Digital Transformation is More than 12-Factor Apps

board-1273117_1280The quest for “digital transformation” has been on the priority list of CEOs and CIOs for several years now, as nimble startups have begun to disrupt long-standing industries, and mobile technology has changed the expectations and experiences of customers in nearly every market segment.

Unlike the past few decades, where the focus of IT was worker productivity and business process cost-reduction, the latest evolution is rapidly evolving the outbound face of business to be technology-centric. This is causing CEOs to think about the strategic role of technology as a market driver and CIOs to be conscious of the top line revenues impacts of internal technology decisions.

CEOs are changing how they use technology Source: PriceWaterhouseCoopers 2016 “Global CEO Survey”

 

As a technology industry, we’re often quick to highlight the successes of disruptive startups (e.g. Uber, Airbnb, Netflix) and encourage our existing and future customers to emulate their technology and cultural models. The mantra of “move fast and break things” plays wells to the meetups of Silicon Valley, but many existing companies around the world are now wondering how they could transform from their existing operating models to ones that more closely mirror the disruptors in their markets.

A critical part of any transformation is a rationalization of where a company is today and whether or not existing assets and investments (e.g. applications, process, people, people skills, etc.) can continue to provide a competitive advantage into the future. While new technology does and will play a critical role in the transformation, it is often existing capabilities that buffer a company’s ongoing success through the transition.

Application Optimization vs. 12-Factor Apps – Where is the Need? 

A recent survey from the Cloud Foundry Foundation highlighted this dynamic. At the core of the survey was a realization that many companies are under-prepared to address the increased software development needs which will be required to drive meaningful digital transformation. The 1990s and 2000s saw businesses in every industry outsource their technical competencies, often in-house software development, to offshore resources. That trend is proving to be a very costly decision (greater than 3-year ROI), and one that must be addressed by CEOs and CIOs who want to remain competitive with disruptive startups in their industry.

Source: "Identifying the Developer Gap" - 2016 Cloud Foundry Global Perception Study
Source: “Identifying the Developer Gap” – 2016 Cloud Foundry Global Perception Study

But an even more interesting output of this survey was the overwhelming number of respondents that realize that many near-term technical challenges must be addressed before they begin looking at the unicorn projects. In other words, while not every company has completed their digital transformation yet, a large percentage of them have begun the technical and financial rationalization about where they must evolve and where the greatest ROI can be achieved. These companies realize that agility, optimized across their entire software portfolio, can give them equally impactful results as they compete with disruptive startups and attack new market opportunities.

Red Hat OpenShift customers have seen significant ROI as they have focused their optimizations on a mix of application and operations, as well as leveraging the core elements of a container-centric platform to begin driving needed organizational changes. In other words, they were able to find the right mix of business evolution (ROI, Faster Time-to-Market) and technology evolution (DevOps, Automation, Self-Service) to prepare them for the next phases of their digital transformation.

Where to create the Digital Transformation?

But if large numbers of companies are not prioritizing 12-factor applications, then where are they focusing their efforts in these digital transformations? In a recent report from McKinsey, focused on Enterprise cloud adoption, we see that companies realize that a single application is not going to significantly impact their business. They understand that core services within their company must also evolve, which is why we’re seeing more and more businesses deploying a broad range of new and existing applications to their container and PaaS platforms.

Source: McKinsey "Leaders and laggards in Enterprise cloud infrastructure adoption" - October 2016
Source: McKinsey “Leaders and laggards in Enterprise cloud infrastructure adoption” – October 2016

 

 

The Digital Future requires Both

screen-shot-2016-11-04-at-8-16-42-amWhile the pace of technology change is exciting, it’s important to remember that change within any organization is a balance between revolutions, evolutions and small iterations. Successful companies must be able to address their immediate needs to satisfy customers and shareholders. They must also be able to have the freedom to creatively explore ways to invent their digital future in markets that are moving much faster than ever before. Finding the ability to deliver that right mix is a critical platform decision that is top of mind to both CEOs and CIOs as they attempt to lead their companies into a digital future.

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