The digital transformation, a model kit: XaaS, Everything as a Service
”Now all that has left me is the curiosity, the old human topic: deciphering” (Julio Cortazar — 62: A Model Kit).
I remember reading the year 2010 the book “The Big Switch: Rewiring the world, from Edison to Google”, by Nicholas Carr, which is a defense of the cloud computing model, or what he called “utility computing”.
I think Carr was very accurate about people and their adoption pattern for previously non-existing solutions, which, on the other hand, did not require moving large information assets to the Internet. So we adopted, almost without noticing it, solutions like Facebook, Google Maps, Waze, and others. Then -again as individuals- we made the effort to adopt the Software as a Service (SaaS) model, now for assets we had in our personal computers (PCs), moving our email to Gmail -or equivalent-, our photos to Flicker, our documents to Google Docs or OneDrive, sharing our files with Dropbox, among many other applications used.
For businesses, however, the road has not been as fast. For various reasons, from idiosyncrasy up to regulation, the speed of adoption of the “as a Service” has been slow, but I dare say that the breakpoint is close to being reached.
In particular, the technology areas of the consolidated organizations (and I make the distinction because emerging digital companies were born “cloud ready”), have been the last ones to adopt “as a Service” and composite computing models; But the current offer is already very tempting — and unstoppable. From the increasingly robust IaaS platforms such as Amazon AWS or Rackspace, through PaaS platforms like IBM Bluemix, Microsoft Azure, Google App Engine, Openshift, Cloudify, Cloud Foundry, including specific environments to develop chatbots or IoT solutions, to name a few.
The digital transformation -understood as the redefinition of business models leveraging technology to create a value chain that delivers innovative products and services that improve the user experience- can be achieved more quickly if the organization forgets to “reinvent the wheel”, and instead focuses on using the offer we can find “as a Service” in that “reloaded” cloud computing market that is the Everything as a Service (XaaS).
This is the way organizations can quickly access capabilities such as reducing the cost of access to technology, the “just in time” use of computational resources, constant innovation and experimentation with innovative (but possibly disposable) solutions, improving availability and support for their platforms, scaling up and down -or horizontally- computing power responding to demand, among many other capabilities.
Service and deployment models of cloud computing.
As we know, the three basic cloud computing service models, according to the National Institute of Standards and Technology (NIST) are:
- Infrastructure as a Service (IaaS). It allows its users’ resources been provided such as processing, storage, firewalls, load balancers, and networks. Each user company has the responsibility of configuring and deploying the applications that consider appropriate.
- Platform as a Service (PaaS). It allows users to deploy applications that have been built using languages, libraries, routines, frameworks, and services provided by the platform vendor.
- Software as a Service (SaaS). It allows to use an application, provided and operated by a provider, which runs in a cloud computing environment. The application is accessed through user interfaces such as browsers or through Application Programming Interfaces (APIs).
This three traditional models of service meant great benefits for some time, however, in recent months the offer has multiplied and all kinds of components “as a Service”, each with better capabilities, more sophisticated, more disruptive, more innovative and smart than the previous one. Like never before, organizations have at their fingertips a variety of “pre-built” blocks that can use to model its path toward the long-awaited digital transformation; this offer of specialized components is what we call XaaS.
In its study “Business as a Service: An IT Service for Digital Disruption”, consulting firm 451 Research, also proposes that to handle this complexity, a fourth service model, the BaaS or Business as a Service, would be required. BaaS should understand how the different components that can be acquired as a service may be integrated and articulated to support specific business objectives, — not only responding to temporary demand but in a sustainable manner, combining even human operational activities and physical asset coordination.
The other dimension that should be considered is where and how cloud solutions are deployed, and there are several possible models of deployment (or delivery):
- Private cloud. In this case, the infrastructure is provided for exclusive use of a single organization and its internal units.
- Community cloud. Cloud resources are provided for exclusive use of a community of organizations. This variant is also useful where security, regulatory or compliance constraints prevent the use of public environments.
- Public cloud. The infrastructure is provided for open use by the general public and is housed in the premises defined by the cloud provider.
- Hybrid cloud. It is the combination of public and private models. The user owns certain parts that integrate with public cloud resources. This model is used in many cases by on-premise type of organizations to manage a soft transition to cloud computing models.
The adoption path of cloud computing -in any of its deployment and service models- should not be just a decision that belongs to IT but should be analyzed and agreed across the organization. The technological, financial, commercial, operation/production, legal, regulatory and even cultural aspects of the organization must be carefully reviewed previously. It all begins, however -with the organization firm belief that the competencies that cloud computing will provide, are necessary and aligned with its most relevant business strategies.
When we adopt technologies and methodologies, we have used many times the framework of people, processes, and technology; for a digital company, from now on it will not be possible to do it without the business, in a symbiotic relationship -two-way- that has to be kept throughout the continuum, from strategy and all the way to operation.
The business must also leverage these new capabilities to dynamically improve their products in order to make them more profitable, or discard them when they do not reach their objectives, in a constant mechanism of experimentation. Something like trial and error, without the “feeling of remorse” that meant in the past, fail in a project after having to invest thousands or millions of dollars.
Cloud Computing: The Challenges
Many organizations -with traditional structures and strategies- are focused on centralized control of their processes and assets, as a mechanism to achieve “sustainable competitive advantage”, in accordance with the widely accepted model of Michael Porter in his analysis of generic strategies to compete. Upon this logic, it was thought that “they could do it all”, and that by doing so -and achieving economies of scale and scope- would have a better control of its productive processes, their costs, and synergies.
But reality seems to show that it is an illusion to think that an organization may develop and stabilize the skills and competencies required to “do it all”, and this applies particularly to technology.
Most consolidated organizations also have complex processes for approving investment projects, through the elaboration of detailed business cases that require clear definitions of objectives, purposes, and scope. This rigor does not encourage initiatives in which trial and error have to be part of the modeling process that will lead to the definition of the new product or service. Business ideas like Spotify, Netflix or AirBnB, -mainly born on experimentation- could not have passed the filters of the rigorous investment committees of corporations in the music, cinema or hospitality industries.
On the other hand, in technology all this meant that we “scored a goal” like in soccer (understood as a project in production), and we got to “defend the score” (operate the new product or service), acting reactively when an incident occurred, when a platform or application is too obsolete, or when a new project came with a good provision of funds that allowed implementing the technical improvements that we were dreaming. Without a doubt, the great costs, times and weariness generated by the traditional projects explain this behavior.
The digital company -as I have mentioned- must seek its competitive advantage by focusing on its ability to develop products highly leveraged in technology, products that respond in an innovate way –or even disruptively- the real needs of its users, that can be integrated with multiple distribution channels and support processes. Those products and services, -now turned into digital-, will be modeled entirely by software, and the border between the product and the technological application that supports it will become increasingly indistinguishable.
Cloud computing: the brand-new capabilities
Cloud computing will undoubtedly challenge the status quo -both in technology and business- and will demand a major cultural shift, which must operate throughout the organization.
A key feature of the cloud model is the ability to create an experimentation/improvement cycle at a lower cost. Many of the promises of agility and continuous delivery will not be fully achieved unless the organization uses a cloud computing model because precisely the services of Everything as a Service (XaaS) allow us to access better commercial resources (than internal ones), at better costs, as well as highly focused expert knowledge.
Some of the features required for a digital world can only be provided by cloud computing, being scalability one of them. If, for example, our company’s services must be invoked by devices in IoT mode, that will be the only way to respond to fluctuations in demand — that will not be compared with those that we have today in our traditional Web page and mobile app. Unfortunately for organizations that are late to this technology, when they realize that it is required, surely, they will be very far from being able to adapt their applications and processes, and eventually losing positioning of their services against more innovative competitors.
In the world of composite computing, it will not be easy to say -for an application or a business process- where one service model ends and the other begins, or which deployment models it uses; You may use a combination of several of them (and even concurrently different cloud vendors). It may not matter the limits that theory imposes on us when it comes to addressing business opportunities. Hybrid solutions should be welcomed because they also allow a smooth transition from legacy applications to the new model.
IT areas that were accustomed to the “do-it-yourself” model, must now become brokers whose responsibility will be to find the best services, which can be integrated -operationally and technologically- with their own (and third-party) services. They must also incorporate a new governance model for these elements, which will now be added to the traditional IT processes.
For instance, IaaS and PaaS are good alternatives for developments, for technical tests, for experimenting, and also for testing designs, concepts and hypotheses, all without the complication of having to support huge projects and capital expenditure (CAPEX).
With PaaS -on the other hand- there is now a very wide offer in the market of new capabilities that the development areas will have to learn to use it, to design better solutions that meet the business needs. Many of these capabilities are not “mimic” of on-premise solutions, but -as in the case of cognitive, for example- these are completely new tools, and incorporating them will be the challenge.
Finally, as a company -and in a world, that will be increasingly digitally integrated- we should also aspire to be prepared to provide our capabilities “as a Service”, to any other business partner or customer.
If you want to know more about how the different processes of the organization are affected with a XaaS model, you can click on the following links:
• IT Architecture and Technology.
• Finance.
• Legal, Compliance and Auditing.
Conclusion
Without a doubt, Netflix is one of the big companies that synthesizes what digital transformation is. Although one might think that it was born as digital, it was actually founded in 1997 as a traditional company that offered an ingenious sales and rental service of movie DVDs by physical mail. The company now manages all its operations with solutions and infrastructure hosted in the Amazon Cloud.
In a 2010 article called “Four Reasons We Choose Amazon’s Cloud as Our Computing Platform,” -published in their TechBlog-, they explain the following reasons why they decided to do so:
- “We needed to re-architect, which allowed us to question everything, including continuing to build our own datacenter-based solution. We may have chosen to build new data centers, or … we could choose to sign a check for someone else to do”.
- “Letting Amazon focus on the data center infrastructure allowed our engineers to focus on building and improving our business. We want our engineers devoted, as much as possible, to the product innovation for the Netflix customer experience; that’s what sets us apart from our competitors”.
- “We are not very good, predicting the growth of customers or the devices by which they will be linked. We do not have to guess, -months in advance- what our hardware, storage, and networking needs will be”.
- “We believe that cloud computing is the future. We chose to be the pioneers in this transition, so that we can leverage our investments as we grow, rather than bet on a model we expect to decline in the industry”.
Cloud computing will generate disruption in the fundamental processes of organizations. In how they access technology, in the future speed of their technology adoption cycles, in changing the previous impact of immobilizing capital -versus an alternative of constant mobilization. IT Operations will take a more dynamic role by on-time resource allocation, and not a passive one of pressing buttons, running “scheduled” jobs, and look at consoles with dashboards and alerts.
Certainly, the adoption of a XaaS model will not be the only factor for a successful digital transformation, but it can be decisive regarding the speed to get there; eventually, it can be the difference between being one of the first to transform, or doing it when it may be late.
Xavier Gutierrez