Show Notes
Highlights from this episode include:
- Key market drivers that are causing Cloud Comrade’s clients to containerize applications — including the role that the global pandemic is playing.
- The pitfalls of approaching cloud migration with a cost-first strategy, and why Andy doesn’t believe in this approach.
- Common misconceptions that can arise when comparing cloud TCO to on-premise infrastructure.
- How today’s enterprises tend to view cloud computing versus cloud-native. Andy also mentions a key requirement that companies have to have when integrating cloud services.
- Andy’s thoughts on build versus buy when integrating cloud services at the enterprise level.
- Why cloud migration is a relatively safe undertaking for companies because it’s easy to correct mistakes.
- Why businesses need to re-think AI and to be more realistic in terms of what can actually be automated.
- Andy’s must-have engineering tool, which may surprise you.
Links:
Transcript
Emily: Hi everyone. I’m Emily Omier, your host, and my day job is helping companies position themselves in the cloud-native ecosystem so that their product’s value is obvious to end-users. I started this podcast because organizations embark on the cloud naive journey for business reasons, but in general, the industry doesn’t talk about them. Instead, we talk a lot about technical reasons. I’m hoping that with this podcast, we focus more on the business goals and business motivations that lead organizations to adopt cloud-native and Kubernetes. I hope you’ll join me.
Emily: Welcome to The Business of Cloud Native. I'm Emily Omier, your host, and today I'm here with Andy Waroma. Andy, I just wanted to start with having you introduce yourself.
Andy: Yeah, hi. Thanks, Emily for having me on your podcast. My name is Andy Waroma, and I'm based in Singapore, but originally from Finland. I've been [unintelligible] in Singapore for about 20 years, and for 11 years I spent with a company called SAP focusing on business software applications. And then more recently, about six years ago, I co-founded together with my ex-colleague from SAP, a company called Cloud Comrade, and we have been running Cloud Comrade now for six years and Cloud Comrade focuses on two things: number one, on cloud migrations; and number two, on cloud managed services across the Southeast Asia region.
Emily: What kind of things do you help companies understand when you're helping with cloud migrations? Is this like, like, a lift and shift? To what extent are you helping them change the architecture of their applications?
Andy: Good question. So, typically, if you look at the Southeast Asian market, we are probably anywhere between one to two years behind that of the US market. And I always like to say that the benefit that we have in Southeast Asia is that we have a time machine at our disposal. So, whatever has happened in the US in the past 18 months or so it's going to be happening also in Singapore and Southeast Asia. And for the first three to four years of this business, we saw a lot of lift and shift migrations, but more recently, we have been asked to go and containerize applications to microservices, revamp applications from monolithic approach to a much more flexible and cloud-native approach, and we just see those requirements increasing as companies understand what kind of innovation they can do on different cloud platforms.
Emily: And what do you think is driving, for your clients, this desire to containerize applications?
Andy: Well, if you asked me three months ago, I probably would have said it's about innovation, and business advantage, and getting ahead in the market, and investing in the future. Now, with the global pandemic situation, I would say that most companies are looking at two things: they're looking at cost savings, and they are also looking at automation. And I think cost savings is quite obvious; most companies need to know how they can reduce on their IT expenditure, how they can move from CAPEX to OPEX, how they can be targeting their resources up and down depending on the business demand what they have. And at the same time, they're also not looking to hire a lot of new people into their internal IT organization. So, therefore, most of our customers want to see their applications to be as automated as possible. And of course, microservices, CI/CD pipelines, and everything else helps them to achieve that somewhat. But first and foremost, of course, it's about all services that Cloud provides in general. And then once they have been moving some of those applications and getting positive experiences, that's where we typically see the phase two kicking in, going into cloud-native microservices, containers, Kubernetes, Docker, and so forth.
Emily: And do you think when companies are going into this, thinking, “Oh, I'm going to really reduce my costs.” Do you think they're generally successful?
Andy: I don't think in a way that they think they are. So, especially if I'm looking at the Southeast Asian markets: Singapore, Malaysia, Thailand, Philippines, Indonesia, and perhaps other countries like Vietnam, Myanmar, and Cambodia, it’s a very cost-conscious market, and I always, also like to say that when we go into a meeting, the first question that we get from the customers, “How much?” It is not even what are we going to be delivering, but how much it's going to cost them. That's the first gate of assessment. So, it's very much of an on-premise versus clouds comparison in the beginning.
And I think if companies go in with that type of a mindset, that's not necessarily the winning strategy for them. What they will come to know after a while is that, for example, setting up disaster recovery systems on an on-premise environment, especially when a separate location is extremely expensive, and doing something like that on the Cloud is going to be very cost-efficient. And that's when they start seeing cost savings. But typically, what they will start seeing on Cloud is a process cost-saving, so how they can do things faster, quicker, and be more flexible in terms of responding to end-user demands.
Emily: At the beginning of the process, how much do you think your customers generally understand about how different the cost structure is going to be?
Andy: So, we have more than 200 customers, and we have done more than 500 projects over the six years, and there's a vast range of customers. We have done work with companies with a few people; we have done companies with Fortune 10 organizations, and everything in between, in all kinds of different industries: manufacturing, finance, insurance, public sector, industrial level things, nonprofits, research organizations. So, we can't really say that each customer are same. There are customers who are very sophisticated and they know exactly what they want when going to a cloud platform, but then there are, of course, many other customers who need to be advised much more in the beginning, and that’s where we typically have tools and processes in place where we can assess what is the right proposed strategy for our customers. And then we discuss these ideas in our workshops, and then let the customer decide what will be the best way for them forward, [unintelligible] cost, timelines, and then also potential product risks.
Emily: Are there any common themes around things that companies tend to not understand correctly, or misconceptions that let's say, just come up often; maybe not all the time, but frequently?
Andy: Yeah. I think the most common misconception is that we work a lot with AWS, Microsoft Azure, Google Cloud, Alibaba Cloud, and other cloud platform providers. And typically, when customers are looking to migrate across, they might have virtualized their on-premise environment, and they're looking at the virtual machine to virtual machine cost comparison: how much does it cost them to run one virtual machine on on-premise versus running it on clouds. And when they do that, usually the TCO calculations, they will start breaking down the cost the customer's not taking into consideration all the security that they get with these cloud platforms, the network aspects of it, the compliance aspects, like for example, compliance certifications, regulatory aspects, and all of these things. So, if the customer was to a total TCO of what they're getting on cloud versus what they're getting on their on-premise environment, then they would actually see the huge cost-saving benefits that they are getting. But, at the moment, many of the customers just look at virtual machine to virtual machine comparison, which in our opinion, is wrong.
Emily: So, it can be really hard for companies to do this, sort of, apples to apples comparison because they're not taking everything into account?
Andy: Yeah, to be fair to them, many times you only start getting some of those benefits, of Cloud if you completely decommission your on-premise data center, but if you still the on-premise data center costs and you have to cloud costs, then you can't fully exploit the benefits of Cloud.
Emily: Do you see any common misconceptions related to how you would have answered three months ago, where related to innovation, or agility?
Andy: I think we have seen a huge influx of projects coming to us right now, and I see that a lot of companies who have been sitting on the fence in the previous years, they have now realized that the economic situation is changing very, very rapidly. And it doesn't matter if they have been the market leader, or one of the challengers, they need to do something. And previously, many companies felt that the best approach would be to go to, maybe, one of the large consulting providers, and just get something from them regardless of the price, or alternatively, go and shop around with 10, 15, 20 different vendors and try and squeeze the best price out of them, and [unintelligible] the implementation at the lowest possible cost. I think now, with the pandemic and economic situation, I feel that many companies have been rationalizing their IT strategy, their strategy they’re suspending, and what they are doing is that they are trying to find what is the most suitable vendor given the current situation, forego lengthy RFP processes, do something quickly on Cloud, do some kind of TOC, if it looks good for them, then let's just get going, don't waste internal resources, don't waste external resources, and try to achieve something quickly.
Emily: Do you feel like, in general, your clients tend to understand the difference between just cloud computing and cloud-native?
Andy: Um, I think that definition is probably hazy. I think it’s probably also maybe somehow hazy for me, [laughs], and I think in some cases, the cloud platform providers want to keep it that way as well. Typically, the customers that we are dealing with is relatively traditional enterprises, and we always advise them that rather than doing a lot of transformation on on-premise first, why don't we just help you to lift and shift and move you to cloud, and once you're on Cloud, you can start doing all kinds of experimentation there with cloud-native services. And it's not just about moving these companies to cloud-native services, which have certain benefits, like for example, serverless technologies that reduces the costs a lot, it also requires the companies to have a pretty clear understanding of their internal processes, and then also, critically, an understanding of the roles and responsibilities within those organizations because when you start deploying software and applications in a different way onto a cloud platform, the technology is one part of it, but the process and people is the other part of it, and if the organizations internally are not ready to change the process, they won't be able to reap the benefits of cloud-native services, otherwise.
Emily: And how challenging do you think it is for companies to do the sort of, organizational work to match this sort of change in the way they work together with a different technology?
Andy: I think it is very challenging, and we see a big skill gap there. Many companies, even large companies, they might have issues of attracting talent. And typically, one of the reasons is that even if the companies are wanting to do something on Cloud, they typically choose one Cloud Platform only, and many IT people who are wanting to get into this space or wanting to be in cloud computing. They don't want to focus just on one cloud platform. They want to be focused on multiple different platforms, and they want to understand what are the differences between, let's say, AWS, Azure, Google Cloud, and other providers, and that's why people who are really skilled, they probably end up in consulting companies like ours and other companies. And that's, I believe, is the whole reason of our existence is that many companies cannot do these things in-house, and therefore, they would like to outsource the initial work, and then also the ongoing work terms of managed services to the companies like us.
Emily: Do companies often ask you, “Should we build this internally? Should we outsource this for somebody else to do? Should we buy a tool that does this automatically?” Is that a question that they have, and how do you sort of evaluate an answer?
Andy: [unintelligible] this depends a little bit on the industry. So, for example, there are a number of so-called unicorns, in the region, and these companies have very big IT departments, in-house development department, in-house, they might have thousands of developers, and they feel that the best way for those companies to create differentiation in the market is to build by themselves. But we deal also with a lot of, like I mentioned before, with traditional manufacturing companies, for instance, and there they will go for packaged applications such as SAP, Oracle, .NET applications, and I think that's the best approach for them, rather than start building something in-house, which would not necessarily make sense for them, given the fact that these costs are not in IT industry, but they are in, let’s say, in food and beverages industry. But they've certainly built, and like to build some services on top of those traditional software packages, and analytics and analytical reports, for example, predictive forecasting, and that's something that will bring about uniqueness to their organization, to their process, and competitive advantage. And that are mostly things that they're exploring on the Cloud, and weighing those options for that make sense to buy something prebuilt, or develop it in-house, or outsource it to some organization.
Emily: What do you think your clients tend to be pleasantly surprised about? What ends up being a lot easier than they expect?
Andy: First of all, IT has always been notorious for failed projects. There has been too many of those, and if you look at Cloud implementations, we really haven't had any. I think Cloud is safe in the sense that even if you have estimated, these are the compute requirements, or the storage requirements, or whatever it might be at the initial phase, and it turns out that assessment is wrong, then it's very easy to actually rectify that, and change the services, and if we brought up, let’s say, an SAP on a certain types of instances and two days later, we find out that no, this instance was too big or too small, we can easily go and change that. That also, if I'm taking that SAP example, SAPs customers are typically wanting to move to SAP HANA at some point of the time, but they're unsure whether that makes sense for them from the organizational point of view and business point of view, and we tell them that why don't you just move to Cloud, and then we can provision new instances with SAP HANA. We can migrate your test environment to an SAP HANA environment, and then you can give it a go. So, Cloud allows you to do a lot of this experimentation, which then leads back to the pleasant surprise that there aren't really any failed IP projects, or even if they are failures, the failures are quite minute compared to some of the IT failures they might have seen in the past.
Emily: Interesting. That's a pretty big upside.
Andy: Definitely it is, and we have had some tough, difficult implementations in the past, big migration projects, but with the [unintelligible] from the customer side, and also internal resources, we have always been able to overcome them. And then, even if things are heated at some point of time, usually at the end of the day, the final project sign-off meetings are relatively pleasant and joyous.
Emily: Do you see a major difference in strategy by industry? So, a technically sophisticated company versus a traditional manufacturing company, are they going to follow dramatically different strategies to build competitive advantage using technology?
Andy: Mmm. So, we are really focused on the infrastructure, so when it comes to infrastructure, mine services, [security mine] services, and I'm looking at the infrastructure layer, typically the customers either just choosing to use something on Linux was choosing to use something on Windows. Maybe they use some server technologies and others, but from that point of view, you can't really tell, if you're looking to a customer's cloud console, whether they are a manufacturing company, or whether they are a finance organization. So, in that sense, there is no difference. Where the differences come in, though, is that we, for example, look at financial industries like banks, and insurance companies, that's where the governmental rules, and regulations, and compliance comes in, and there's a lot of paperwork outside of the cloud implementations that need to be done. There's a lot of guidelines that we need to follow, how to provision the infrastructure to be compliant to, let’s say, banking or insurance regulations. That's one industry which is different from the others.
Healthcare in the US, for example, there is HIPAA compliance, so how HIPAA compliant applications need to be built all the way from ground up, so that's also a significant difference. Third one is public sector. And so, like I mentioned before, almost half of our business is coming from public sector, and that's where, for instance, security, and compliance is extremely important, and it sometimes almost goes overboard to a certain extent, but I can understand why. And the security and networking requirements are extreme, and that’s probably, for me, the most different industry out of all of them, customer-based that we have.
And then the last one is multinational companies. Multinational companies have to adhere to their own IT policies, and audit requirements and they also have, many times, a lot of requirements that are relatively unique that they need to follow. Those are also different types of projects from the rest of them. Whether it's a media company, whether it's a manufacturing company, whether it's a research company or organization, I don't see too much differences in the way that they put the demands, and requirements on the infrastructure platform.
Emily: And what do you say is something that your clients sometimes come to you looking for help with, that you still, kind of, don't have a great answer for?
Andy: Machine learning. AI. A lot of companies talk about it, a lot of companies have been pitched about it, a lot of companies come to us, and said we want to do a machine learning project, and I said, “Well, fine. But what do you want to get out of those machine learning algorithms, and what do you want to build?” And essentially, once you start drilling down, what they want to have is this one red button when they press, and everything else can happen magically underneath to resolve all of their business problems.
And I think all of us know that that's not how machine learning works. That's not how AI works, or at least it doesn't work like that right now. So, the expectations that vendors are setting what can be done with machine learning and AI, I think need to be revised. And also, customers need to be a bit more realistic in terms of the expectations what can be automated, what can be done through these new technologies versus what they've been doing in the past.
Emily: Basically, if you want machine learning, you have to know it won't answer all of your questions. You have to know what you want answered, otherwise, you're not even asking the right questions.
Andy: Pretty much. And also, machine learning, just like, also, analytics is that you require vast data sets that need to be ready from the organization, and the data sets need to be relatively clean as well, otherwise, it's hard to come up with models that are accurate, and the old fashioned saying of garbage in, garbage out is also very true, not just in analytics space, but also in the machine learning space.
Emily: Is there anything else that you'd like to add about the topic of cloud-native and what companies get out of it in a business sense?
Andy: I believe that we are living right now in 2020 in a very unique time, and at some point of time, when we start looking back, maybe in a few years from now, we’ll start seeing that actually cloud-native started rocketing and taking off like no one expected in this year, is right now, it's happening. Every company is focusing on it one way or the other, and I think those companies that are taking advantage in this difficult economic times will be the winners once we come out of this economic and pandemic situation.
Emily: I've actually heard that sentiment from many people, so that makes me think it's probably correct. Oh, my last question for you—I almost forgot—what is your can't-live-without engineering tool? So, is there a tool that you would find it difficult to impossible to do your job without?
Andy: It still, after 30 years, its email. So, from that point of view it’s, you know—but if I'm looking at our team, and what they're really focusing on right now, so working on things, like for example, Terraform, or an AWS site on CloudFormation tools, and that brings about automation. And the difficulty, sometimes, in Cloud is that there's so many different things that you can do. So, customers have a perception, when they go to Cloud, they do a one-off project, and then they're kind of done and dusted, and off they go and think about the next thing, but there’s new services coming in all the time, and there is drift that happens on the cloud platform in terms of security, and ports, and network settings, and instances that gets loaded up and everything else, so you can only manage the cloud platform if you manage the [unintelligible] to automation. And I think that some of the [conflict] tools right now for us are starting to become tools like Terraform, from HashiCorp, CloudFormation from AWS, and similar kind of services from Google, and Microsoft that allows us to keep the platform in the kind of a compliance that the customer originally intended the platform to be.
Emily: Where could listeners connect with you, or follow you?
Andy: We have a pretty strong presence on
LinkedIn. So, if you just search for Cloud Comrade on LinkedIn. So, that's where we post news about our industry, and our company, and our people, and our customers on a daily basis, and I would be looking forward to also connecting with your listeners.
Emily: Well, thank you so much, Andy. That was very interesting to learn about what you do, and the types of companies that you work with, and what the Southeast Asian market, kind of, looks like.
Andy: Thank you so much, Emily, for your invitation.
Emily: Thanks for listening. I hope you’ve learned just a little bit more about the business of cloud native. If you’d like to connect with me or learn more about my positioning services, look me up on
LinkedIn: I’m Emily Omier, that’s O-M-I-E-R, or visit my website which is
emilyomier.com. Thank you, and until next time.
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