Avoid the buffering wheel—heed experiences from cloud native transformation

The Situation: Most organizations have hit the “go” button on cloud, grasping the requirement to move workloads to the cloud. The pandemic kicked even laggards over the line. Yet many are left staring at the buffering wheel, waiting for the promise of cloud to load and deliver. The realization is dawning that goals for migrating assets must go beyond enabling work from anywhere.

Too often, the industry leads with capabilities and technology jargon rather than providing clarity on what those broader strategic outcomes should be and how to deliver on them. We must confront the new operational complexity that moving toward becoming cloud native entails. To help, HFS is launching a new Top 10 study on cloud native transformation to learn from the experiences of organizations that have not only moved workloads into the cloud but also transformed their operating—or even business—model.

Without an enterprise-wide cloud strategy, organizations will continue looking at the cloud through a cost and infrastructure lens

Despite all the market noise, the journey toward cloud native remains challenging. For many organizations, costs spiraled out of control, and the harsh lessons of ineffective controls are sinking in. Often, a change of provider has accompanied the realization of these challenges. Recent HFS survey data provides more color about how organizations are looking at the transformation journey. We asked participants how they would describe their organization’s cloud approach. As Exhibit 1 outlines, for many organizations, cloud is largely a cost play focused on driving efficiencies in infrastructure. More poignantly, 22% of the companies surveyed didn’t have an enterprise-wide strategy yet. Given the infrastructure focus, in all likelihood, the percentage of organizations without a strategy linking infrastructure, applications, and business processes will be significantly higher than that. On the positive side, 10% are moving workloads into the cloud with the intent of achieving cross-functional workflows. Here, the OneOffice mindset cuts in, yet only 5% are looking at accelerating the path toward innovation. The bottom line is that organizations struggle to conceptualize strategic goals beyond cost. Therefore, by engaging with organizations that have successfully transformed their operating model, we can learn about how we should think about enterprise-wide cloud strategies.

Exhibit 1: Almost a quarter of companies do not have an enterprise-wide cloud strategy

Sample: 800 Global 2000 Enterprises, HFS OneOffice™ Pulse Study, H1 2021
Source: HFS Research, 2022

Cloud native is more about cultural principles than capabilities

Against that background of challenges, the focus of this new cloud native transformation study is on how service providers help clients envision and ultimately deliver cloud native transformation. What outcomes should organizations focus on as a North Star? While cloud migration and functional transformation are part of an organization’s journey toward cloud native, the focus of our new study is operating model transformation, business model transformation, and innovation outcomes. There is little value in being prescriptive about the exact definition of “cloud native,” but what our friends at Container Solutions describe as cloud native transformation is a great summary that aligns with our thinking: Cloud native is “about a set of architectural and cultural principles [as highlighted in Exhibit 2]. Ultimately, cloud native is about how we create and deliver, not where. The heart of cloud native is cloud-based services. This is the platform upon which organizations build, launch, and operate their distributed, containerized, and automated modular application empire.”

Exhibit 2: Cloud native transformation is more about culture than about capabilities

Source: HFS Research, 2022

Characteristics of cloud native transformation

While architectural principles are the building blocks for accelerating the transformation, the discussions have to move beyond dissecting the minutiae of Kubernetes and reciting the 5 “Rs” of cloud migration. Therefore, building on the technology capabilities of cloud native applications, we are trying to better understand:

• Data-driven outcomes: We have stated it time and again: Data is your strategy. How are service providers helping clients envision data-centric outcomes? What are compelling examples of those outcomes, and how can providers determine the business assurance for them? By getting more insights into those outcomes, we might be able to balance all those incremental cloudification narratives.
• Organizational and cultural change: Perhaps the most important observation is that there is no end state for cloud native transformation. Rather, it is a permanent process of change. Therefore, how can service providers drive change to deliver on those outcomes? How can they help clients establish cultures of DevOps and Site Reliability Engineering (SRE) to enable new ways of working and collaborating? And, last but not least, how are providers driving the change necessary to leverage these new collaborative cultures?
• Ecosystem mindset: While there is no end state for cloud transformation, the North Star increasingly is shifting toward enabling organizations to find new sources of value in complex ecosystems. For HFS, it is the logical evolution of the OneOffice mindset. Overcoming external organizational boundaries is becoming as important as overcoming internal organizational complexity.
• Operating and business model transformation: It is here where the wheat is separated from the chaff. What can we learn from organizations that have successfully achieved operating model transformation or business model transformation? We are intrigued to learn whether the providers are being considered for those outcomes or whether the business consultants like McKinsey & Company, Bain & Company, and Boston Consulting Group are deemed to be the preferred partner. If the latter, then what are the examples of successful partnerships between service providers and business consultants?

The Bottom Line: Just as with most things in the operations space, we must drive the discussion on cloud native transformation back to outcomes—not capabilities.

Our forthcoming HFS Top 10: Cloud Native Transformation, 2022 study tackles an urgent and important challenge in the enterprise—proving the business value of the road to cloud native above and beyond the technical infrastructure. Becoming and being cloud native is predominantly about people, culture, and change.