The cloud-native app economy

The cloud-native app economy

Businesses and customers alike can reap huge benefits from increasingly powerful service-based model

The cloud-native app economy
We have now entered Cloud 3.0, which is all about experience, users and customer service.

Cloud-native platforms will serve as the foundation for more than 95% of new digital initiatives by 2025 -- up from less than 40% in 2021, the IT research company Gartner predicted.

Progression to the cloud has been a gradual process for many firms. That progression -- and let's call it by its proper name of migration -- has been a process of prototyping, testing and in some cases experimentation that has spanned many years.

With so many elements of the cloud having evolved from their early beginnings, we can now reap the benefits and exploit the new opportunities that the service-based cloud model can give us.

This is not just cloud, this is cloud-native, cloud-first and native cloud-application first. This is the cloud-native application economy.

So how does the central technology proposition in this new arena work and what should firms be doing to get the most out of the way they compute today?

Cloud 1.0 was an IT play: We need to remember that cloud has been around now for quite a while, but this is cloud-as-a-platform that can deliver the increasingly high-performance needs of the IT department.

At the same level, the IT function wants to be able to depend on the cloud for flexibility, scalability, security and the chance to gain a global reach from the massively connected data centre systems that form the planet's cloud backbone.

The more modern notion of the cloud -- or more specifically cloud-native -- is really all about unlocking the true value of cloud at the application level.

Cloud-native applications by their very nature are composable, meaning they can be formed from a selection of best-of-breed components to bring together an interwoven fabric of combined services and functions in the most efficient mix, at the most relevant time and at the most pertinent point of delivery depending on an application's intended use case.

The modular and changeable nature of cloud-native applications means they can be changed rapidly and at massive scale when needed. To illustrate this, if we think about the disruptive effects of the pandemic, we have seen taxi firms reinvent themselves as restaurant delivery services, we have seen pharmacies up their game to suddenly offer community support services, we have seen drinks manufacturers with bottling plants rapidly change their business models to offer hand sanitiser production, and so on.

The reality behind these innovations are firms that already operated with cloud-native application backbones. These are the businesses that had the DNA to exhibit true cloud-native flexibility.

Cloud for the customers: If cloud era 1.0 was there for the IT function, then cloud 2.0 started a move towards the hybrid-cloud, multi-cloud mix that we now accept as normal.

This all paved the way for cloud 3.0, which is all about experience, users and customer service.

At one level, the cloud now works to provide application services for customers. But at the same time, employees have now rightly come to expect the same level of cloud-native app economy services themselves in the workplace.

It's a natural extension and it's a reality that forward-looking organisations should be aware of.

Front, middle, back-office cloud: When we look at experience, we need to think about front office (customers), middle office (the organisation itself) and back office (the IT function), which all need to work in unison to provide the same level of transparency throughout.

Services emanating from the cloud-native application economy need to be able to scale to the demands of the market without users (inside or outside the organisation) being able to notice any degradation of performance at any level.

Directly stemming from these fundamentals is personalisation power and the ability to deliver granular adjustments for each user in an agile and adaptable way.

Being able to capture the exact segment of the customer market that an organisation wants to target, for example, was simply not possible at the granular level that it is today before the personalisation control offered by the cloud.

IT from cost centre to profit centre: Looking forward, a new level of business ambition is emerging. Previously, IT was relegated to being a cost centre and was often regarded as a loss on the balance sheet.

Today we are seeing software and the business define each other -- software defines the business and business defines the enterprise software stack that we build, deploy, operate, manage and maintain.

This means IT has evolved to the point of being a profit centre -- or at least it can be if organisations embrace the power that they can wield inside the new cloud-native application economy.

With all these thoughts on board, we can now create new go-to-market strategies that innovate in critically new ways.

We can think about the agility and adaptability that some companies were able to champion and exhibit through the pandemic, and we can hold onto that energy and create a more flexible future form of trade inside the cloud-native application economy without compromise.

But perhaps most importantly, we should act on the opportunity business has to embrace cloud-native applications in order for them to transform and pivot better. That is difficult with traditional IT, but high-performance, low-code offers a true alternative in making this a reality -- and at the pace that business requires.

Termsak Virakachornpong is regional vice-president for Southeast Asia of OutSystems, a low-code development platform specialist.

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