Cloud Native as the Foundation for Enterprise Innovation

Migrating to cloud solutions and transforming software delivery to a Cloud Native model is not just an IT requirement. It is a business necessity because it fundamentally changes the company’s level of innovation. Today, the main obstacle to innovation in companies is a lack of time and space. According to the Hackett Group report “Improving Innovation From Technology,” this factor is more significant than organizational resistance, fear of change, or financial barriers. The Cloud Native model addresses this challenge. According to the Hackett Group report “The Business Value of Migration to Amazon Web Services,” in companies leading the migration to one of the top public cloud ecosystems (AWS, GCP, MS Azure), up to 70% of development team members have shifted their focus to development tasks. This fulfills the initial expectations companies have when migrating to the cloud: more than half of all companies, and three-quarters of the best ones, aim to create new products and services through this change. We have already dedicated an article to the motivations and the process of migrating to Cloud Native . It focuses on overcoming challenges and obstacles on the path to Cloud Native. At Mindbox, even at the initial stage of planning a cloud migration, we highlight various categories of benefits. We consider the shift in innovation to be the most important benefit obtainable through the cloud, providing the most value.

Sources of innovation in the cloud era

Data is the source of strategic innovation for businesses today. Changes to business or operational models are made based on data analysis. Companies often begin using the cloud model in the area of analytics. The cloud provides data processing potential and a number of available tools and functions that are incomparable to the traditional model. The ability to quickly gain insight into a situation radically shortens the time spent searching for solutions and generating ideas. The “Business Value of Cloud modernization” report by the research and marketing firm Known states that obtaining reports and analyses using Managed Analytics was faster for 35% of companies. In the cloud model, access to a constantly and dynamically growing ecosystem of solutions is a very important source of innovation. Cloud Native, being technologically neutral, enables the integration of solutions from various vendors and technology platforms, as well as the achievements of the open source community. This flexibility does not exist in the traditional model. Technology is the source of business model innovation and product innovation. This is due to deep digitalization of products – beyond physical attributes, market success is determined by the digital layer. It creates ecosystems that dynamically follow customer moods and needs. Some business categories, such as modern car rentals or food delivery, are hard to imagine without being immersed in a digital ecosystem – a set of applications, external cloud services, IoT, geolocation, etc. But only in the Cloud Native paradigm can the entire range of available technologies be dynamically orchestrated, scaled, and modified. Prototyping and experimentation, preceding full-scale solutions, is a principle and best practice in the cloud model. Cloud Native provides space for innovation and increases the probability of success. Entering the market with elements of processes and ideas happens in stages, in a mode of flexible improvement and scaling depending on observed results. This model of building innovation does not require as much expenditure as the traditional approach. An external impulse is a frequent motive for the decision to adopt the Cloud Native model, as we wrote in the previous article. A need or a change in context encourages the creation of new ideas. It is worth emphasizing that their subsequent consistent development and modification can best and most fully take place in a Cloud Native environment. All the cited sources and paths of innovation that currently dominate gain power and value after adopting Cloud Native.

Structure of benefits

  In the cited “Business Value of Cloud modernization” report by Known, 22 performance indicators for cloud services were collected. They form four paths for adopting a modern cloud model: containerization, the use of managed services in the area of data and analytics, and the choice of a serverless approach. Using all four elements as part of a cloud transformation resulted in revenue growth for 43% of companies. In the case of implementing container solutions alone, 28% of respondents declared revenue growth. Nearly 40% reported a decrease in IT spending after adopting a serverless approach. For 35% of the surveyed companies, using Managed Analytics allows for faster reporting and analysis. And 13% of those using Managed Data react faster to security incidents. According to the Hackett Group, migration to AWS brings measurable business benefits from the perspective of resilience, agility, savings, and performance. In the “Cloud Services Study” report, 43% of surveyed companies believe that after migration, they deliver new application features used by customers to the market faster. Using the cloud and the Cloud Native model allows developers to reorient themselves toward development activities rather than maintenance and bug fixing. The number of developers focused on creating new features and product characteristics – innovation – increased by approximately 30% to 70%.   Shortening the time to deliver new application features (by over 60%) improves process efficiency and allows for service development. This applies to the front-end layer, but also to the back-end, e.g., recruitment processes. Team productivity improves thanks to the automation of software delivery processes. This combines efficiency with speed. Standardization and automation of these processes also lead to improved security. All the above categories of benefits relevant to the innovation process are currently being confirmed in our conversations with clients and in the projects we carry out with them.

Where to start the transformation

A successful transformation to the cloud model follows standards, but it must also be a process focused on the context of a given organization. What should connect them is a focus from the beginning on business value and improving innovation. Guided by this logic, the transformation begins with containerization. It will allow for building technological neutrality and avoiding the risk of vendor lock-in. The Known report mentions that application portability then increases by 45%. The next element is the choice of environment and CI/CD process tools. This must be supported by know-how and requires adaptation to the capabilities and needs of the organization. The market is full of examples of advanced environment implementations that remain unused because developers do not want to use them. Cloud Native has also created its own methods and practices — both for implementation and subsequent operation. We are talking about a gradual approach to migrating applications to microservices and container architecture as part of the transformation factory concept. The basis and constant point of reference should also be the 12 principles of software development in the Cloud Native model (12th Factors App). Issues of business resilience and disaster recovery should serve as an anchor in this transformation. The most important assumption and criterion for change remains its business goal and character – filling technological forms and standards with business value.