Becoming a digital enterprise without Cloud, is it possible?

Written by: Koen van Schijndel

For many organisations Cloud is inextricably linked to the digital enterprise. Because: infinite computing power, ready-made modules and scalability as far as the eye can see. All handy stuff, but still it’s a little too short-sighted. Because although Cloud is often presented that way, the technology is not a magic trick that suddenly makes you part of the digital movement. In fact, you could say that a cloud strategy is not even necessary to become a digital enterprise. After all, everything that Amazon Web Services can do, your IT department can do on a small scale, right? High time for an honest comparison. In this article you will read the sense and nonsense of Cloud for companies that want to become a digital enterprise.

What is a digital enterprise?

The definition we all know by heart at Rapid Circle reads as follows:

“A Digital Enterprise is a company that has automated its production and its marketing and sales to the point where it can accelerate its innovation.”

So a digital enterprise deploys IT as a competitive advantage, which freely translated means becoming a software company. Digital enterprises are fast and flexible in digitizing and automating applications and can therefore innovate quickly. They look very closely at what the user needs (even before the user knows) and constantly adapt to external developments. They do this by collecting information and continuously adjusting the development of new applications. Great examples are Netflix and Spotify: although they offer movies, series and music, they are all about IT. Based on IT, subscribers use the services, and thanks to IT, data is collected that forms the basis of all decisions in the company. In the B2B sphere, companies such as Salesforce and Portbase stand out. Both digital enterprises provide their services through an online platform, where external applications can also be linked.

Digital enterprises lean on technological progress

In the previous paragraph, the word Cloud was nowhere to be found. But wait a minute. Netflix is so successful because the company can offer video streaming in a standardised way to users around the world. And for data collection and interpretation, both Netflix and Portbase use innovative technologies such as AI, IoT and Machine Learning. Consider the sensors that Portbase uses to monitor which terminals are occupied and by which ship. Or the algorithm Netflix utilises to predict users’ personal preferences. These technologies all use Cloud because it allows large amounts of data to be collected and analyzed quickly. Your own IT department can build innovative apps, but the link with innovative technology such as IoT and AI becomes difficult AND you lack the computing power to scale up quickly. Just try replicating AWS’ service catalog internally!

What happens when you innovate digitally without Cloud?

Suppose you do leave innovation 100% to your own IT department. In theory, this is possible: building applications is perfectly possible without Cloud. Creating links, storing data; it can all be done without it.

What you’re missing in this case is a base for working quickly and cost-effectively. And that is exactly what it is all about in a digital enterprise. You have to be able to experiment and adjust as often as needed, and quickly developed something that can go live. This requires a lot of manpower and computer power that your own IT department and databases do not have. By migrating applications to Cloud, you have all the computing power at your disposal (but pay only for what you use) and many future applications (or parts of them) are already ready to go as a kind of kit. That way you are faster, have more room to experiment and incur fewer costs. Those advantages combined actually make Cloud indispensable, because you can’t keep up with the cloud pace of competitors with your own manpower. Also, a cloud-less IT department is inflexible because you have to conclude contracts with vendors without knowing how much capacity you’re going to need in the future.

A little from yourself and a little from Cloud

So the interim conclusion is that digital enterprises cannot avoid Cloud. But it doesn’t mean you have to outsource or purchase the management of all your applications as a SaaS product. For example, we see many companies migrating to Cloud keeping some of the IT management in their own IT department. For example, consider companies working with DevOps teams. This combines Development (application development, testing) with Operations (management and monitoring). DevOps teams work in short cycles so that software is constantly being improved. This approach goes well with a cloud strategy because it combines the best of Cloud (computing power, ready-made building blocks) with the best of your own people (creativity and knowledge of your products).

Final verdict?

The answer to the question in the title: in theory you can become a digital enterprise without Cloud, but in practice it is not feasible. Your own IT department simply lacks the computing power and manpower to meet the innovation pace of a digital enterprise. This makes Cloud an indispensable part of your digital strategy. However, it does not mean that you can no longer do anything yourself. On the contrary, to become a Digital Enterprise, you have to work on your applications yourself. The better and more unique you make these, the greater your competitive advantage (think Tikkie or a good app from an insurance company). This is why a DevOps team is also recommended. This gives you all the benefits of Cloud, but gives you total control over your new applications. For the less distinctive applications, you pass off the work, which in turn leaves you more time for innovation.