Quantum computing, AI, DAOs and the metaverse make for an interesting cloud race after COVID-19
Two years ago, when I last wrote about the state of the cloud race for ERP Today, the landscape was characterised by the amount of capital that enterprises needed to save, which led to more workloads being driven to the cloud. Converting CAPEX into OPEX has proved to be a winning strategy for enterprises, enabling them to drive enterprise acceleration.
But since then, we have seen the era of infinite computing begin, meaning enterprises now need to build next generation applications to stay in the game. Meanwhile the war in Ukraine, COVID-19, rising interest rates and fears of an upcoming recession haven’t increased the appetite of boards to put capital into data centres, not when the cloud offers a workable, viable and in almost all cases, a safe opportunity for enterprises to operate workloads in the 21st century.
Let’s look at the state of play as reached in the last two years, and the next-gen disruptions that are acting as game changers in cloud.
COVID-19 boosted the cloud
Uncertainty is a strong impetus to review the status quo. As many an enterprise struggled to both redefine itself and operate successfully under pandemic circumstances, the ability to tie operating costs to business performance has proved to be both highly desirable and critical. Moreover, board members who took a more cavalier approach towards the IT conversation on moving to the cloud have become keen experts on CAPEX allocation in the last few years, and in many cases had their eureka moment when it came to IT costs.
The results have driven a harder push to move workloads to the cloud than ever before. Not only did COVID-19 ‘boost’ (pun intended) the move to the cloud, but also the ‘Great Re-Assessment’ of employees towards working life. When people work from home, switch jobs more often and redefine their work/life balance, it becomes even more of a challenge to fill IT operations jobs to run on-premise data centres. Here is what CxOs are doing – or should be doing – to move to the cloud in these changing times:
Talk to your apps vendor. It isn’t only enterprises that have to move to the cloud, but also the application vendors as well. Obviously they will be keen to keep their customers, and will offer ways to move an enterprise to the cloud.
CxOs should evaluate these offerings and consider taking advantage of them if they see their enterprise working long-term with its current business application vendor.
Select SaaS vendors that use IaaS vendors. As I laid out in my article two years ago, it matters greatly when it comes to who is responsible for producing CAPEX. It should not be an enterprise’s future SaaS vendor, as they would be better off investing in their software rather than infrastructure.
CxOs therefore need to ask their SaaS vendor if they run on another IaaS vendor, because if they do not, then they can’t offer commercial elasticity. Which is what the move to the cloud is all about: pay less when you use less, and only pay more for IT when you use more IT.
Start building in the cloud. Software is eating the world, and enterprises must create next generation applications to differentiate themselves and operate new digital business models.
Suffice to say that CxOs need to build these applications in the cloud, with modern tools and with cloud-inherent economic mechanics as this is the only way to avoid creating bigger CAPEX challenges and higher migration loads to the cloud in the long run.
The cloud is essential to fuel the move to AI as it enables infinite insights, the economical data storage of all things digital in the enterprise
The AI imperative forces the enterprise into the cloud
A lot has been said about the impact of artificial intelligence (AI) on the enterprise. The long wait and anticipation phase is ending, and the benefits are becoming real – so real that enterprises which don’t take advantage of AI will struggle to remain relevant towards the end of this decade.
The cloud is essential to fuel the move to AI as it enables infinite insights, the unlimited, economical data storage of all things digital in the enterprise, while not knowing what the queries to the data will be, in short fuelled by Hadoop data-scalable technologies.
AI also fosters infinite compute, the ability to ramp up and ramp down computing infrastructure to fuel AI processes in the volume as enterprises need it.
Quantum computing is becoming increasingly relevant
The next generation of computing paradigm that will be relevant for the enterprise is quantum computing. The technology has matured fast from a pure ‘speeds and feeds’ phase only two years ago, to the first commercial use cases being available since spring 2022.
Quantum computing will be the first computing platform that enterprises will not adopt on-premise (except for some government use cases, of course, and perhaps deep-pocketed banks and pharma enterprises) – but from the cloud. CxOs who want their enterprise to be able to take advantage of quantum computing better move their enterprise to the cloud, starting with data.
Deep learning is deep looming on the horizon
The ability of software to learn from data and then determine and even automate the right course of action is deep learning. Deep learning will be key for enterprises that compete to give their employees an attractive workplace with a compelling work/life balance, and the automation for that can only come from deep learning.
To be ready for deep learning, CxOs need to move workloads and data to the cloud so their enterprise can take advantage of deep learning capabilities and thrive in the marketplace with both its employees and customers.
DAOs are powered by the cloud
Decentral autonomous organisations (DAOs) operate in the cloud, as they need to minimise CAPEX and need both the architectural and commercial economics only the cloud offers. And while the decentralised approach seems alien to the traditional enterprise, innovative CxOs will make sure that their enterprise can take advantage of both the talent and capital currently flowing into DAOs.
As the decentralisation trend will only get stronger, it is even more relevant to have both an enterprise’s data and processes in the cloud so that it can take advantage of DAO dynamics powered on the blockchain.
The metaverse will transform all business
The metaverse merits a whole article by itself, and while we know very little about it, with it likely to be the last of these mega trends to materialise, we know one thing for sure already: the metaverse runs in the cloud, so to hedge and be ready whenever the metaverse fully lands, CxOs need to make sure their enterprise runs in the cloud.
Quantum computing has matured fast from a pure ‘speeds and feeds’ phase, to the first commercial use cases being available since spring 2022
Handicapping the Big Three – and a not-so-young newcomer
The rich got richer in the cloud these last few years. As such, Amazon’s AWS, Google’s Google Cloud and Microsoft’s Azure businesses are bigger and more relevant than ever before. The newcomer to the game is Oracle’s Oracle Cloud, which has earned its spot at the table by building one of the most enterprise-friendly public clouds out there.
As you already know, when understanding technology vendors, it is always good to look at their organisational DNA alongside pure capabilities:
Amazon AWS leads and keeps leading. Nothing has changed at AWS: Amazon remains an e-retailer, and AWS is its IT platform. The cloud company’s CEO Andy Jassy was so successful that Amazon founder Jeff Bezos recently handed him the keys to the whole of the business. And while Amazon struggles with overcapacity, AWS is doing just fine, partially benefitting from the extra capacity that makes for extra ammunition in the ‘war’ for cloud leadership.
AWS has also spotted in the hearts of developers an aspect that CxOs cannot overlook as people continue to build software and their preferences remain crucial. More and more we see AWS using its overall expertise in supply chain management, logistics and warehousing automation to appeal to customers. Amazon has massive internal and organic load from its e-commerce business which gives its cloud a lot of internal scale.
Google Cloud and the vertical twist. In spring 2019, newly minted Google Cloud CEO Thomas Kurian started the vertical cloud promise, whereby enterprises will receive more value from a vertical cloud that knows and automates specific industry aspects. With that he took the initiative, and the rest of the industry was forced to react. This created a veritable additional differentiator for Google Cloud which relied a lot (perhaps too much) on scale and AI.
For AI, Google Cloud is maintaining its two to three year lead for algorithms on custom silicon over AWS and Azure. Google has the inherent advantage in that its cloud needs to scale to premier performance requirements to keep its internal use cases around advertisement, natural language processing, YouTube etc. going.
The result is a premier cloud infrastructure, which includes networking, and a setup where Google boasts its own cables. At the same time, Google needs to take market share from AWS and Azure and therefore is very competitively priced, to the point of Google Cloud continuously measuring losses for parent business Alphabet, as seen once more in the company’s most recent quarterly earnings.
The Microsoft metamorphosis. After almost a decade, Microsoft has completed its transformation into a cloud vendor. Its CEO, Satya Nadella, came from the Azure business and led Microsoft into its cloud metamorphosis.
Across AWS and Google, Redmond understands the enterprise better than its competitors, and has decade-long ties into the IT organisation of practically any enterprise on the planet. More importantly, almost all enterprises have some sort of contractual agreement to boot with Microsoft, concerning at least Office and often also more of the Microsoft stack. Compared with its two key competitors, Microsoft has only little in-house organic load (e.g. advertising, Xbox etc.). With its focus on Office, Microsoft is also more advanced and active concerning data privacy and data residency, which comes part and parcel with the nature of the Office business containing sensitive data.
Good ol’ newbie, Oracle
Oracle has been a long time partner of enterprise IT, carrying the ‘old guard’ label against competitors like AWS. And while it looked for a long time that the company would join the extensive list of former key IT partners that did not manage to move to the cloud, things have looked up for Oracle in the last five years, with particular focus on the last two.
Despite past and ongoing attempts to replace Oracle’s database, its competitors have made little to no inroads. In the meantime, Oracle has built out its second-generation cloud, which is the optimum platform to run the Oracle Database. To serve customers, Oracle and Microsoft recently even announced a DBaaS service of Oracle Database running in Azure. This is a good example of the more IT-centric cloud vendors realising that the customer comes first, regardless of past animosities or competition.
In contrast to the other three competitors, Oracle has no organic load for its cloud (its SaaS Apps being the notable exception), something it must make up with large deals (e.g. Zoom, TikTok etc.) while it waits for customers to move workloads to Oracle Cloud. Being a software company, Oracle Cloud is margin-dilutive for Oracle as its equivalents are for Google and Microsoft. Nonetheless, Oracle is investing massively, with its recent quarter showing the company’s largest CAPEX expense to date.
The takeaways
CxOs should understand the core differences between these four cloud infrastructure vendors, all the way down to their organisational DNA, which remains immutable and cannot be changed by marketing and products.
All vendors bring distinctive value propositions to enterprises. AWS is and will be the preferred platform by developers for the near future, and, outside of the AI/ML space where they are catching up, has done very well for itself.
Microsoft works well with IT and most enterprises use the vendor already. Google will be ideal for enterprises who want to bet on the AI/ML strategy early. Oracle is a new player, which is definitely relevant for existing Oracle customers, but also for non-Oracle customers as it has the most enterprise-friendly cloud management.
It will be interesting to see how the companies handle disruption along the lines of quantum computing and the metaverse. Hopefully with their services, your enterprise will ride out the storm with aplomb.
