Published

25

Jun

2020

Position Paper

Constructing Cloud-Native Business Capabilities

Why a strategy for cloud is a business-shaping strategy, not just an IT strategy

  • Cloud today is as much about delivering business capabilities as it is about IT.
  • The main hyperscalers (Amazon, Google and Microsoft) have moved far outside their initial niche of standard IT infrastructure services. In addition to providing services for developers to reduce time-to-market, they have built specialist services targeted at the major technology trends such as blockchain, 5G, machine learning, artificial intelligence and digital identity. Moreover, they are adding many industry-focused solutions.
  • The vast revenues (over $18bn in Q1 2020) of the hyperscalers give them huge scope for continued investment, opening up opportunities for enterprises rapidly to combine IT and business components and thereby acquire business capabilities that in a traditional model would have been unaffordable. So, the critical question for an enterprise is: How can we capitalize on this unparalled investment?

Assembly vs. build & the industrialization of IT

  • The progressive industrialization of cloud has brought tools for developers to build systems in the cloud – so-called cloud-native applications. The more recent addition of components with business functionality, many targeted at the latest industry and technology trends, enables enterprises to construct cloud-native business capabilities, which from Day 1 are conceived and designed on the basis of sourcing components from the cloud. Through this evolution, enterprises can turn from being builders of IT systems to assemblers of business capabilities.

The flexibility and the options created by assembling components from the cloud give enterprises new freedoms: to experiment, to scale and to create distinct products and services. Moreover, IT teams can invest their time in configuring cloud components to meet the needs of their target customers, instead of stitching together the plumbing. The result is solutions that are both more differentiated and more valuable.

Strategic vision & execution through digital transformation

  • Today’s catalogue of public cloud solutions can make a direct contribution to new products and services, but fundamentally what they offer is a basket of much more sophisticated components. These components must still be assembled and configured to reflect the specific needs of an individual enterprise and its customers. Processes have to be redesigned, staff trained in new skills, culture aligned, new KPIs put in place and new organization structures set up.
  • With so much capability available on a utility basis from the cloud, competitive advantage will come from the vision to see how and where components can be assembled to make differentiated customer propositions. Moreover, since the components are the same for everyone, the skills of the workforce in assembly inevitably become of pivotal importance.
  • The new model of assembly, as opposed to build, represents such a new paradigm that an enterprise’s operating model and governance must be overhauled. In addition, architecture grows in importance: architecture describes components and how they are combined, while individual architects challenge project teams to adopt assembly and experimentation, rather than traditional build based on assumptions about customer needs.
  • The transformation from build to assembly is of such a wide-ranging and fundamental nature that the active intervention of CEOs, COOs, CFOs and other business leaders are essential.

You can develop your strategy using the practical tool of a Wardley Map

  • You can capitalize on the hyperscalers’ huge investment by intercepting their development path, gaining momentum in the market by exploiting the newest cloud services and avoiding investment in custom-building capabilities that will soon be available as a utility. At a higher level, you will want to understand which components with rich business value will soon be forthcoming so that you can short-cut the traditional product development cycle and afterwards ride a wave of future upgrades and enhancements.
  • As a practical tool, you can develop a Wardley Map to chart the trajectories of the different hyperscalers as they build out IT and business components. Next, you can use a Wardley Map to plot your own strategy to rapidly assemble IT and business components into cloud-native business capabilities that will make a difference to your customers.
  • We use the Banking industry as an example to show how you can create a Wardley Map that exploits the investments of the hyperscalers to construct your own differentiated strategy.  

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