Trip Reports: SAP, IBM, and ServiceNow Events Show Shifting Criticality of Cloud from “Why” to “How”
What is Happening? This week, Saugatuck research executives found themselves participating in three, simultaneous industry events shaping the world of Cloud IT and business. CEO Bill McNee and SVP Bruce Guptill sat down with key executives (including C-level meetings) at SAP Sapphire in Orlando; VP Mike West met with company leaders and users at ServiceNow’s Knowledge12 conference in New Orleans; and VP Charlie Burns took part in IBM’s invitation-only Cloud Innovation Forum in Chicago. It’s been a Cloudy week for Saugatuck, in other words.
The net takeaway from all three events, including dozens of discussions with provider and customer leaders, is that the religious wars and mystery about what Cloud is all about is clearly gone. The critical questions for providers and user enterprises have shifted from “What is it” and “Why should we?” to “When should we?” to “How do we?”
In fact, Saugatuck sees the next two to three years filled with extremely intense efforts by providers and users to develop and refine best practices regarding Cloud solution and provider selection, from core IT (IaaS/PaaS/SaaS) to social, mobile and analytics; along with best practices for integration of all this into, within, and between enterprise business operations.
For providers and user enterprises alike, Cloud is no longer about “What,” “Why,” or “When.” Cloud now is about “How.” And that’s changing providers’ go-to-market, along with buyer/user requirements for IT and provider value.
Why is it Happening? There are two things to look at here. First, why do we take this position?
On one hand, we can clearly see all of the traditional Master Brand IT providers have moved their business strategies and models, fairly rapidly, from Cloud engagement to Cloud-enabled to Cloud-centric. Most (if not all) truly get it. As can be seen in some of our most recent Lens360 blog posts, however, few traditional Master Brands “get it” the way that SAP does, especially when it comes to going “all in” on Cloud. For SAP’s core business strategy to work, Cloud IT and business have to be at least as important and widely used as we think it will be (see (Lens360,Sapphire 2012: Six Key Takeaways; andSapphire 2012: SAP Betting the Ranch on the Cloud). If buyers and users give up on Cloud, SAP loses and loses big.
Almost every traditional IT Master Brand has made similar types of strategic announcements over the past few years, including Microsoft’s Steve Ballmer “We’re all in” pronouncement that helped crystallize traditional IT provider Cloud positioning (712RA Microsoft “All-in” Memo Coalesces Cloud IT Reality for Master Brands, 28May2010). But frankly, we have been deeply involved in the Cloud technology and business strategies of all traditional IT Master Brands for several years, and we have not previously seen one making the size and breadth of bet that SAP is making on Cloud – especially now as it begins to aggressively target its large-enterprise accounts, not just SMBs. As we note in our Lens360 blog posts this week: SAP’s future is not about some generic or me-too strategy with the word “Cloud” in it. SAP is more “all-in” on Cloud than any other legacy IT provider at this point; company leadership has bet the future on widespread, common, and de facto business use of Cloud in all aspects, from core systems of record to lite mobile interactions. If SAP is to succeed, Cloud must be the core business IT worldwide.
As a more broadly-positioned IT Master Brand, IBM has the resources and business units to profit from a more organized and coalesced Cloud strategy without the need to go “all in” to the same extent as SAP. The Cloud Innovation Forum in Chicago this week highlights how IBM is quickly, but methodically, integrating more Cloud into its several operating units over time, keeping pace with customer and partner demand and abilities. IBM’s pace may be different, but the importance of Cloud-driven technology and business change is felt just as much by IBM leadership as it is by SAP leadership – or for that matter, by Microsoft leadership. Different business models require different, but no less bold or critical, strategies and approaches.
Meanwhile, non-traditional providers such as ServiceNow continue to indicate just how much Cloud-based IT-as-a-service has altered enterprise buyer/user conceptions and expectations of IT, and therefore the value of Cloud to the enterprise, especially the increasing importance of what customers want and how they want to use it. And they see fewer and fewer reasons to keep IT within traditional IT boundaries (1052CLS, Boundary-free Enterprise™: Empowered by the New Master Architecture, 11Apr2012).
As noted in Mike West’s latest Saugatuck blog post, customers have driven, and continue to drive, the expansion of the ServiceNow platform beyond the IT domain (Lens360, Where Are Customers Leading ServiceNow Now?). ServiceNow has numerous examples of customers creating business solutions in shared services such as HR, Facilities and GRC, and also in line-of-business (LOB) functions such as insurance claims, services requests, scheduling, resource provisioning and other business functions. We see similar Cloud-based IT+process services from hundreds of Cloud-native providers as well as from practically all traditional IT providers, including the afore-mentioned SAP, IBM and Microsoft. Hundreds of providers with thousands of offerings being implemented and used by tens of thousands of customers indicate that we have certainly moved from the “What” and “Why” into the “How.”
Market Impact The “How” impact runs at least two ways. First is the buyer/user/customer side, which needs guidance regarding how to manage the important things in a time of experimentation and rampantly-disassociated IT acquisition and use (803MKT, Free-Range Knowledge Work Spotlights IT Dissociation and Future, 30Oct2010). In fact, the question(s) regarding whether or not Cloud is “real,” useful, effective, etc., are relatively simple and easily addressed when compared to the “how,” especially when it comes to:
- How to acquire
- How to evaluate
- How to contract
- How to integrate
- How to govern
Second is of course the provider side, which itself runs at least two ways: traditional vs. native. The “How” impact for traditional providers includes how to develop, refine and implement business models; how to address shifting customer value requirements; and how to anticipate and mitigate changing channel and partner roles, demands, and relationships.
The “How” for native Cloud providers includes how to develop and articulate a value proposition for maturing and more sophisticated buyers; how to partner with traditional IT providers (including channel members) to improve go-to-market and value propositions; and how adapt and grow beyond initial offerings and value propositions in a rapidly-growing and shifting marketplace with changing buying patterns and value expectations (1060MKT, Buyer Expectations Over Time: What We Want From SaaS/Cloud, 27Apr2012).