adopted. Another key feature of this strategy is how IT spending will evolve from just being a cost center managed by the CIO to business investing in digital technologies to drive business differentiation. The below architecture has been remodeled in a digital transformation framework and once the transformation kicks in, IT spending across different layers will change as IT budgets move up the value chain and invest in technology to bring in business differentiation.

Digital transformation of enterprise

Systems of records: Is the back office that hosts home-grown applications, legacy applications like mainframes and has traditional structured database management systems. Most of the data is structured, content is static, and reporting is historic. These applications may require extensive refactoring or reconfiguration when upgrading or attempting to move to the cloud; the complexities involved may deter cloud migration in the short term. These systems/applications and the supporting data are typically hosted in on-premise data centers.

Systems of Differentiation to Systems of Engagement: This is where core organizational businesses differentiate using applications that create competitive value. Usage of efficiency, automation and productivity tools can bring in differentiation. Reporting is planned, content is static, unstructured and streaming data is making way as organizations embrace connected digital ecosystems. These systems are good candidates to be hosted on private cloud (Infrastructure as a Service – IAAS). Some have been disrupted by the Software as a Service solutions (SAAS) in the marketplace and Platform as a Service (PAAS). Traditional exchange services from Microsoft have moved to the 0365 online cloud (SAAS).

Salesforce has completely differentiated the CRM processes by creating the CRM SAAS marketplace. While this is true at one end of the spectrum, many applications will continue to have on-premise components (due to data restrictions, proprietary logic or regulatory constraints). There will be business silos and they will need to be managed within the hybrid ecosystem. Cost and efficiency of managing this in a hybrid set up will outweigh the cost of transforming all on-premise applications to the cloud.

What is redefining the pace of change in this layer is the fact that growing business functions put the consumer at the core and design business outcomes and experiences around this consumer. This layer has and will continue to evolve into a Systems of Engagement. Differentiation in terms of experience, agility and scalability with IT will transform core business processes. The MAN U fan engagement portal started off as a marketing website but has evolved into a digital experience platform that aims to engage more than 1 billion fans around the world through interactive content, ecommerce and digital asset management.

An AI chatbot that is being used to provide differentiation in response and experience, by making IT more responsive and cognitive is evolving into a system of engagement. AI chatbots are evolving into virtual assistants beyond IT, where business queries are responded for internal collaboration within the workforce. This virtual assistant has the potential to be extended to end consumers of the business (enterprise consumer helpline) or to various suppliers, partners in the ecosystem.

Systems of Innovation to Systems of Insights & Decision Making: This is the layer where large organizations are consistently innovating. Proof of concepts and ideas driven by technology are being trialed, and once successful, moved into mainstream. Here blockchain, artificial intelligence and machine learning are becoming mainstream. Today, these digital solutions are no longer proof of concepts and organizations are creating competitive differentiation. Decision making is being transformed based on the visualizations and insights generated by the applications in these layers.

Most of the digital solutions are completely cloud native and technologies like 5G will revolutionize the consumption of these services. Product companies are bundling intelligent AI services around their core products and offering platform solutions not only from the back-end but at the edge by deploying containers. Product companies are defining new revenue models which bundles predictive maintenance, anomaly detection and real-time fraud detection as a part of its portfolio. ABB Ability platform has created more than 200 digital solutions where core manufacturing products are bundled as services and offered to its end customers.

API Connected Microservices, deployed and orchestrated through containers & serverless technologies will reduce cost and foster innovation at scale. These systems will be built completely on the cloud and foster concepts like ‘pay as you execute’ and radically transform business models based on data-driven insights.

This layer will drive completely cloud native development by enabling artificial intelligence & blockchain at scale. Traceability within the supply chain is not just limited to when the raw material enters the production line, but right from the time raw material leaves the source, and is tracked while it is being shipped and distributed through various channels. Blockchain solution will start becoming mainstream. Artificial intelligence-based fraud detection and anomaly detection will provide real time insights and trigger alerts to take corrective action before it is too late.

This is the layer where artificial intelligence and data-driven decision making visualizations will become mainstream in the next few years, transforming the investments in this layer into a System of Insights & Decision Making.

HCL has been at the forefront of implementing cloud transformations and virtualization technologies, assisting enterprises to drive business growth and enable superior digital experience. Cloud transformation should not be looked at purely from a cost perspective but from the organizations wider IT and business strategy angle.

HCLs vision of the enterprise for the digital technology age builds on a holistic view with an aim to digitally transform organizations as an agnostic consulting partner. HCL assists customers in adopting best-in-class, next-generation hybrid data center management architecture to enhance agility. This allows IT the freedom to create united and secured data center services for their systems of records and create experiences for its consumers in the systems of engagement layer. This, in turn, helps businesses focus on creating competitive differentiation in the systems of decision making and insights. HCL has assisted more than 200 enterprises with digital solutions in their digital transformation ambitions.

https://enterpriseiotinsights.com/20190520/internet-of-things/global-iot-connections-reach-50-million-2030-study

https://www.forbes.com/sites/default/files/images/inline-migration/tomcoughlin/2018/11/27/175-zettabytes-by-2025/#a5ab31854597

https://www.gartner.com/en/information-technology/glossary/pace-layered-application-strategy