Pivotal Cloud Predictions: A Perfect Storm for 2016—The Top 5 Themes

January 14, 2016 James Watters


sfeatured-crystal-ballJoint work performed by James Watters and Josh McKenty.

When we look back at 2015, it can only be portrayed as the year of digital transformation. According to dozens of recent market surveys, think tank articles, and Wall Street analysts, the traditional enterprise must transform into a modern software company or face disruptive, digital competition. In this post, we take a look back at where 2015 has taken us and peek into the future, 2016, which is teed up to be a transformative year for cloud.

First, A Retrospective—2015 In Review

If we look beyond the past year’s unicorn obsession, an extensive number of userland innovations have been reconstructing every industry. In 2015, software was leading news everywhere and mainstreamed the sharing economy, IoT everywhere, open source in the enterprise, wearables, Apple Pay, car-to-car communication, FinTech, mobile first, big data, the industrial internet, machine learning, and cloud architectures. The list goes on and on and on. If you have consulted with economists, they say this is absolutely not another bubble—there is a fundamental and revolutionary shift in economies of scale at play.

When we sat down with CEOs this past year, we found that they are often leading the digital charge. They know that “Silicon Valley is coming,” and they know what the phrase “continuous delivery” means. CIOs have told us they are making 20 year commitments to Cloud Foundry so they can deliver on long-term, digital strategies. Most business executives are prioritizing the digital budget. They are also creating innovation outposts or co-locating business leaders and development teams within startup incubators to seed a new culture. All of this leads to new processes and new tooling.

As soon as a business points their compass in this direction, IT joins with them to begin the Cloud-Native Journey—new clouds, frameworks, architectures, runtimes, and automated processes combine into a new way of delivering software—ways that are far faster, safer, and have greater throughput. At a certain point along the journey, companies do get these pieces in place, and it is absolutely amazing to see. One of our customers has delivered 300 apps since the spring and 100 more are going into production before this coming spring—that is more than an app per day. They have a “new machine” in place, and this is what we are calling the Cloud-Native Pipeline.

The Top Five Digital Transformation And Cloud-Native Themes For 2016

This year, we’ve had the opportunity to work with hundreds of companies on the path to digital transformation—Mercedes-Benz, First Data, Ford, IDEO, and Corelogic are just a few. While each are at different stages of their journey and have unique constraints, we see the emergence of five themes that will drive digital transformation forward in 2016:

Year Of The Leapfrog: Now It Is Their Turn

Established brands face disruptive competition from startups, but these incumbent businesses still have major advantages that they can use to leapfrog ahead—namely their data, relationships, and cash flow. This will be the year they make major investments in strategic, digital capabilities. Mercedes-Benz, First Data, Ford, and Corelogic are perfect examples. Mercedes has been working with us to speed innovation cycles and develop a software company culture, helping them compete with the likes of Tesla. First Data is making Payeezy APIs available within the Spring and Pivotal Cloud Foundry ecosystems. Ford has also been working with us to become a Silicon Valley company—transforming their culture, people, and methodologies into a model for continuous software innovation. CoreLogic has also been building their innovation labs with us. Each of them are fundamentally rethinking their approach for technology, and trusting the future of their businesses on it.

This is not confined to these few name brands. In fact, across every industry, traditional companies are bringing software labs and digital innovation teams in house to leapfrog their competitors, and this will be pervasive in 2016.

The Rise Of The Chief Digital Officer (CDO)

With so much at stake, we see a new leader emerging on enterprise org charts—the Chief Digital Officer (CDO). Across customers like Humana, Corelogic, Kroger, and Lockheed Martin, the true leaders possess strong business and technical acumen. They know Google, Amazon, and or an unknown upstart like Uber can quickly become a direct competitor. In response, they are redefining their organization and culture to address this competition. Ultimately, this new class of leaders is on the hook to mesh IT and business groups into a more productive organization that can more effectively capitalize on their leadership in their markets.

With the increasing pressure to transform every company to a digital company, these leaders, called a variety of things now, are increasingly revered as strategic officers of the company. Operating at the center of the business-IT collaboration, they are in charge of the software delivery pipeline—what we are calling the Cloud-Native Pipeline. At the end of the day, it is the CDO’s job to build it, fill it with software, and measure all the data that streams back, optimizing for revenue and profit.

In 2016, all eyes will be on the CDO to usher traditional enterprises into the new digital economy.

Measuring The Cloud-Native Pipeline

Very soon, we believe the traditional app server market will collapse because of the economic benefits of the Cloud-Native Way. When something like Cloud Foundry and DevOps tooling can help companies deliver software 10x faster, there is such a huge advantage that any remaining traditional development activities will be viewed as a liability for the company. So, executives will introduce new measures. At VMware, we saw this—at some point, the CIO introduced the metric of “percentage virtualized” as an indicator of cost savings and the transition to a more efficient model.

Measurement of digital transformation will also become more prevalent in 2016, and leaders will want to know what percentage of apps are running through their Cloud-Native Pipeline.

Microservices Will Be Everywhere

To achieve maximum velocity through the Cloud-Native Pipeline, applications must be refactored or redesigned. Apps of the past just weren’t developed with the cloud in mind. They are not loosely coupled, and legacy monoliths won’t fit well in a Cloud-Native Pipeline without refactoring them as microservices. The Cloud-Native way is speedy delivery, and speed means no dependencies across features or sessions and no internal coordination to slow releases down. Apps also need to be designed for resilient operations—for doing and undoing daily deployments at the press of a button or in a completely automated way.

We have seen extreme interest in this area first hand. We’ve engineered Netflix OSS microservices to run within Spring Cloud. Our Spring Java talks and books, Cloud Foundry events, and work contributing to open source has given us a clear perspective—microservices are the molecules that make larger apps work with fast deployment cycles. Together, these permit companies to deploy software as fast as their digital-first competitors.

We expect to see a very large volume of traditional applications become microservices in 2016.

Multi-Cloud, Multi-Vendor Platforms Will Be The New Normal

Increasingly, companies are going to utilize infrastructure in data centers they don’t own and on servers they don’t operate. As well, their apps will run across several cloud environments. As this transition to cloud infrastructure happens, companies will face a decision. They can run many different processes to deploy an application to multiple environments and operating systems across different providers with radically different mechanisms for operations and control. Or, they can choose a cloud application platform that actually supports standards, portability, and interoperation across clouds and vendors. The latter is the primary way to prevent vendor lock-in, an expensive lesson from the past.

This is the vision we had for Cloud Foundry upon inception—if an application runs on Cloud Foundry in your data center, it runs on Cloud Foundry on AWS, Azure, Centurylink, or on any other place you may find a Cloud Foundry environment running. It provides enterprises with a much smoother transition to the cloud. In other words, you can truly write your app once and run it anywhere. This promise from the past is actually happening—we see it regularly.

The Cloud Foundry Foundation’s brand new certification program provides a guarantee that portability and interoperability exist not just across Pivotal distributions of Cloud Foundry, but also any other Certified vendor as well. As it was announced late last year, CenturyLink, HPE, Huawei, IBM, SAP, Swisscom, and Pivotal are certified. These standards also give developers a consistent experience across clouds and vendors while reducing risk, increasing innovation, and driving down costs.

We expect to see an explosion of Cloud Foundry Certified providers in 2016.

See You Next Year!

The story for 2016 is clear, and we invite you to follow our thinking or watch our tweet stream to stay on top of it’s progress.

Incumbents are swinging back at the new school startups. To do it, new organizations, leaders, and cultures are being formed. Powering these new orgs are new processes and tools—Cloud-Native Pipelines, microservices, and multi-cloud, multi-vendor application platforms. Without these things, we just don’t see a way to compete on digital growth strategies.

Happy 2016!


About the Author

James Watters

James Watters is the Senior Vice President, Strategy of Pivotal. James serves as our Senior Vice President, Strategy, where he has helped shepherd Pivotal Cloud Foundry into a highly disruptive enterprise software business, and helped led our efforts to bringing our cloud-native platform to the world. Prior to joining Pivotal, James held leading product roles at VMware and Sun Microsystems.

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