As companies migrate to the cloud, many providers are serving up industry clouds—cloud services that offer data models and workflows that meet the basic needs of companies in particular industries like banking, healthcare, and manufacturing. By taking care of table stakes requirements, these specialized clouds are saving companies time and money. And perhaps more importantly, they’re freeing up many industry leaders to innovate new services for customers.
“In the most recent IDC survey conducted for industry cloud users, about 46% of those users said they have already implemented at least one industry cloud, and about 47% said they are planning to do so in the next 12 months,” says Nadia Ballard, IDC research manager. “It’s a very fast growing space and very exciting.”
The uptake is accelerating, and despite being relatively new on the scene, with a consensus to approach with clarity and caution, industry clouds are steadily proving their worth and the benefits speak for themselves, especially around visibility and transparency, according to Chad Wright, CIO of robotics company Boston Dynamics.
“When I joined the company three years ago, it was your typical 10 silos for 10 departments,” he says. “People were building spreadsheets and trying to do their own things. As a leadership team, we needed to build a platform that would allow visibility across the organization because we felt it was going to be advantageous in our speed to market with our own robots, and we’ve seen that. In our first year of ERP, we shaved 75% off of our order cycle time, and that had a lot to do with that visibility that these industry clouds could provide us.”
For Kumar Iyer, business technology senior leader at KeyBank, there were challenges to face, including legacy technology and a lot of manual processes. So the options were to either invest and build from the ground up, or look at industry clouds. They chose the latter.
“The reasons why we did that were essentially because of frequent updates, new features that we could get out of the box quickly without having to build, and the ability to solve for the table stakes issues,” he says. “The things you have to build in this space aren’t really offering us any competitive edge, but there’s still a significant amount of investment in actually getting those things done.”
CIO’s Stan Gibson moderates this high-level panel to get clarity on the benefits and potential pitfalls of the rapidly growing market of industry clouds. Here are some edited excerpts of that conversation. Watch the full video below for more insights.
Nadia Ballard on the benefits and pitfalls of industry clouds: The most immediate general benefit industry cloud users see is in fast growth, as they are so custom tailored to the particular industry or vertical, providing a fast onramp to cloud. It’s the preconfigured security and compliance conditions that are already there. There’s not much need for customization on the side of the customers, which usually takes a lot of time and effort. More specifically, industry clouds are built recently, so they provide this open architecture, a lot of composability and extensibility, which are very important for users.
On the pitfalls, it’s still early. A lot of times, the features and the benefits that your vendors mention are either rudimentary or still in development. So there’s a bit of ‘buyer beware’ in that sense. Overall, because industry clouds are industry specific, they’re also a combination of a lot of assets. They usually require higher consumption on the side of the customers from the original vendor. For some buyers, they could be wary of that because there could be a lot in it for them with that vendor. But the most common one we see with any cloud transition is not being well prepared for it. Industry cloud, by their very nature, require more sharing, collaboration, and openness with your data, and other assets. Organizations internally need to be prepared for that kind of shift in culture and openness.
Chad Wright on business transformation: Three years ago, Boston Dynamics made a decision to try and build a robot and make a profit. And how do we do that considering we’re a 28-year-old company with no business processes around selling and marketing robots, or recognizing revenue or providing customer support. People use the term “digital transformation” and it was for us, but it was really a business transformation. We needed to create a platform that would support that fundamental transformation for the company.
We had people in the organization familiar with Salesforce, for example, so we looked at that as a platform to run our sales and marketing and customer support. From an ERP perspective, when we started thinking about financial accounting and manufacturing operations, we chose Rootstock ERP, which is built on the Salesforce platform. What we’ve done is built this single data model across our customers, orders, and products, allowing us the extensibility and time to value where we can roll out functions multiple times a year. Also, upgrades are nothing like they were years ago. I had 15 years of experience in traditional, on-premise ERP systems but with these cloud systems, we can move to value so much faster and provide value to our customers. And for me, as a CIO, that was fundamental to our strategy.
Kumar Iyer on industry cloud efficiency: KeyBank has grown over the years organically as well as through acquisitions. But there’s a lot of legacy technology in play. That was one of the problems we were trying to solve with a lot of manual processes and complex integrations. So we looked at industry clouds. Then we landed on Salesforce financial services cloud because we were already using Salesforce within our commercial bank. We also use a managed package that sits on top of Salesforce called Encino. It’s very niche and specifically supports our commercial credit and underwriting systems. So that’s another area where we decided to go down this path of the industry cloud and it has helped a lot in terms of speeding up the process of adding new features quickly—especially out-of-the-box features—and sparing the time we used to spend before about solving these problems.
Chad Wright on reimplementation: I’ve worked on a number of ERP implementations at several different companies. Several were on-premise. The last couple have been more of these industry clouds. And it’s always the same thing for me. It’s taking the time and resources to invest in preparing for the implementation. So, do a current state and a future state analysis. That’s going to allow the business to galvanize their requirements and build out a vision of what they want to do. The first step is learning how to do it and many people aren’t familiar with that, particularly if these decisions are being made at higher levels in an organization. But that current state and future state analysis identifies the gaps you can then use to look at these industry cloud providers and see how they’re going to best benefit your business. That allows you to build a product roadmap. I find people don’t always spend the time to do that, and it gets them into trouble during implementation.
Nadia Ballard on the future for industry clouds: There are more industry clouds being built in more industries and verticals and subverticals. That increasing competition is driving verticalized and specialized solutions, but the use cases are very specific. And that is great, because in this sense, industry clouds are replacing those heavily customized on prem or prem cloud solutions organizations can build over years. And now you can have it à la carte and be able to implement the industry cloud use case solutions most relevant to you that can replace your previous setup. We are seeing the growing variety and abundance of industry cloud offerings will give users many more choices. We’re also seeing that as industry ecosystems continue to go online, they become centers for developing new industry clouds and shared applications, which is a very positive environment because it helps existent partners become more related and more creative. So the industry cloud landscape is getting more interesting, but it’s early days still, so I expect a lot of growth and dynamic changes, both to the vendors and how users adopt them and use the industry clouds. But I think it will be a fun ride in the next year.
CIO, Cloud Management, Digital Transformation, Innovation, IT Leadership