Organisations will not be in a position to employ all the skills it needs to implement, develop and maintain for its digital infrastructure and applications. The choice is going to be which skills are most important to an organisation. This selection needs to be very discriminating and focus on differentiating skills – those that really make a difference within your ecosystem, particularly for your customers and employees.
Organisations will need a great partner who can deliver generic skills and more services. They will have better economies of scale and skill and will free management to attend to those things most important to customers and employees.
Hybrid Cloud has an Edge
Almost every organisation has a hybrid cloud environment. This is not a projection – it has already happened. And most organisations are not well equipped to deal with this situation.
Organisations may not be aware that they are using multiple public clouds. Many of the niche SaaS applications used by an organisation will use Microsoft Azure, AWS or GCP, so it is highly likely organisations are already using multiple public clouds. Not to mention the offerings from vendors such as Oracle, Salesforce, SAP and IBM. IT teams need to be able to monitor, manage and maintain this complex set of environments. But we are only in the early stages of integrating these different services and systems.
But there is a third leg to this digital infrastructure stool that is becoming increasingly important – what we call “the Edge” – where applications are deployed as part of the sensors that collect data in different environments. This includes applications such as pattern recognition systems embedded in cameras so that network and server delays cannot affect the performance of the edge systems. We can see this happening even in our homes. Google supports their Nest domestic products, while Alexa uses AWS. Not to mention Amazon’s Ring home security products.
With the sheer number of these edge devices that already exist, the complexity it adds to the hybrid environment is huge. And we expect IT organisations to be able to support and manage these.
Simplify, Specialise, Scale
The lessons for IT organisations are threefold:
Simplify as much as possible while you are implementing new features and facilities. Retiring legacy infrastructure elements should be consistently included in the IT Team objectives. This should be done as part of implementing new capabilities in areas that are related to the legacy.
Specialise in the skills that are the differentiators for your organisation with its customers and employees. Find great partners who can provide the more generic skills and services to take this load off your team.
Scale your hybrid management environment so that you can automate as much of the running of your infrastructure as possible. You need to make your IT Team as productive as possible, and they will need power tools.
For IT vendors, the lessons are similar.
Simplify customer offers as much as possible so that integration with your offering is fast and frugal. Work with them to reduce and retire as much of their legacy as possible as you implement your services. Duplication of even part of your offer will complicate your delivery of high-quality services.
Understand where your customers have chosen to specialise and look to complement their skills. And consistently demonstrate that you are the best in delivering these generic capabilities.
Scale your integration capabilities so that your customers can operate through that mythical single pane of glass. They will be struggling with the complexities of the hybrid infrastructure that include multiple cloud vendors, on-premises equipment, and edge services.
But then over the past couple of days came a couple of reminders of our exposure – our suppliers will share our data with their suppliers, as well as be prepared to use our resources to their benefit. I am reasonably technical and still find it difficult, so how does a person who just wants to use a digital service cope?
Bunnings’ Data Breach with FlexBooker
First example. Bunnings started using a service called FlexBooker to support their click-and-collect service.
To do this, they share personal information with the company for the service to work correctly. But hackers have stolen data for over three million customers from FlexBooker in a recent data breach.
How many of Bunnings’ customers were aware that their data was being shared with FlexBooker? How many would have cared if they had known?
I have only read the comments from Bunnings included in the Stuff report but I believe the reported reaction lacks the level of concern that this breach warrants. What did Bunnings do to verify FlexBooker’s privacy and security standards before sharing their customers’ data with them? What is going to change now that the vulnerability has been identified?
Neither of these things is clear. It is not clear if Bunnings have advised their customers that they could have been affected. There is no clear message on the Bunnings New Zealand site on the details of the breach.
In “Privacy is Power”, the author makes a strong case for customers to demand protection of their privacy. Organisations that use other companies as part of their services must be as demanding of their suppliers as their own customers would be of them.
Is Crypto Mining part of antivirus?
The second example is a little different. Norton has released crypto mining software as part of their antivirus suite. This crypto mining software uses the spare capacity of your computer to join with a pool of computers that are working to create a new blockchain block. Each time a new block is added, you would earn some cryptocurrency that you could change to a fiat currency, i.e. normal cash.
But I question why a crypto miner is part of an antivirus suite. Norton makes the case that they are a trusted partner, so can deliver a safer mining experience than other options.
Norton have made the use of this software optional, but to me, it does indicate the avarice of companies where they see a potential income opportunity. If they had included the software in their internet security suite, then there may be some logic in adding the capability. But to antivirus?
The Verge did some unscientific measurements on the value to a user of running this software. They found the cost of the electricity used during the operation of Norton’s mining software was about the same as what they earned. So Norton, with their 15% fee, would be the only ones making money.
The challenge remains for most of us. Our software vendors are adding new functionality to our services regularly because it is what we as customers expect. But I rarely check to see what has been changed in a new release as normally you will only see a “bugs squashed, performance improved” messaging. We have no guarantee that they have not implemented some new way of using our information or assets without gaining explicit approval from the user for this new use.
To Norton’s credit, they have made crypto mining optional and do not activate the software without their users’ consent. Others are less likely to be as ethical.
Both of these examples show how vulnerable customers of companies are to the exposure of their private data and assets. All organisations are increasing their use of different external services as SaaS options become more attractive. Commercial terms are the critical points of negotiation, not customer privacy. What assurance do customers get that their privacy is being maintained as they would expect?
One point that is often overlooked is that many cloud service contracts define the legal jurisdiction as being either the cloud provider’s home jurisdiction or one that is more advantageous for them. So, any intended legal action could be taking place in a foreign jurisdiction with different privacy laws.
Customer service organisations (i.e. pretty much all organisations) need to look after their customers’ data much more effectively. Customers need to demand to know how their rights are being protected, and governments have to put in place appropriate consequences for organisations where breaches occur outside that government’s jurisdiction.
The article prompted me to think through some of the implications of using cloud services. Tech buyer organisations will have less need for technical capabilities as increasingly these are delivered by the cloud suppliers.
But the growth in demand for digital and IT skills just continues to increase as more and more industries digitalise. In the past, tech buyer organisations would have invested (at least the good employers did!) in the development of their people. The cloud suppliers are increasingly doing this talent development.
Most contract negotiations are based on cost, quality and customer service. A significant proportion of cloud contracts are now boilerplate – you pay with a credit card for a monthly service and have little or no ability to negotiate terms and conditions.
The trade-off is required to get a short commitment term and a variable cost profile. No tech vendor can afford to negotiate bespoke contracts for this type of commercial arrangement.
This situation leaves the question of how tech buyers can influence tech vendors to develop their people’s talent appropriately. Some would say that the tech vendors will do this as a matter of course, but the statistics, as highlighted in the Ecosystm research data in Figure 1, show that we are not bringing people in at the rate the industry requires.
Advice for Tech Buyers
I recommend you look closely at using two tactics with the tech vendors that you are working with:
First, look to consolidate as much workload as practical under a single contract with the supplier. This is not a new recommendation for contracts – but with the increasing use of boilerplate contracts, it is one of the few ways an organisation can increase its value and importance to a tech vendor.
Second, start finding those tech vendors that are developing new and existing talent in practical ways and favour these organisations in any purchase decision.
Most organisations, individually, do not have the commercial power to dictate terms to the cloud providers. Still, if enough tech buyers adopt this critical criterion, the cloud providers may see the value in investing in the industry’s talent development in meaningful ways.
The downside? Talent development does not come free. Tech buyers may need to pay a higher fee to encourage the suppliers but paying a low-cost provider who does not develop their talent sounds like a recipe for poor quality service.
If you would like to discuss any of these thoughts or issues further, please feel free to reach out and contact me. This is an industry issue and one for our broader society, so I would be interested in hearing how your organisations are addressing this challenge.
Woolworths have announced the adoption of a new Software-as-a-Service capability from One Door to support the quality and compliance of their in-store merchandising. There are some valuable lessons from this announcement for other retailers.
The power of data, particularly as the capability of specialist AI tools improves, continues to help retailers improve their offering to customers.
SaaS Capabilities Offer Performance Improvements
Woolworths are working on improving the compliance of product merchandising in-store using One Door Visual Merchandising solution.
One Door will improve the accuracy of data available to both the in-store teams and for the central supermarket merchandising team. The supply chain in Woolworths is already highly automated but getting the shelf presence right is dependent on the quality of data being captured. While store teams already use a range of electronic tools to capture this information, the compliance with store planograms and visual merchandising standards has been difficult to automate.
One Door’s solution provides a single source of this information in an easy to use digital format. The AI tools that One Door have developed appear to be able to show the degree of compliance of the actual shelf layout and stock position.
For store teams, One Door will simplify tracking layout changes by highlighting them and making the data available on the shop floor. This should deliver productivity benefits to the store – benefits that can be reinvested in new activities or on better customer service.
Store teams will be able to verify that third party merchandisers are compliant. Major product manufacturers often use their own merchandising teams in supermarkets and One Door will provide a simple mechanism to verify they have done their jobs properly.
The central merchandise teams will be able to quickly get data-driven feedback on how the stores are making planned changes, as well as verifying the quality of compliance with their store layouts.
All of these factors should mean that the product that is available in-store is presented in the manner that the merchandising teams have defined, and the customers will see a more consistent presentation of products.
Integration is Critical for Rapid Deployment
Effective integration with existing systems and new cloud capabilities is critical to support the real-time operation in Retail.
The ability to introduce and scale up new capabilities that can be delivered by cloud services such as One Door will only be effective if integration is simple and quick. This requires compatibility at a number of levels including data semantics and the ability to exchange data effectively. Woolworths have been growing their capability for managing and supporting APIs that will make this integration smoother.
In addition, the cloud service providers have made the development of integration capabilities an investment priority.
The introduction of One Door is showing how the company can integrate new capability and introduce it to almost 10% of their stores as a pilot capability, with the full deployment to be completed across their chain during 2022.
Other retailers who don’t have this capability to integrate cloud services quickly, reliably and cost-effectively are going to lag companies that have invested to achieve this capability.
CIOs and CDOs should be leading their organisations in the development of a rich and scalable set of APIs to enable the integration of this type of high-value specialised solution.
Deployment without Consistent Architectures will be Complex
Rapid deployment of new capabilities requires a well-architected cloud, network, and edge infrastructure – and a well-trained team.
It is highly likely that the deployment of the One Door solution will be delivered over the existing Woolworths infrastructure. The capability is delivered from the cloud, with little or no deployment costs or time required. With the existing network and hybrid cloud capabilities that Woolworths have developed this type of rollout will be a relatively simple technical activity.
The integration of the service into the Woolworths environment is likely to be the most complex activity to make sure accurate data is exchanged.
It doesn’t take long to identify a wide range of different digital initiatives that Woolworths are pursuing. With the platform that they have established, they are well-positioned to take advantage of new capabilities as start-ups and existing suppliers develop them.
Every retailer needs to maintain their focus on their digital capabilities. As companies such as One Door develop AI-based enhancements, CIOs and their teams need to be ready to integrate these capabilities quickly.
Strong architectures for both infrastructure and digital services are needed to achieve these outcomes.
Recommendations for Retailers
Retail organisations continue to find new ways to leverage the power of the data that they are able to collect. The flexibility that SaaS developments deliver will be essential to maintaining an organisation’s competitive positioning.
CIOs and their teams need to lead their organisations and ecosystems by:
Identifying new SaaS capabilities that support the strategic positioning of their companies
Preparing their environments by supporting a rich set of APIs to support the rapid integration of these new capabilities
Developing and maintaining strong architectures that provide organisations a solid framework to develop within
Checkout Alan’s previous insight on Woolworths micro automation technology adopted to speed up the fulfilment of online grocery orders
Last week Microsoft announced the acquisition of Nuance for an estimated USD 19.7 billion. This is Microsoft’s second largest acquisition ever, after they acquired LinkedIn in 2016. Nuance is an established name in the Healthcare industry and is said to have a presence in 10,000 healthcare organisations globally. Apart from Healthcare, Nuance has strong capabilities in Conversational AI and speech solutions to support other industries. This acquisition is in line with Microsoft’s go-to-market roadmap and strategies.
Microsoft’s Healthcare Focus
Microsoft announced their Healthcare Cloud last year and this acquisition will bolster their Healthcare offerings and market presence. Nuance’s product portfolio includes clinical speech recognition SaaS offerings – Dragon Ambient eXperience, Dragon Medical One and PowerScribe One for radiology reporting – on Microsoft Azure. The acquisition builds on already existing integrations and partnerships that were in place over the years.
“Microsoft Cloud for Healthcare offers its solution capabilities to healthcare providers using a ‘modular’ approach. Given how diverse healthcare providers are in their technology maturity and appetite for change, the more diverse the ‘modules’, the greater the opportunities for Microsoft. This partnership with Nuance also brings to the table established relationships with EHR vendors, which will be useful for Microsoft globally.
The Healthcare industry continues to struggle as the world negotiates the challenges of mass vaccination. But on the upside, the ongoing Healthcare crisis has given remote care a much-needed shot in the arm. Clinicians today will be more open to documentation and transcription services for process automation and compliance. The acquisition of Nuance’s Healthcare capabilities will definitely boost Microsoft’s market presence in provider organisations.
However, Healthcare is not the only industry that Microsoft and Nuance are focused on. The Microsoft Cloud for Retail that was launched earlier this year aims to offer integrated and intelligent capabilities to retailers and brands to improve their end-to-end customer journey. Nuance has omnichannel customer engagement solutions that can be leveraged in Retail and other industries. As Microsoft continues to verticalise their offerings, they will consider more acquisitions that will complement their value proposition.“
Microsoft’s Focus on Conversational AI
Microsoft already has several speech recognition offerings, speech to text services, and chatbots; and they continue to invest in the Conversational AI space. They have created an open-source template for creating virtual assistants to help Bot Framework developers. In February, Microsoft announced their industry specific cloud offerings for Financial services, Manufacturing, and Non-Profit, and also introduced a series of AI and natural language features in Microsoft Outlook, Microsoft Teams, Microsoft Office Lens and Microsoft Office mobile to deliver interactive, voice forward assistive experiences.
“There is no slowing down in this space and the acquisition clearly demonstrates the vision that Microsoft is building with Nuance – a vendor that has made speech recognition, text to speech, conversational AI the foundation of the company. This is a brilliant move by Microsoft in the Conversational AI space and a win-win for both companies.
This move could also mark further inroads for Microsoft into the contact centre space. With Teams now being integrated into contact centre technologies, working with large customers using speech and conversational AI, Dynamics 365 could herald the start of more acquisitions for Microsoft to bolster a wider customer engagement vision.
The Conversational AI war is heating up and various other cloud vendors such as Google and AWS are starting to get aggressive and have made investments in recent years to enhance their Conversational AIcapabilities. Google Dialogflow has been seeing rapid uptake and they now have deep partnerships with Genesys, Avaya, Cisco and other contact centre players. Microsoft coming into the game and acquiring a company with years of history and IP in the speech space, demonstrates how the cloud battle and the war between Google, Microsoft and AWS is heating up in the Conversational AI. All of a sudden you have Microsoft as a powerhouse in this game.”
2020 was a breakout year for SaaS providers – and a tough one for a lot of on-premises software vendors. SaaS (or mainly SaaS) providers like Salesforce, Zoom, Microsoft had record growth and some of the best quarters in their history, while other mainly on-premises software providers have had poor quarters. SAP is even accelerating the transition to a 100% cloud-based business as their revenue suffers. The race to deploy SaaS tools and platforms is well and truly happening. Many of the usual ROI models and business cases have been abandoned as the need for agility – to drive business change at pace trumps most other business needs. Ecosystm data validates this
This trend will continue in 2021 – in fact, we expect it to accelerate. Most SaaS solutions (such as CRM, ERP, SCM, HRM etc.) are implemented by less than 30% of businesses today – which means the upside for the SaaS providers is huge.
Hybrid Cloud Will Finally Become Mainstream
The sudden move to remote working in 2020 forced most organisations to increase their use and reliance on cloud-based applications. Employees have relied on collaborative tools such as Zoom, Microsoft Teams and WebEx to conduct virtual meetings, call centre workers had to respond to calls from home – most if not all relying on cloud-based apps and platforms. This trend is set to continue going forward. Ecosystm research finds that 44% of organisations will spend more on cloud-based collaboration tools in the next 6-12 months.
But the forced adoption of these tools has also prompted many – especially larger organisations – to worry about losing control of their IT resources, including worries related to security and compliance, cost, and reliability. As for the latter, both Microsoft Azure and Zoom experienced outages after the pandemic hit and this has made many organisations wary of relying too much on a single public cloud platform. Ecosystm therefore expects a sharp increase in focus on hybrid cloud platforms in 2021 as IT Teams seek to regain control of the apps and services their employees rely the most upon.
Carrier Investment in 5G Will Give Edge Computing a Boost
The gap between the hype around edge computing and the actual capabilities it offers will narrow in 2021 as 5G networks are built out. One of the most promising methods of deploying edge computing involves carriers embedding cloud capacity in their own data centres connected to their 5G networks. This ensures data does not unnecessarily leave the network, reducing latency and preserving bandwidth. This combination of 5G and the Edge will be of particular benefit to applications that until now have faced a trade-off between mobility and connectivity. Over the last twelve months, the major hyperscalers announced their 5G edge computing offerings, and some of the major global telecom providers have served as test cases by partnering with at least one hyperscaler and will likely add more over the next year. Expect this ecosystem to expand greatly in 2021.
Cloud environments can benefit from pushing computing-heavy workloads to the Edge in much the same way as IoT and provides a great platform for managing the edge computing endpoints. The flipside of pushing containers to the Edge will be the increased complexity and the fact that the number of attack surfaces will increase. Containerisation must therefore be deployed with security at its core.
Stateful Applications Will Move to the Cloud with Containers and Orchestration
As organisations seek to migrate workloads and applications between platforms in an increasingly hybrid cloud environment, the need for “lifting and shifting”, refactoring and partitioning applications will increase. These approaches all have their shortcomings, however. Lifting and shifting an application may limit its functionality now or in the future; refactoring may take too long or be too costly; and partitioning is often not feasible or possible. A better approach to this task is to modernise the applications to make use of application containers like Docker, Windows Server Containers, Linux VServer and so on, to enable a faster and more seamless way to migrate applications between platforms. We also see container orchestration environments like Kubernetes and containerised development and deployment platforms like IBM’s Cloud Paks.
How these technologies are used to deploy stateful applications in multicloud environments will evolve. A raft of container management platforms, based on Kubernetes, are being released to simplify what was once a complex DIY process. New entrants will look to challenge the cloud hyperscalers, virtualisation giants, and Kubernetes specialists. The emerging features that previously required cobbling together third-party tools, like service mesh, data fabric, and machine learning, will speed up containerisation of stateful core applications. The deployment of containers on bare metal rather than in virtualised environments will also gather pace. The most challenging task will be delivering containerised applications at the Edge, forcing developers and platform providers to create inventive solutions.
Serverless will take us a step closer to NoOps
As the application lifecycle speeds up and the distinction between development and operations shrinks, the motivation to adopt serverless computing will grow in 2021. While NoOps, the concept that operations could become so automated that it fades into the background, is still a distant goal, serverless computing will make a stride in that direction by abstracting the application from the infrastructure. Having seen the agility benefits of a microservices architecture, many DevOps teams will experiment with breaking services down further into functions. Moreover, the pay-as-you-go model of serverless will appeal to OpEx driven organisations. Expect stories of bill shock, however, as were seen in the early days of cloud adoption. While AWS Lambda is currently considered the serverless industry standard, it is likely that in 2021, Microsoft, Google, and IBM will ramp up efforts in this space. Each of these providers will build out their offering in terms of languages supported, event triggers, consumption plans, machine learning/AI options, observability, and user experience.