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The biggest impediment to cloud adoption is cultural: capioIT CEO

The migration from traditional, on-premise hardware and services to the cloud isn't easy for legacy companies, but it's increasingly important, says Phil Hassey

By Varsha Meghani
Published: Apr 14, 2017

Phil Hassey, CEO of capioIT

“Cloud is changing all of business and society on a fundamental level,” said Ginni Rometty, chairman and CEO of IBM, while giving the keynote address at the InterConnect 2017 in Las Vegas in March. An annual affair by the technology giant, this year saw industry experts come together to better explore how businesses can disrupt and transform using cognitive and cloud-enabled technologies. On the sidelines of the three-day conference, Forbes India caught up with Phil Hassey, CEO of capioIT, an Australia-based advisory firm that helps organisations understand emerging technologies in emerging markets. Edited excerpts:

Q. Cloud adoption is no more a matter of if, but what and when. How do you see it accelerating, especially in the Asian markets?  
I started as an IT outsourcing analyst years ago. For me, cloud is just an extension of that technology. I remember thinking, probably eight years ago, “Is cloud an evolution or a revolution?” It’s an evolution for sure, but it’s evolving quickly. Nowhere do I see discussions not having a cloud element to them. When organisations are investing in new technology, every piece of that conversation is about the cloud. In Asia, in pretty much all the markets, security is not an inhibition anymore to adopting cloud technology. The security that a regional bank in India or telcos in Taiwan offer is nowhere close to the security that Microsoft, IBM or AWS [Amazon Web Services, the cloud computing division of online retailer Amazon] have. So security is not an issue anymore. The only real impediment is legislative requirements about where data is to sit or the structure of that data.

Q. But transitioning to the cloud requires change across all levels of an organisation and that’s not easy…
Cloud is not easy. It’s a change management process. The biggest impediment to cloud adoption is cultural—organisations not understanding the cloud, so they’re not able to invest in it. Everyone thinks that with the fantastic AWS, you can swipe your credit card and you’ve got cloud. It’s not that easy, especially, if you’re dealing with legacy infrastructure across, say, India, China and Australia. If you’re a single entity in a single spot in Singapore, swiping you’re credit card and getting on the cloud is easy. Not so if you’re a bank with branches across a hundred towns and cities in India. So culture is an important aspect that often gets overlooked. Because it’s not the technology—the best technology out there is cloud-enabled, or security—because the best security is cloud-enabled. The vendors who are providing cloud services, too, are pretty strong vendors. So it’s got to be that culture—the lack of understanding of the benefits as well as some regulatory environments.

Q. What are the economics of cloud adoption?

People are realising that the economics of cloud aren’t necessarily better. You don’t hear about 50 percent savings going to the cloud. The cloud, in some instances, may be more expensive. It’s a bit of a catch-22 situation. The cloud can enable you to do more, so your workload goes up, so does your bill. Yet you haven’t bought those servers because you didn’t need them so far. So, say, you were spending $1 million on servers. But, now, because your business has doubled [from more workload], you’re spending $2 million on cloud. So the economics of cloud are an ‘interesting battle’, for want of a better word. It’s not just about being cheaper. You’re not necessarily going to save money directly on the cloud. It’s more the opportunity of being on the cloud and the flexibility it presents to you. It’s the tangible and intangible benefits of the reactivity and proactivity that cloud enables, which is important. For instance, if you’re going to Singapore, you don’t have to build the infrastructure, you just have to go to your cloud provider, plug in. And you’re operating in Singapore.

Q. AWS is the fastest growing and most profitable part of Amazon. Microsoft and Google are devoting greater resources to cloud computing, although their market share still lags behind Amazon’s. Who are the strongest vendors in the cloud computing space and how do you see the market evolving?
We’ve got pretty strong vendors: AWS in particular and increasingly Microsoft Azure. The transformation of Microsoft is probably the biggest we’ve seen from a legacy to a cloud vendor. They’re strong providers for storage market or commoditised volume mass market. Oracle has some aspirations in that area, mainly driven by a fear of AWS because if people migrate their database to AWS, Oracle is left with nothing. IBM has a different perspective. No one else has Watson [IBM’s cognitive Artificial Intelligence (AI) platform]. Other organisations have their own AI and machine-learning capabilities. But Watson is certainly the most developed, most enterprise-ready and the most cognitive. For me, storage isn’t IBM’s market in the long term. For them, it’s all about cognitive and linking organisational data into the cloud at the enterprise level. So if you’re running cognitive-type workload for, say, the financial, health care or transportation sectors, that’s where IBM has a genuinely differentiated capability. Even if you look at Cisco, HP or Dell, they don’t have a Watson. Today HP is a private data centre, server and storage centre—there’s not massive amounts of growth in that market. Google, I think can do it, but they’re just a bit sub-enterprise. Their enterprise isn’t fully fleshed out from a strategy, execution, and partnering point of view. But if Google can do to cloud what they’ve done to search, then it begins and ends with Google. In my view, they’re still about 12 months off from being fully enterprise-ready. They don’t have the local data centres needed to get there as yet. They’ve been a bit too slow to develop their global footprint. Going forward, we’ll also have players who we haven’t thought of, like Facebook. No one has better consumer data or more data centres than they do. Facebook is the next organisation to understand. What they’ll do from an enterprise point of view, the basis of that is just the unbelievable volume of data they generate.

The writer attended the IBM InterConnect 2017, Las Vegas, at the invitation of IBM

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