I believe that this may finally be the year that the CIO role ‘crosses the Rubicon,’ leaving behind its traditional, IT-focused orientation. But I don’t believe that either of the previous predictions of this outcome — fading into oblivion or rising to a business executive level — is correct.
Instead, I think this is the year that we will see the role of the CIO transformed into something altogether different.
As you have probably heard, the EU commission signed the General Data Protection Regulation (GDPR) back in April 2016. The legislation is designed to help companies handle efficiently the data challenges of the 21st century and give strict guidelines as to how to work with massive flows of digital information. It is set to protect web users (data subjects) from malicious use and loss of their personal info and, also, to give people greater control over how their records are processed.
Red Hat has announced the acquisition of CoreOS, a provider of Kubernetes and container solutions, for $250 million (£176.5m).
The move will help Red Hat ‘further its vision of enabling customers to build any application and deploy them in any environment with the flexibility afforded by open source’, as the company put it. “We believe this acquisition cements Red Hat as a cornerstone of hybrid cloud and modern app deployments,” said Paul Cornier, Red Hat president of products and technologies in a statement.
The strategic rationale behind the move is straightforward enough. As cloud infrastructure becomes ever-more complex, container technologies are increasingly being used to move applications between clouds. Kubernetes, designed by Google and donated to the Cloud Native Computing Foundation (CNCF), is seen by some in the industry as becoming the leading container orchestration player in 2018.
One of the key trends of last year, as this publication noted, was a serious increase in major cloud players joining the CNCF and recognising container technology, from AWS to Microsoft to Oracle. Any assessment of nascent enterprise technology trends worth its salt will have containers somewhere near the top, with McKinsey saying as much back in November.
From Red Hat’s perspective, the move certainly fits in with their ethos around open source. Speaking at a customer event at the back end of 2016, Werner Knoblich, Red Hat EMEA general manager, explained the company saw itself as the #2 player in Kubernetes and Docker after, naturally, Google and Docker respectively. The former was also referenced in the press materials, where Red Hat is the second leading contributor to Kubernetes.
CoreOS was founded in 2013, and saw its first mention in this publication two years later, when Docker and CoreOS announced at DockerCon they were joining the Open Container Project. The company has secured $48 million in total funding across three rounds, more than half of which in its $28m series B round in May 2016.
Alex Polvi, CoreOS CEO, noted how the two companies had been collaborators for many years. “This announcement marks a new stage in our shared aim to make these important technologies ubiquitous in business and the world,” said Polvi.
You can find out more about the deal here.
Updating or modernising key legacy applications and moving them to the cloud has become a high priority for organisations as they pursue digital transformation. But for various reasons, some legacy applications will have been deemed best left alone, left to run on in-house systems.
But as ever smarter cloud-accessible technologies become available, offering massive data processing capabilities, machine learning and artificial intelligence for example, the reasons for continuing to leave these remaining applications ‘on-prem’ is wearing thin. By moving more legacy apps to the cloud, organisations can leverage further ‘smart app’ competitive advantage.
Organisations tend to initiate legacy migrations for one of two reasons. A ‘lift and shift’ because the underlying infrastructure or technology needs to be updated or replaced, often for cost or technology obsolescence reasons. Or secondly, driven by business transformation, where there’s the desire to create additional value through providing new capabilities to the business such as smart cloud services. In addition, migrating legacy applications to the cloud can help with closing process gaps if a current system doesn’t support a full end-to-end process.
Of these two drivers for legacy application migration, business transformation initiatives are the more common, certainly in our experience. Such applications are intended to replace legacy systems that don’t fully support modern business processes. While these legacy migration projects require new functionality, they often must support current processes as well.
These business transformation-led initiatives are often core legacy migrations; large systems built by central IT, such as portals and custom ERP systems which require scale, performance, and complex data migration. But there are non-core application migrations such as departmental apps originally built by the business using tools like Microsoft Access, SharePoint, Lotus Notes and so on, where defining characteristics for a successful migration are business enablement, centralised governance and easy data migration.
Flexibility: An objective of any legacy migration is to create a system that is flexible to change. After all, nobody wants a new system that will fast become outdated. Cloud-based application architectures promote such agility by leveraging microservices.
Enabling developers to rapidly take advantage of best of breed modern technology stacks without having to be an expert in all of them will create a high level of flexibility that is fully documented and visually constructed.
Scalability: Many core legacy systems fail to deliver the required performance at scale. A cloud-based application ensures that the new solution can be deployed with the required resiliency and high availability for mission-critical use. A cloud-native architecture enables automatic failover for continuous operation of business-critical apps, ensuring that they don’t run into the same performance issues as legacy systems.
For example, a large European mail and parcel delivery organisation is taking a cloud-first approach to its new core system. With a set of hundreds of services that scale independently, cloud hosting offers this organisation the flexibility to scale horizontally or vertically at will, increasing the resiliency of this mission-critical project as the demands on these services crest and fall. Additionally, by using a cloud Foundry based hosting environment, this organisation is exploiting a cloud that is fully-managed, robust, and highly available out of the box.
Smart capabilities: Cloud technology makes it possible to incorporate smart capabilities into an application. Smart apps are innovative systems that gather tremendous amounts of data from sensors and other sources, using machine learning algorithms and predictive analytics available on the cloud to make this information actionable for users and to improve experiences.
The characteristics of smart apps include their being intelligent, in that they use analytics, machine learning and AI services to make recommendations and predictions that guide users and things to take the next best action. Smart apps are also contextual, embedding personal, sensor and location data into users’ processes, made available on any channel/device. A third characteristic is that smart apps are proactive; pushing notifications and making use of chat bots and messaging services to interact with users and give them smart recommendations of what to do and when.
Usability: Deeper understanding of the users and business context can help close process gaps that existed in the legacy system, delivering an end-to-end solution that drives substantial productivity gains. This level of understanding may also result in the incorporation of new capabilities that weren’t available in the legacy system (e.g. mobile, conversational UI), or the removal of unused features. Both help deliver a more focused and engaging user experience. Look for a platform that enables the business to participate in the design process to ensure app usability and success.
In summary, legacy migration of applications to the cloud will enable a more user-centric application experience which will ensure greater adoption for both internal and external stakeholders. In a software-driven world, organisations that employ a cloud-first approach to application architecture will reap tremendous benefits in flexibility, scalability, smart capabilities and the usability of an application.
Hybrid IT deployments continue to gain favor with CIOs and CTOs, but cloud computing will now drive a greater share of the ongoing investment in business technology. Those combined platforms are enabling digital transformation projects across the globe.
Total spending on IT infrastructure products for deployment in cloud environments reached a total of $46.5 billion in 2017, with year-over-year growth of 20.9 percent, according to the latest worldwide market study by International Data Corporation (IDC).
Public cloud data centers will account for 65.3 percent of this spending, growing at the annual rate of 26.2 percent over the IDC forecast period.
Hosted off-premises private cloud environments will represent 13 percent of cloud IT infrastructure spending, growing at 12.7 percent year-over-year. On-premises private clouds will account for 62.6 percent of spending on private cloud IT infrastructure, and will grow 11.5 percent year-over-year in 2017.
Worldwide spending on traditional – i.e. non-cloud – IT infrastructure is expected to decline by 2.6 percent in 2017, but will still account for 57.2 percent of total spending on IT infrastructure products — that's down slightly from 62.4 percent in 2016.
This trend represents a faster share loss than in the previous three years, according to the IDC assessment. Moreover, the growing share of cloud environments in overall spending on IT infrastructure is common across all regions.
In cloud IT environments, spending in all three technology segments is forecast to grow by double-digits in 2017. Ethernet switches and compute platforms will be the fastest growing at 22.2 percent and 22.1 percent, respectively.
Meanwhile, spending on storage platforms will grow 19.2 percent. Investments in all three technologies will increase across all cloud deployment models – public cloud, private cloud off-premises, and private cloud on-premises.
Long-term, IDC expects spending on off-premises cloud IT infrastructure will grow at a five-year compound annual growth rate (CAGR) of 12 percent, reaching $51.9 billion in 2021. Public cloud data centres will account for 82.1 percent of this amount growing at a 12.1 percent CAGR while spending on off-premises private cloud infrastructure will increase at a CAGR of 11.7 percent.
Combined with on-premises private cloud, overall spending on cloud IT infrastructure will grow at an 11.7 percent CAGR and by 2020 will surpass spending on non-cloud IT infrastructure. Spending on on-premises private cloud IT infrastructure will grow at a 10.8 percent CAGR, while spending on non-cloud IT (on-premises and off-premises combined) will decline at a 2.7 percent CAGR during the same period.
"As adoption of public cloud services and private cloud deployments continue to spread around the world replacing traditional on-premises hardware-centric IT settings, overall market spending on servers, storage, and networking will follow this move," said Natalya Yezhkova, research director at IDC. "The industry is getting closer to the point when cloud deployments will account for the majority of spending on IT infrastructure, which will be a major milestone embracing the benefits of service-centric IT."
It’s conference season and, as you might expect, Jason and I have been on the road covering a bunch of them. It’s always great to see what the disruptive players in the market are doing — and this year did not disappoint. But there is one thing that repeatedly happens that just gets under my skin: transformation-washing.
As Jason explained in a Forbes article over a year ago, ‘washing’ is when a vendor (or pundit) applies a buzzword loosely in an overt attempt to attach themselves to its buzz. And transformation-washing is rampant.
So data warehousing may not be cool anymore, you say? It’s yesterday’s technology (or 1990’s technology if you’re as old as me) that served yesterday’s business needs. And while it’s true that recent big data and data science technologies, architectures and methodologies seems to have rendered data warehousing to the back burner, it is entirely false that there is not a critical role for the data warehouse and Business Intelligence in digitally transformed organizations.
The rise of the market for No-Code platforms and tools has given rise to a burgeoning population of ‘citizen developers’ – non-technical business personnel who can use these platforms to build an increasingly powerful set of business applications without writing a line of code.
As this market matures, different platforms focus on different challenges. As a result, a wider range of ‘citizen’ roles also evolve, such as citizen process creators and citizen data analysts.
High on this list: the new role of citizen integrator.
A citizen integrator is a non-technical business user who uses a No-Code integration tool to perform either application integration or data integration tasks – as well as tasks that combine these two integration modes.
It is 2018 and nearly every consumer has heard of, come into contact with or purchased cloud services in one form or another. Many of us are now dependent on cloud benefits as many of the most common life experiences such as listening to music, watching television and learning in a classroom have all been improved by the ability to access, manage and purchase IT resources online.
Businesses are no different. Enterprises are now leveraging the efficiency and on-demand access of cloud more than ever to speed innovation, cut costs and improve productivity. But like many other revolutionary solutions before it, cloud faced many obstacles in early adoption.
As soon as cloud hit its stride in 2010, IT analysts, vendors and customers began asking if cloud was ‘here to stay or is it one of these hyped subjects that inevitably will be forgotten in a couple of years’ time?’ Sure enough, no more than a year later in 2011 (according to Gartner’s 2011 Hype Cycle for Cloud Computing), cloud had taken the first step in answering this question by moving beyond the ’Peak of Inflated Expectations’ and straight into the ’Trough of Disillusionment’.
At the time, critics cited ‘cloud washing’ as evidence that cloud could never live up to our expectations. Cloud was everywhere. Eventually, this cloud washing helped accelerate its complete dislocation from reality. Fast forward to 2018 and we could reasonably ask if anything but cloud is here to stay. In fact, not only has cloud met our “inflated expectations” of 2011, but also it has arguably surpassed what we imagined to be possible. Turns out that we weren’t wrong about the potential of cloud, we were just early.
One of the more surprising realities of cloud as we move into 2018 has been the rate of business adoption of public cloud services for mission critical applications. Just a few years ago, many of us were convinced that public cloud was great – but was most appropriate for archive, backup and other business “non-critical” data. Non-critical was seen as the “appetiser” of data; the “main course” (mission critical data) would always remain on-premises.
What a difference a few years make. Today, SAP, Oracle and other mission critical, traditionally “on-premises” applications are being efficiently run in public clouds. In fact, a recent survey from the 451 Group suggests that three in five (60%) enterprise workloads will run in the cloud by mid-2018, up from around two in five (41%) today.
While it is true that cloud has become as pervasive as the on-premises hardware it is replacing, it’s important to remember that there is no “one size fits all” cloud. In fact, if there exists any hype in cloud today, it is that any one cloud can be a panacea for all our IT challenges. As a result, smart enterprises are focusing on cloud vendors that lead with attributes that directly contribute to running applications and, therefore, a business.
Looking back seven years, we certainly did a great job of hyping cloud beyond all reasonable expectations. But as the cloud momentum continues to press onward, enterprises are developing a plan for the future of their IT landscape with cloud providers in mind. Businesses are requiring their cloud provider to have industry leading performance, efficiency and flexibility across a plethora of integrated cloud platforms, software and managed services.
Additionally, as cloud technologies become more intricate and pervasive, companies will rely on the cloud provider’s ability to meet their most demanding enterprise requirements for complex, mission critical applications and data requiring enterprise-class object storage. And lastly, in the future, enterprises will need a cloud provider who can quickly and efficiently build hyper scale cloud environments that provide customers with significant economies of scale, resource flexibility and enterprise control.
In 2018 we see no signs of cloud adoption slowing. In fact, according to the RightScale 2017 State of the Cloud Report, in the UK 95% of respondents are using cloud with 85% of enterprises reporting that they have a multi-cloud strategy – so we predict that this trajectory will just continue to grow.
SAP has praised ‘stellar cloud bookings’ in its Q417 financial results, with total revenue across all segments at €6.805 billion (£6bn) and cloud and software revenues comprising 85% of that figure.
New cloud bookings were at €591 million for the quarter ended December 31 2017, up 22% from the previous year. The figures show a steady continuation of a long-term trend. Cloud subscriptions and support went up 21% to €997m year over year, while the more traditional software licenses and support bucket went down 2% to €4.81bn.
The company expects full year non-IFRS cloud subscriptions and support revenue to be between €4.8bn and €5bn, thanks to ‘continued strong momentum’ in its cloud business, while full year cloud and software revenue will be between €20.7bn and €21.1bn.
SAP also reiterated its 2020 ambition for cloud and total revenue. By 2020, the German software giant is expecting non-IFRS cloud subscriptions and support full year revenue at a top point of €8.5bn, and ‘more predictable revenue’ – in other words, cloud support and software support revenue – to be between 70% and 75%.
The company also announced acquisition news; that of Callidus Software, a provider of ‘quote to cash’ cloud software, for $2.4 billion. The company said the acquisition will give it ‘immediate leadership’ in the lead-to-money software space and that the combination of SAP and CallidusCloud will ‘deliver the most complete, end-to-end, fully cloud-based lead-to-cash offering.’
Bill McDermott, CEO of SAP, said the company was ‘connecting the back office to the front office in this consumer-driven growth revolution.’ “The addition of CallidusCloud aligns perfectly to SAP’s innovation strategy to transform that front office,” added McDermott. “SAP gives CallidusCloud the global scale to accelerate its already impressive growth.
“These two strong companies will be better together, help the world run better and improve people’s lives.”
You can read the full financial report here.
This story is being updated with more information as soon as CloudTech gets it.
Picture credit: SAP