Part One: How PaaS Facilitates Digital Transformation

In my current role, I have traveled extensively meeting with customers across the US in various industries all of whom are interested in leveraging Platform as a Service (PaaS) as a means to facilitate their company’s digital transformation. As we kickoff 2016 I expect the level of customer interest will only increase and scale exponentially as more and more customers seek to benefit from the same benefits and advantages that their early adopter peers are now realizing. The fact that the technology behind the Platform as a Service segment is mature and stable also helps justify and facilitate wider enterprise adoption. With this market trend in mind here is the first part of a two piece blog post that outlines how PaaS can help you accelerate your digital transformation efforts this year.

 
So what is digital transformation?
Before I go any further I want to quickly define digital transformation in the context of this blog post . Essentially digital transformation is the conscious act of a company embracing the following five major digital concepts/technologies: Cloud Computing, Big Data, Hyper Connectivity, Smart Devices and Cyber Security. Companies around the globe are embracing these five elements in their own way with varying degrees of aggressiveness and success (in terms of increasing their bottom line).1

 
These five technology concepts when understood and embraced can have revolutionary effects on the enterprise and its traditional industry. In addition the thought process behind the digital transformation trend is that incumbent companies who do not embrace the latest technology available to them will ultimately be disrupted by new market entrants who do. SAP has a great whitepaper on Digital Transformation that can be found here.

 
The idea behind digital transformation is to use these great and unprecedented capabilities to approach markets and industry segments in new ways through new products, processes or approaches. For example Uber is now the largest global taxi operator and owns no vehicles, AirBnB is the largest hospitality company and owns no property. Pick your industry and there is a startup or industry disruptor looking to use digital transformation to their advantage (Facebook in Media, Netflix in Entertainment, Amazon in Retail, UnderArmour in Athletics are additional examples).

 
McKinsey has some great statistics in a recent paper that points to the ever decreasing life expectancy for the typical S&P500 company. Standard & Poor’s data show it was 61 years in 1958, 25 years in 1980, and just 18 years in 2011—digitization is placing unprecedented pressure on organizations to evolve. At the present rate, 75 percent of S&P 500 incumbents will be gone by 2027 . That’s a sobering thought. That means managing your transition to a digitally driven business model isn’t just critical to beating competitors; it’s crucial to your firm’s survival.

 
What is PaaS?
Having defined digital transformation in detail it makes sense to cover what is meant by Platform as a Service. When it comes to cloud computing there are three major market segments: Software as a Service (SaaS), Infrastructure as a Service (IaaS) and Platform as a Service (IaaS). The first two segments are widely known and understood. SaaS is the concept of purchasing a packaged line of business solution that runs in the cloud. For example SuccessFactors for HR, Ariba for Supply Chain and others for solutions that touch finance, sales and marketing etc. The idea with SaaS is that you get 90%+ of what you need from the prepackaged application and the vendor provides the underlying resources and access to the solution via the Internet. IaaS involves subscribing to server capacity in the cloud. Amazon Web Services is the big cat in this segment but there are plenty of hosting providers available including SAP. Platform as a Service is a little bit different from the other two segments and is the fastest growing. PaaS is essentially an application development platform in the cloud that can be used for extending and customizing existing applications (on-premise or SaaS), as well as the ability to develop new applications. These applications can be developed by your firm or you can utilize a PaaS vendor’s ecosystem of SI’s and ISPs just like you would with the old on-premise world. Market leading PaaS offers (like SAP’s HANA Cloud Platform) include a robust library of cloud based services to accelerate your application development cycles. For example HANA Cloud Platform has specific services for Internet of Things Services, API Management, Mobile Services, Business Services for eCommerce sites, etc.

 
How does PaaS tie in with Digital Transformation?
When it comes to the big five tenants of digital transformation (cloud, hyper-connectivity, big data, security and smart devices), PaaS touches them all. As a buyer of PaaS you can choose to take these aspects on individually or collectively since PaaS enables you to purchase associated services on an a la carte or bundled basis. Essentially by using an application development platform in the cloud you are able to accelerate business initiatives, reduce costs and cycle times and achieve a competitive edge.

 
Because PaaS offers are available to you in the cloud you can right-size and scale your application environment. Typically you can scale your PaaS according to the number of developers or active application users you intend to onboard (employees, suppliers, consumers, etc) or by the number of resources you need (for example the size of storage or site visits you expect). No longer is there a need to secure and provision hardware, no need to purchase and install the licensed software. Now you can start accessing a cloud based environment on a global 24/7 basis to facilitate around the clock development and short sprints to develop specific user-based or automated applications.

 
When it comes to hyper-connectivity leading PaaS offers come with a complete set of user experience orientated development tools. Whether your users will be consuming the application on a mobile device or via a browser modern application development tools come with responsive design tools. In addition application development tools are increasingly facilitating non-developer skill sets to modify or build their own applications using existing templates or drag and drop tools. We live in a mobile first world and so applications need to easily accommodate this usage need. Further applications need to be intuitive and user-friendly. When it comes to speed of business this includes not only the development timeframe but also adoption and utilization by the associated user base. Your user base expects their applications to also incorporate real-time data in a secure manner. PaaS can help you achieve this goal through associated system integration and security tools

 
On the big data front we are seeing unprecedented levels of data being generated by IOT sensors, corporate systems, people and businesses. Collecting data is one thing but making it actionable is another. Again leading PaaS solutions can provide you with analytical tools to make use of this data. Whether you are trying to move your business from a reactive to a predictive one or whether you are trying to make your company a data-driven one, PaaS can help you build these associated application quickly with a unified view and all the benefits of a scalable architecture (most likely using both on-premise and cloud elements).

 
When it comes to smart devices the world is changing at a rapid pace. Smartphone usage currently sits at 2.6B globally as of July 2015. By 2020 the number is expected to more than double, surpassing 6.1B (one for every person on the planet). Likewise projections for IOT devices are in the 50B range by 2020. This amount of connectivity is unprecedented. With explosive growth in the drones, smart clothing, smart home and smart car segments everyone and everything will be connected to each other all the time (connected people). PaaS can help you make sense of all the data coming from these sources, help you prioritize your actions and taking advantage of this new reality through new applications and solutions.

 
Finally with digital transformation you need to have your cyber-security ducks in a row. Again working with a PaaS expert and taking advantage of their ground up security tools and knowledge will help ensure you stay safe and ahead of bad actors in the economy who are looking to take advantage of slow moving or outdated organizations (your competition). Historically security was handled in house by most firms but with almost monthly headlines involving data breaches. A new approach is needed when it comes to digital transformation. By leveraging a PaaS provider for your application development and business initiatives you will be able to take advantage of physical and virtual security expertise from your PaaS partner. You’ll ultimately be minimizing your exposure and freeing up your valuable internal resources to focus on revenue generating initiatives and priorities.

 
Thanks for reading part one of my tw0-piece blog on PaaS and Digital Transformation. Now that we’ve laid out the basic premise I’ll be back next week with more specific guidance on how SAP customers are actively using HANA Cloud Platform (our PaaS) to quickly gain traction with their digital transformation experts. See you next week!

 

[1] 3.Marla Capozzi, Vanessa Chan, Marc de Jong, and Erik A. Roth, “Meeting the innovation imperative: How large defenders can go on the attack,” McKinsey on Marketing & Sales, July 2014, mckinseyonmarketingand sales.com.

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