Welcome to the Third Wave of cloud computing. A wave that is centered on connectivity and engagement, that has been accelerated by a global pandemic and a rush into the digital world.
The cloud’s latest evolution is more technically advanced than its predecessors, larger and more complex. Now in 2022, the benefits of cloud computing have been proven and it’s become the foundation for most digital transformation efforts. By next year, spending on public cloud services is expected to reach $482 billion.
But “the cloud” isn’t a magical utopia that you just arrive at one day. You need people to design, implement, manage and evolve those systems – especially as the landscape becomes more complex and companies become more dependent on cloud providers.
Let’s take a look at how to select that advisory help for cloud growth. But first let’s fully understand today’s Third Wave.
What is the Cloud’s Third Wave?
The biggest difference in the Third Wave is the cloud’s maturity. Customers are no longer new to the cloud. They have seen the speed and agility it can offer, which the pandemic proved is key to survival. They no longer have to be convinced.
When cloud computing (or Software-as-a-Service) first came into our vernacular in the early 2000s, it was a complete paradigm shift. The biggest value driver then was productivity and ease-of-use, and most projects were at the departmental level or within small to medium businesses.
The Second Wave (roughly 2010-2020) was marked by the rise of Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) technologies, and increasing enterprise adoption of the cloud. Larger companies saw these platforms as a way to lower costs and get out of the data center game, while new technology providers saw them as a way to get up and running fast with new solutions.
As we enter the Third Wave, the cloud is exceptionally diffuse and complex. There isn’t one winner. At its core, Third Wave means that multicloud and hybrid cloud environments are the norm. A 2021 survey of 380 IT leaders conducted by IBM found that 95 percent of respondents are looking to adopt public, hybrid, or private cloud strategies, and they’re doing so aggressively.
Finding Help with the Third Wave
As customer demand increases and cloud vendors proliferate, so too does the number of strategy firms, integrators, digital consultancies and managed service providers vying to serve those markets. This is a double-edged sword for customers.
On one hand, more choice is a good thing. On the other hand, finding the right consultancy to guide a particular business, in a particular industry, which can help them get the most out of these platforms is becoming increasingly difficult.
Firms that can best serve customers in the Third Wave excel in three categories:
- Their team’s technical capabilities
- The way they deliver their services
- How they run a business
These areas have always been important when choosing a partner, but they look a little different in the Third Wave.
According to the World Economic Forum’s 2020 Future of Jobs report, demand will continue to increase for roles such as data scientists, AI/ML specialists, robotic engineers, software developers and digital transformation specialists. Service partners know their success lies in having team members with these capabilities and having a methodology to grow and expand them over time because of how fast technology is changing.
The best (and most in-demand) service firms will also have expertise across a growing array of disruptive technologies, from machine learning (ML) and artificial intelligence (AI), to Robotic Process Automation (RPA) and integration, to cybersecurity and blockchain – just to name a few.
While the best firms typically specialize in one of these areas, when it comes to digital transformation, it’s important to have expertise across many of these areas and to be able to apply them across existing hybrid environments.
While technical skills might make the headlines, it’s the firm’s ability to apply them in the business that really matters. This requires industry and business knowledge, as well as the soft skills and capacity to help clients through the journey.
Third Wave Delivery Models: Tech-Enabled and Managed Services
It’s not just what a services firm delivers that has evolved, it’s also how those capabilities are brought to market and applied within customers. Gone are the days of big-bang projects that take three years. The world and customer expectations change too quickly.
Insight into specific business and regulatory requirements is now a must for most customers. While industry-specific expertise has always been important, most cloud consultancies of the past were horizontally focused. This mindset is changing.
Third Wave consultancies should be able to demonstrate deep vertical market expertise and the ability to customize “off-the-shelf” vendor cloud solutions to address critical industry-specific business processes.
Key point: Third wave cloud consultancies are expanding in two additional areas: tech-enabled and managed services.
The trend toward tech-enabled services started during the Second Wave, but recently software is driving a larger portion of revenue. The ability to automate recurring tasks through software and provide pre-packaged accelerators to get customers to value faster will become even more important as service providers struggle to recruit and retain technical talent.
Demand for managed services is also growing as organizations digitize and look to offload more of the “run” part of their business operations. In the past, managed services have been an add-on or focused primarily on customer support.
Today’s managed services offer customers guaranteed access to scarce talent so they can continue innovating, and peace of mind that their systems are secure, managed well and ready for what’s next.
Also see: Top Digital Transformation Companies
Third Wave Business Operations: Socially Aware
Last but certainly not least is the way Third Wave consultancies operate as a business, especially as it relates to how they recruit, manage and retain global talent. According to Korn Ferry, there could be a global shortage of more than 85 million tech workers by 2030, and we’re already seeing this play out in today’s talent wars.
Succeeding in this work environment means firms must rethink their recruitment and talent management processes, and appeal to the way their workforce and the next generation workforce wants to work. People-based firms must be far more mission-driven, diverse and socially responsible than they’ve been expected to be in the past. It’s no longer a “nice to have,” it’s a requirement.
Consultancies who build teams that are inclusive and diverse will be more capable of responding to the varying needs and expectations of customers spanning different cultures and geographies. A 2021 McKinsey & Company report found companies are 21 percent more likely to outperform their peers in EBIT (earnings before interest and taxes) margins. Furthermore, 27 percent are more likely to outperform peers in long-term value creation if they have higher diversity levels worldwide. Consultancies who have achieved full-team diversity and built a value-based corporate culture will be more likely to achieve long-term success.
Finally, the shift to a more globalized, remote workforce comes into play. Consultancies who invest in programs, tools and incentives to facilitate and reward collaboration, communication and connectivity across the organization, their partner ecosystem, and their customer base will be in a better position to deliver on their promises.
Also see: DevOps, Low-Code and RPA: Pros and Cons
Look Beyond What Worked in the Past
In summary, if you are a customer looking for a cloud partner to help you navigate and succeed in the Third Wave, don’t settle for what has worked in previous cloud eras.
Seek out service organizations that focus on outcomes, not output. Firms that put people at the same level as profits. Firms that have domain expertise and disruptive technical skills, but also the ability to apply them for real world business impact. Look for firms that understand the world has changed and can prepare customers for what’s next.
About the Author:
Chris Barbin, Founder and CEO, Tercera