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September 17, 2021
Digital Transformation
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Digital Transformation
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With today’s business transformation led by cloud, migration frenzy remains at a fever pitch. Even though most cloud vendors are now witnessing slower growth, it will still be years before this juggernaut halts. But can you have too much cloud? The question of how far enterprises should go in their cloud transformation journey is rarely thought of. Read on to learn when it may be time for your enterprise to stop and reexamine its cloud strategy.
Enterprises believe cloud will continue to be critical but only one part of their landscape, according to our recently published Cloud State of the Market 2021. Once enterprises commit to the cloud, the next question is: How far should they go? This runs deeper and far beyond asking how much of their workloads should run on cloud, when is the opportune time to repatriate workloads from cloud, and whether workloads should be moved between clouds.
Unfortunately, most enterprises are too busy with migration to consider it. Cloud vendors certainly aren’t bringing this question up because they are driving consumption to their platform. Service partners are not talking about this either, as they have plenty of revenue to make from cloud migration.
The challenge in cloud transformation can manifest in multiple ways depending on the enterprise context. However, our work with enterprises indicates three major common obstacles. It’s time to relook at your cloud journey if your enterprise experiences any of the following:
This question may appear strange given enterprises are still scaling their cloud initiatives. However, some mature enterprises are also struggling with deciding the next steps in their cloud journey. Each enterprise and business unit within them should evaluate the extent of their cloud journey. If any of the points mentioned above are becoming red flags, they must act immediately.
Operating models also should be examined. Cloud value depends on the way of working and the internal structure of an enterprise. Centralization, federation, autonomy, talent, and sourcing models can influence cloud value. However, changing operating models in pursuit of cloud value should not become putting the cart before the horse.
Enterprises always struggle with the question of where to stop. This challenge is only made worse by the rapid pace of change in cloud. As enterprises go deeper into cloud stacks of different vendors, it will become increasingly difficult to tweak the cloud transformation journey.
Despite these pressures, enterprises should periodically evaluate their cloud journeys. Cloud vendors, system integrators, and other partners will keep pushing more cloud at enterprises. Strong enterprise leadership that can ask and understand the larger question from a commercial, technical, and strategic viewpoint is needed to determine when enough cloud is enough. Therefore, from journey to the cloud, to journey in the cloud, enterprises should now also focus on the journey’s relevance and value.
If you would like to talk about your cloud journey, please reach out to Yugal Joshi at [email protected].
For more insights, visit our Market Insights™ exploring the cloud infrastructure model. Learn more
Many companies now experience dramatic improvements in productivity – measured by the effectiveness and efficiency of work. They achieve these improvements because of implementing the new operating models and agile methodologies. However, companies still looking to achieve productivity improvements find a fundamental dilemma in trying to implement necessary changes associated with the new operating models.
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The European market has been slower than other areas of the world in adopting digital transformation, but that’s changing. With new regulations opening up the digital marketplace for fair competition, sizeable strategic partnerships, and providers embracing the latest cloud, automation, and Artificial Intelligence (AI) capabilities, Europe is poised to seize a leadership position in the tech landscape. But the region needs to act quickly and grasp the right opportunities to prevail. Read on to learn more about Europe’s road to digitalization by 2030.
COVID-19 accelerated the worldwide movement that has been underway for years by businesses to adopt digital initiatives. Amid the pandemic, digitalization was pushed into the spotlight as a means for businesses to survive by finding innovative ways to deliver services through digital media.
The European market, however, felt the impact because it has historically shown a slower rate of digital adoption in some segments and also bore the early onslaught of the global pandemic (starting with the outbreak in Italy).
Coupled with slowing macroeconomic growth and looming Brexit, enterprises in Europe have been facing significant challenges. The changes fueled by the pandemic have now pushed Europe to rethink its business models and talent and embrace accelerated digital transformation.
Gearing up for change
Combined with this market context, Europe’s dependence on global technology companies (versus homegrown firms) has increased. Various reasons exist for Europe’s perceived decline as the home of Big Tech companies, including a stricter tax regime, more active regulatory/legal frameworks, and a smaller homogeneous addressable market. Despite this, Europe outperforms the world in many pockets of innovation, such as financial technology (FinTech), blockchain, payments, creative agencies, and cybersecurity.
Now, new expectations that developed from the pandemic have led European organizations to gear up to fully embrace digital business models. According to an Everest Group key issues survey, customer experience is the most critical priority for enterprises and service providers over the coming few years, followed by operational efficiency, then launching new products and services. The image below illustrates Europe’s priorities in business model changes and areas of innovation.
To improve the customer experience, European enterprises are offering digital solutions for conducting simple interactions without physically going to a location or speaking directly to a customer service agent and delivering more personalized experiences for language support, channels, and availability.
Against this backdrop, Europe also is ramping up technology sovereignty efforts. Recently, the European Commission set the course towards a digitally empowered Europe by 2030. European governments and regulators are rethinking the enabling frameworks and legal structures to foster innovation and digital leadership.
The goal is to achieve digital sovereignty in an open and interconnected world and to develop digital policies that will enable businesses to adopt and seize a human-centered, sustainable, and more prosperous digital future.
Among the European Commission’s targets are ensuring 80 percent of all adults have basic digital skills, three-quarters of companies use cloud services, all public services are available online, and all households have gigabit connectivity.
To achieve these ambitious expectations, Europe will need to move fast.
To pave the way towards digital success, Europe has set in motion initiatives such as the Digital Markets Act (DMA), the Digital Services Act (DSA), and GAIA-X, a project to develop common requirements for a European data infrastructure supported by representatives of business, science, and administration.
With data security, privacy, and technology sovereignty becoming key issues for the region, Europe is setting up the following sanctions to protect companies and ensure a competitive market:
With these new seminal regulations potentially changing the enabling framework of doing business across Europe, the market is at a juncture where it can take back the reigns of the technology landscape. But its success at capturing the next wave of digital transformation will hinge on how the region, its businesses, and regulators react to the current situation.
Europe has always had a broad range of innovative companies and countries with strong start-up and entrepreneurial cultures. Large partnerships over the past nine months that point to scaling digital transformation are also on the rise in Europe. These include deals like Wipro joining with Telefonica and METRO AG, Infosys with Daimler, and TCS with Deutsche Bank and Prudential Financial. For more details, please see our webinar, Why Europe is Poised to be a Major Factor in Digital Transformation Strategies, from earlier this year.
With increased digitalization accelerated by COVID-19, European organizations are moving forward with top digital capability priorities like cloud, cybersecurity, and analytics alongside automation and advanced automation AI.
Europe also provides attractive options to meet the need to shift to digital with different constituent countries offering local language and cultural context, and easier intra-region mobility (Brexit notwithstanding). For instance, vibrant technology ecosystems are developing in different clusters such as Germany for hi-tech and automotive, Eastern Europe for product engineering, and the UK and Ireland for financial services, to name a few.
Poised to be one of the main drivers of digital adoption, Europe will retain its central place in the world’s technology economy. However, spotting the right opportunities and actions to grasp will be crucial over the next few years.
Europe must take advantage of current changes in the market by:
Our recent research shows that European enterprises plan not just to recover but exceed projected financial goals. With the end of the pandemic in sight and the reopening of business throughout the continent, digital innovation and opportunities to scale will be ripe for Europe’s taking.
How do you view the European digital transformation opportunity? Share your thoughts by emailing [email protected].
It’s time to revisit your digital transformation strategy, given the disruption and organizational changes that occurred during the pandemic.
“IT leaders need to differentiate between what they had to do to survive out of desperation versus as part of a thought-out strategy,” says Yugal Joshi, Vice President of digital, cloud, and application services research for Everest Group.
Digital transformation is accelerating as we come out of the COVID-19 pandemic, with more and more companies starting to achieve tangible and meaningful business results. Companies are also undertaking the grand adventure of implementing new operating models that offer better competitive positioning and a lower cost to serve. In addition, we now face an acute talent shortage, and companies must shift their focus away from controlling or cutting costs to instead focus on building an assured supply of the necessary talent. As a result, increasingly, focusing on risk is more important than focusing on profits.
Low-code platforms are here to stay because of the rapid application development and speed to market it enables. But why is no one taking the same “life cycle” view for low-code applications and workflows as typical software development? A new model of Low-code Development Life Cycle (LCLC or LC2) is needed for enterprises to realize the potential benefits and manage risks. Read on to deep dive into these issues in this latest blog continuing our coverage of low-code.
Our market interactions suggest enterprises adopting low-code platforms to build simpler workflows or enterprise-grade applications are not thinking about life cycle principles. Though enterprises for ages have adopted Software Development Life Cycle (SDLC) to build applications, it is surprising no such initiatives exist for low-code applications.
As we previously discussed, low-code platforms, requiring little or no programming to build, are surging in adoption. We covered the key applications and workflows enterprises are focusing on in an earlier blog, The Future of Digital Transformation May Hinge on a Simpler Development Approach: Low Code.
Given its staying power in the market, it’s time to consider Low-code Development Life Cycle (LCLC or LC2).
Here are some recommendations on how LCLC can be structured and managed:
Rethink low-code engineering principles: Enterprises that have long relied on SDLC concepts will need to build newer engineering and operations principles for low-code applications. Enterprises generally take long-term bets on their architecture preferences, Agile methodologies, developer collaboration platform, DevOps pipeline, release management, and quality engineering.
Introducing a low-code platform changes most of this, and some of the typical SDLC may not be needed. For example, these platforms do not generally provide an Integrated Development Environment (IDE) and rely on “designing” rather than “building” applications. In SDLC, different developers can build their own code using their IDE, programming language, databases, and infrastructure of choice. They can check in their code, run smoke tests, integrate, and push to their Continuous Integration/Continuous Delivery pipeline.
However, for most low-code platforms, the entire process has to run on a single platform, making it nearly impossible to collaborate across two low-code platforms. Moreover, enterprises might be exposed to performance, compliance, and risk issues if these applications and workflows are built by citizen developers who are unaware of enterprise standards of coding. This also might increase the costs for quality assurance beyond budgeted amounts.
Even professional developers, who are well aware of enterprise standards while building code in an existing manner, may not know how to manage their LCLC. Many low-code platforms allow SDLC steps within their platform, such as requirement management. Therefore, all the collaboration will have to happen on the low-code platform. This creates a challenging situation requiring enterprises to have different collaboration platforms for low-code applications separate from the other standard tooling they have invested in (such as Teams, Slack, and other agile planning tools) – unless they are integrated through APIs, adding overhead and cost.
Also complicating issues is the desire by some developers to have the developer portal of these low-code platforms extend to their IDE. Most platforms prefer their own CI/CD pipelines, although they can also integrate with third-party tools enterprises have invested in. A different mindset is needed to manage this increased technological complexity. Because low-code applications are difficult to scale for large data sets, some of the scaling imperatives enterprises have built for years will need to be rethought.
Manage lock-in: Most low-code platform vendors have a specific scripting language that generates the application and the workflow. Developers who are trained on Java, .net, Python, and similar languages do not plan to reskill to learn proprietary languages for so many different platforms. While enterprises are accustomed to multiple programming languages in their environment, they normally have selected some primary languages. Though low-code platforms do not extensively rely on developers coding applications, enterprises generally would want to know “under the hood” aspects around architecture, data models, integration layer, and other system elements.
Build governance: We previously covered how low-code platform proliferation will choke organizations that are blindly prioritizing the speed of software delivery. Therefore, governance is needed not only in the development life cycle but also to manage the proliferation of platforms within enterprises. Enterprises will need to closely watch the low-code spend from subscription and software perspectives. As low-code platforms support native API-based access to external platforms, enterprises will need to govern that spend, risk, and compliance (for example, looking at such issues as whether some third-party platforms are on the blacklist).
Low-code platforms can provide enterprises with a potent platform. But, if not managed well, it can be risky. To manage the potential risks, enterprises need to be aware of these three considerations:
Enterprises’ desires to drive digital transformation will make low-code proliferation a reality. Currently, most low-code vendors derive a small $100-500K revenue per client, indicating the focus is mostly on Small and Medium Business (SMB) segments or small line of business buying. As a result, we expect consolidation in this market with large vendors such as Salesforce, ServiceNow, and Microsoft furthering eating into small vendor’s share. Enterprises should keep a close watch on this M&A activity as it can completely change their low-code strategy, processes, and the business value they derive out of strategic investment into a low-code platform.
What has your low-code journey been like, and how are you using life cycle concepts? Please reach out to share your story with me at [email protected].
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