Posted: 24 Feb. 2022 3 min.

The cloud native operation model is picking up speed

Topic: Cloud

An old analogy comes to mind when I look at the development of the cloud market.

If you are a music lover, you remember the time where you put together stereo components to build the perfect hi-fi system. Speakers, cables, receivers, turntables and so on. Based on a variety of combinations you could customize the system to your liking. It was widely recognized that different manufacturers of stereo components had different strengths, and therefore it made sense to follow a multi-manufacturer strategy.

Even though a lot of music lovers still follow this strategy, you could argue, that today you can get really good sound from standard systems where all components are built by the same manufacturer. Maybe not perfect sound, but surely good enough for most people, and without the hazzle from connecting, maintaining, and upgrading system components.

The gap is closing
You can probably guess what I’m hinting at.

Just a few years ago it was widely recognized that you had to integrate certain third-party applications to your cloud platform to get the kind of data structuring capabilities you need to steer your business. Today, I’m not sure that analysis still applies. 

We are on the verge of a tipping point when it comes to how and when to go all in on a cloud native operation model. A small handful of market leading cloud vendors have invested massively in their cloud platforms, and they will continue to do so. In terms of functionality, they will push to close the gap between specialized third-party software and standardized cloud native software. If you follow the logic behind their willingness to invest, it’s not hard to imagine a scenario where these handful of cloud vendors at some point will not only match the functionality of third-party applications but also outpace them.

Opportunities and risks
So, the big question is: What does this acceleration of the cloud native operation model mean for your business?  

First, it opens a strategic discussion about specialized versus standard software. If you have a tradition of using specialized software from third-party vendors, it’s probably harder to imagine that you can rely solely on solutions designed to fit all. But as more and more companies digitize their business it’s becoming clear, that they share a lot of core processes. Companies are unique because of values, leadership, and the company culture; not because of basic workflows. Standard solutions offer simplicity, code-free and without the need for cumbersome maintenance, and then you use the technical capabilities embedded in the cloud platform to build the details that set you apart from other companies.

Secondly, there is the matter of vendor lock-in if you become dependent on a cloud platform from one of the big market leaders. Vendor lock-in is a concern. But it’s also a risk you must compare to an operational model where you are responsible for handling all integrations, maintenance, and development of the platform. Is that a trade-off worth considering?

Explore all options in cloud native
I can’t recommend one strategy over another. It depends on how well your business can be supported in a cloud native operation model.

But I can emphasize the need for companies to further explore the options in their cloud platforms. I think that a lot of decision makers would think differently if they knew more about the services, the tools, and the business possibilities in the leading cloud platforms. And my best guess is that they would consider accelerating their IT operation to the cloud based on that knowledge.

Think of it as an illustration of a two-dimensional graph. If you believe that it’s just a matter of time before everybody is running a cloud-based business, it’s about finding that perfect point in time where the upsides offset the downsides. Those that nail that intersection, will gain a competitive edge.

Forfatter spotlight

Halvor Moen

Halvor Moen

Partner | Head of Strategy and Operations practice in Norway

Halvor is a Partner within Consulting in Norway and the Industry lead for Retail and Consumer Products at Deloitte Norway. He has extensive experience helping clients improving their operations advising on strategic, operational and technology related issues. The work has often focused on improving processes, both strategic and operational, and supporting them with the infrastructure needed to ensure the necessary efficiency. His experience includes scoping, planning, managing and delivering large and complex projects.

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