As cloud computing approaches its 18th birthday, it’s a good moment to consider what comes next. Given that “the cloud” has completely upended the IT industry during its adolescence, knowing where it’s going in the next 18 months—let alone another 18 years—is key to making smart IT and business decisions.
Here are four dynamics that should shape your investment, sourcing, and management strategies for the next stage of technology evolution.
1. The Cloud is becoming the Platform
The Cloud’s great leap forward was in allowing developers to see—in real time—how software was used. This seemingly simple step saw the birth of Amazon, Salesforce.com, Uber and others that have become titans of the Digital Age. If the software you write—or consume—doesn’t do this, it’s toast.
Cloud vendors provide “platforms” that learn, grow, and develop through analyzing transactional metadata that customers or users provide with every click, like, browse, swipe, and buy. Amazon’s deft use of its platform is the reason the one-time bookseller is a very different company in 2015 than it was in 2005. The Uber of 2025 will likely have morphed into an organization distinct from the one it is today.
What exactly is a platform? Platforms pre-integrate “below the app” components and facilitate easy “above the app” extensions. With that—and the ability to constantly improve the user experience through API-generated feedback—Metcalfe’s Law kicks in: the value of the platform is proportional to the square of number of users.
Enterprise software and solutions vendors have been slow to leverage this development, but are now racing hard to catch up. Enterprise IT departments likewise have been cautious in leveraging these new trends, but similarly are increasingly investing in platforms to power processes like Telco expense management, medical billing reimbursement, and fraud protection in banking and insurance.
Platforms are becoming way more important and valuable than any single piece of technology (check out Uber’s current valuation). In cloud’s toddler years, everyone thought it was about cost reduction through multi-tenancy. While a crucial development, cloud’s early benefits were really only stepping stones on a longer journey.
The Internet begat the cloud. The cloud begat the platform.
2. The Platform is Powering the Internet of Things
As sensors and processors wander further afield from their spawning grounds—the datacenter and the desktop—it’s becoming clear that technology’s past is simply prologue: That is, we ain’t seen nothing yet.
The platform is central to the great digital build-out that is ramping up. As “things” become “smart,” the big commercial opportunity will be to orchestrate interdependencies; a smart refrigerator that “auto-magically” orders a delivery of milk when you run low will only become reality if a complex set of integrations occur.
The platform solves this challenge by supplying the mechanism that pre-integrates components and facilitates extensions, learning along the way.
The vendor-side war to orchestrate those interdependencies and monetize them is heating up by the minute. Home-automation hubs Wink, Iris, and Revolv as well as Internet of Things operating system Google Brillo are all seeking the early lead in establishing platform dominance.
As the cloud has evolved into the platform, it becomes more obvious that seeing the technology as simply a means of reducing cost in your business today is to miss its role in shaping your business in the future. The platform generates and harvests data, the understanding and leveraging of which is central to the digital era.
3. When it comes to the Platform, will your Organization be a Developer or a Consumer?
Your answer will influence the future of your company. The central role that platforms play now, and will increasingly play in the future, leaves much of current enterprise IT falling short. That is, does your accounts receivable software learn from its users? Does it suggest that if your organization did x it should now do y? Most don’t.
But the cost of developing modern platforms that can support business users to compete and win in the commercial market is prohibitive for many organizations. CEOs and CFOs are not lining up to encourage CIOs to build new in-house expense management systems.
For those enterprises, the better course of action is to decommission existing in-house applications and supporting infrastructure, and to re-direct spending toward investing in commercial platforms.
Many CIOs baulk at this idea. Having reached the C-suite through technology, it’s hard to now contemplate saying “goodbye” to it.
But the sophistication of the modern cloud, and now the platform, and the fact that platforms produce “winner take all” results, means that only those organizations with strong constitutions (and deep pockets) can continue to operate as developers. The better, more logical route is to be a savvy platform consumer.
4. Everything Rests on the Platform being Secure
However you see the future of the cloud, and however you plan to leverage it, one thing is clear: your IT budget allocation for security is far too low. Many enterprises understand the need to upgrade their security posture, but are not yet grappling with its implications and acting on them with vigor. With the future of your business resting on a digital platform, security failures are not an option The platform is core to the future of your work. Mastering it is the great task ahead.