Welcome to the COVID cloud hangover

The Big Story

Taking stock

Companies are waking up from last year's cloud-computing splurge and realizing that while that spending was justified, they're having trouble making progress on their goals. That's the conclusion from a recent report released by PwC on the "cloud value gap," a survey of more than 500 business and tech leaders conducted last month.

There's a big gap between aims and achievements for many businesses that have shifted to the cloud, according to PwC, even among those companies that had already decided they needed to make the switch before the pandemic made it an urgent priority.

• The top reason survey respondents adopted cloud computing was to "improve resilience and agility," but half of those who stated that aim reported not "realizing substantial value" with respect to that goal.
• A similar proportion were struggling to "improve decision making through better data analytics," which is basically the entire promise of the "digital transformation" sales pitch.
• This pattern continued across several different goals businesses hoped cloud computing would help them deliver: On average, only 53% of respondents thought they had achieved their cloud goals.
• While only a small number of respondents said they adopted cloud computing to "disrupt our industry or other industries," almost all of those folks were happy with their progress toward that end.

For cloud providers, this is a big reminder: As they continue to capture a growing share of the world's IT spending, they're going to have to spend as much time on customer training as they do serverless container services. Part of the problem is already well understood.

• Companies that simply "lift and shift" their existing applications to the cloud without modifications often have trouble understanding what the fuss is all about.
• Yet even companies that understand why the cloud requires a different operating model have trouble finding the people they need to optimize their systems for cloud computing.
• And executives of a certain generation — especially ones who have been purchasing IT services since before the launch of S3 — still see cloud as a security risk.

So cloud providers need to work more closely with customers. These problems keep surfacing in 2021 because either the message isn't getting through or cloud customers are moving too quickly to understand what they are buying until they get the first bill.

• This isn't just about the CIOs, but the other business leaders across key functions such as finance, who need help understanding how to get the most out of their cloud investment.
• Cloud providers also need to deepen their relationship with partners, who are often seen as a more trusted, well, partner for businesses when it comes to buying and implementing technology services.
• The Big Three all know this, and have invested substantial amounts of money into customer architects and skills programs to help companies understand this once-in-a-generation shift in IT strategy.
• But when half of your customers don't think they're getting what they paid for, that's a problem.

After all, there's still a long road ahead. It can sometimes seem like cloud infrastructure services have been around forever, but PwC's report shows that Fortune 1000 companies are still finding their way.

• "Crucial to realizing cloud value is a fundamental shift in both how the organization works and how quickly it can deliver new products, services and experiences," PwC wrote.
• Those shifts can take time, and that means hybrid cloud approaches to enterprise tech will become even more entrenched.

— Tom Krazit

A MESSAGE FROM INTEL AND MICROSOFT AZURE

Trust, but verify. It's a good guideline for many things, but essential in data security. That need to confirm the reliability of data got easier recently when Microsoft rolled out Azure Confidential Ledger, which provides cryptographic evidence that blockchain ledgers have not been tampered with.

Learn more

This Week On Protocol

Google Cloud hits the factory floor: The third-place provider has made manufacturing one of its core focus areas. And the vendor just released its first product: an AI-backed system to detect product defects. While a bit underwhelming, Google Cloud is taking big steps to win customers in an industry that is poised to generate enormous amounts of data.

RPA 4 ever: While some critics have labeled the tech as "transitory," UiPath CEO Daniel Dines thinks robotic process automation is here to stay. And now, after April's successful IPO, the up-and-coming provider is trying to move beyond automating tedious tasks.

Creativity in 3D: Adobe released a new suite of tools aimed at upending traditional photo studio, efforts that the company says were accelerated during the pandemic. It's a bet that the software provider can convince creatives to embrace virtual photography and 3D design, reports Protocol's Janko Roettgers.

Five Questions For...

Jim Rose, CEO, CircleCI

What was your first tech job?

My first tech industry job was as a consultant for a small firm based in Seattle, MSI Consulting Group. I joined MSI at the beginning of the internet boom and had the opportunity to work with some of the largest tech companies in the world, as well as some of the earliest internet startups, doing sales and marketing consulting.

What was the first computer that got you excited about technology?

The Apple IIe. A friend of mine had one and it had a much more interesting and user-friendly platform than the IBM PC that we had at my house, which was powerful, but clunky, and as user-friendly as an IRS audit.

If Protocol gave you $1 billion to start a new enterprise tech company from scratch today, what would you do?

Honestly, I would still tackle the problems we're trying to solve at CircleCI. I truly believe change validation is going to be the challenge of the next decade. Every organization in every industry is now waking up to the fact that the software delivery process is broken. The minute everyone moved not just to remote-first, but to remote-only, organizations realized they could no longer rely on their manual processes. Being able to move quickly — without sacrificing reliability — has become the backbone of software delivery.

How can enterprise tech improve its current status around diversity, equity and inclusion?

Avoid falling into the trap of pattern matching. The tech world has a history of modeling after someone else's previous successes. We see a company that was successful and we try to follow their footsteps. When it comes to hiring, this results in recruiting from similar education backgrounds, or from a certain geographic area, and it becomes insular very quickly. Most of the time the model isn't diverse and we just end up perpetuating a sea of sameness. We need to break this pattern.

Which enterprise tech legend motivates you the most?

The founders of Hewlett-Packard, Bill Hewlett and David Packard, inspire me. They were able to build a company that didn't just produce great technology, but also a great organization with a great culture that people wanted to work for and customers wanted to buy from.

Around the Enterprise

• Oracle now has its own loyalty program: Every $1 spent on cloud earns a customer a 25-cent maintenance credit. And like a loyalty program, it comes with a list of caveats.
• Microsoft unveiled Windows 11 today. It's heavily streamlined, integrates Teams, makes multitasking easier, is (supposed to be) faster and reimagines the concept of the app store. Protocol's David Pierce has more.
• AWS and Salesforce will begin co-creating pre-built applications as part of a deeper partnership between the companies. One top AWS exec says it's "not doing this level of application integration with anyone else."
• Splunk nabbed a $1 billion investment from Silver Lake. The data security and compliance provider is using the money to fund growth — like its new cloud product — and buy back shares.
• HPE acquired Determined AI, the machine-learning platform provider, for an undisclosed sum. It's an extension of its efforts to provide the compute needed to run advanced AI models.
• Intel had a management shakeup, split its data group in two and launched two new business units. Among those exiting are Vice President Navin Shenoy, who was once thought to be a CEO contender.

A MESSAGE FROM INTEL AND MICROSOFT AZURE

Trust, but verify. It's a good guideline for many things, but essential in data security. That need to confirm the reliability of data got easier recently when Microsoft rolled out Azure Confidential Ledger, which provides cryptographic evidence that blockchain ledgers have not been tampered with.

Learn more