Every company is becoming a technology company, industry proclaims. And with that comes an immediate impact on vendors to rethink how they interact with customers.
The modernization push has given rise to a new breed of industry-specific technology solutions, with tailored solutions for retail or pharmaceuticals, for example.
It's a stark contrast from clunky, standard applications companies would customize.
CIO Dive sat down with Julia White, Microsoft's corporate vice president of Azure, to discuss all things cloud: Where it was, where it is and where it's going.
The new role of vendors
"Vendors like Microsoft have gone from selling standard, repeatable applications like Office and Windows to providing technology to do custom lines of business development," White said.
Azure puts Microsoft at the heart of how businesses runs, not just the suite of productivity tools companies employ for email or to keep track of billing.
From a tech perspective, as soon as you put yourself "in the core line of business, you have to be industry-oriented. There is no office application that's generic across every industry ...
It's fine if you're just trying to do email for everybody or websites for everybody.
Once you get past that very generic layer of technology, the custom line of business is very unique by industry, by type, by [geography], those types of things."
Technology turns into building blocks
Before the cloud era, technology contracts were big, clunky and hard to break.
Companies purchased hardware with a four-year lifespan and distributed the costs over time. Application customization was frequent and companies struggled to implement vendor updates.
The days are gone when CIOs inherited technology stacks with impossible to maintain customization, according to White.
"As soon as you were done with it, it was already out of date. People hated it the minute you finished it. You wrote the spec and then five years later you were done implementing it then in those five years, everything changed.
You reached your goal and everyone's like, 'I hate everything you built me.'"
Cloud has made customization more agile, said White. "So maybe you're customizing 50% of your line of business applications, but you can adjust it weekly, you can do semesterly sprints ...
[Companies] need to think about the world differently. These three years, $30 million, 300 people projects are gone, forget those.
They're now six week sprints ... If it doesn't work, you shut it off and you're not down anything other than the last six weeks of Azure you paid for."
Where are customers really?
Whispers of reliance on on-premise technology peek through, but the modern technology push dictates cloud first, cloud always. Estimates on where companies actually are on their cloud journey vary.
Each analyst has a different view of spend in the cloud and how much is in the cloud, according to White. They largely coalesce around 30% of technology spend in the cloud, which doesn't mean install base.
That means there's still more on prem than there is in the cloud, she said. "But it's shifting, and I think most forecasts show at like 50-50 in the next couple of years, so I think we're starting to hit that pivot point."
Motivations for moving to the cloud can differ. When Walmart, which uses Azure, began moving to the cloud, it adopted a lift and shift strategy. Now, it follows a lift and optimize, lift and modernize approach.
"Most of the customers we interact with, the first reason they come to the cloud is for new innovation. 'I need to stay competitive, I need to appeal to my customers better, I need this new kind of capability,'" White said.
"Ultimately they end up moving over and migrating existing applications. But the catalyst to start was about this new innovation capability.
Then I think again, three years ago there was view of lift and shift: take something on prem, move it in the cloud, it makes it better.
Most people look at that and they're like, 'there's no value in that. If I'm not going to modernize, if I'm not going to optimize, if I'm not going to change anything of it, might as well just leave it on prem and modernize the hardware in place.'"
Correction: A previous headline listed Julia White's title as EVP of Azure. She is the corporate vice president.