Cloud for industry sectors calls for co-innovation
The verticalization of cloud computing will hinge on alliances in which service providers, hyperscalers and customers collaborate on industry-specific platforms.
Partners deploying the cloud for industry sectors aim to make it a team activity.
The technology's traditional one-size-fits-all-industries proposition has changed course amid digital transformation. More businesses view cloud computing as a way to reinvent themselves, rather than strictly a source of cost or efficiency improvements.
"Enterprises who have realized significant benefits from cloud adoption are the ones who have aligned their technology strategy with their most pressing digital business transformation needs," said Sudhir Kesavan, global head at Wipro FullStride Cloud Services, a cloud transformation business. "It is this set of clients who are now leading the adoption of industry cloud."
But doing so means clouds must tightly fit specific uses cases and compliance duties within a vertical market. Public cloud providers are taking steps in that direction. But their offerings typically require at least some tweaking, if not significant custom development, to make them viable as industry clouds.
Collaborating on industry clouds
Consultants and service providers point to co-innovation as the appropriate response. That is, collaborating and investing with customers, cloud providers or, possibly, both types of organizations to creatively solve a problem beyond the scope of a single entity. Market research firms such as Gartner and Forrester also point to co-innovation as a key partnering trend for handling complex IT problems.
Industry-specific clouds fit that profile.
"This initial wave to create industry clouds is going to be heavily co-innovation," said Andy Thompson, managing director and industry cloud lead, Technology Strategy and Advisory at Accenture. "That is not just co-innovation with hyperscalers -- it is with clients, as well, who are responding to disruption, responding to key drivers and choosing to invest."
Nicholas Merizzi, principal in Deloitte Consulting's Cloud Strategy offering, cited a similar approach to industry-cloud building, which he called co-creation. In this approach, hyperscalers, SaaS providers and 5G companies offer the building blocks for cloud. Deloitte works with its customers to create specific applications and business processes on top of that foundation.
"I do see a lot of that co-creation happening," Merizzi said.
In addition to third-party resources, Deloitte provides its own library of assets and prototypes to help clients meet their industry needs. The consultancy's intellectual property includes reusable data models, workflows and APIs.
"These can be assembled together and taken to market with clients within specific verticals," Merizzi said.
For some projects, Deloitte partners with a client and a hyperscaler to bring to life a cloud for industry. The various forms of industry cloud partnering tend to focus on outcomes, Merizzi added. Outcome-based contracting links some or all of a service provider's payment to meeting performance objectives such as achieving faster processing times or enabling a new product launch for a client.
Wipro, meanwhile, uses cloud provider partnerships to facilitate industry cloud projects. "We are partnering with all the hyperscalers, and we plan to make industry-specific cloud solutions a key cornerstone of our partnership with them," Kesavan said.
The company builds its own IP, but also buys, partners with and invests in third-party IP offerings to create industry clouds.
"We believe that the future of industry cloud solutions will be built around ecosystems versus a single homogenous stack," he said.
Wipro, with headquarters in India and New York, kicked off a 3-year, $1 billion investment in cloud technologies and partnerships in 2021.
Trianz, a digital transformation consulting firm based in Santa Clara, Calif., offers reusable frameworks, accelerators and software for migrating on-premises applications and expanding data sciences capabilities, among other services, said KC Sreeram, vice president, Cloud and Infrastructure Practices at Trianz.
The company works across a range of cloud platforms to create its industry cloud IP. For example, Trianz was among a handful of partners to build on AWS' Athena Federated Query (AFQ) Extensions, according to Sreeram. Trianz's AFQ offering and its soon-to-be-released data mesh platform will provide industry-specific cloud analytics.
Niches within niches
Co-created industry clouds will tend to be highly focused. Customers want clouds to suit their needs at the sector or subsector levels within an industry, as opposed to a broader industry cloud, Merizzi said. A cloud specifically designed for capital markets, versus a cloud for banking, is what they have in mind.
"We're starting to see those types of solutions coming a lot more to the forefront," he said.
Accenture's Thompson said he envisions clouds for sub-industries or specialized value chains that may span several industries. In a similar vein, Merizzi cited the reinvention of value chains, or parts of value chains, as a role for industry clouds. He pointed to the example of sports leagues, which are embedding sensors in players' gear and relaying the signals back to a central analytics platform in the cloud.
"From there, visualization layers and a set of APIs are built to track and study players' behaviors and performance in ways that were never available in the past," Merizzi said.
As for specific industries, financial services, manufacturing and healthcare are among the sectors to watch. Regulated markets such as the U.S. federal government also show strong demand for industry-specific clouds, said Paul Wilkinson, executive vice president for 1901 Group, an MSP in Reston, Va., and a wholly owned subsidiary of Leidos.
The Federal Risk and Authorization Management Program (FedRAMP) sets standards for cloud adoption in the federal sector. Cloud service providers -- from the hyperscalers to smaller IT services providers -- must implement FedRAMP security controls to conduct business with agencies.
A large-scale procurement for an industry cloud is in the works. The Department of Defense's Joint Warfighter Cloud Capability (JWCC) is a multi-vendor contract with an estimated value of $9 billion over five years, Wilkinson said. The DoD in November 2021 selected AWS, Google, Microsoft and Oracle to compete for the deal. JWCC replaces the Joint Enterprise Defense Infrastructure program, which the Pentagon cancelled in July 2021.
The U.S. intelligence community also has an industry cloud -- the Commercial Cloud Enterprise (C2E) -- to address classified data and systems. "C2E is like JWCC in that it is a multi-vendor, cloud contract," Wilkinson noted.
Industry cloud's next phase
While specialized clouds can spark business transformation, they may prove too much of a good thing. "We have to make sure that some of that co-creation is universally leveraged across an industry to be beneficial," Merizzi said. "We don't want a whole bunch of silos."
Over time, however, industry clouds suitable for a particular sector will become generally available for a wider number of customers. Those clouds will be ready-to-run and won't require co-innovation or co-creation, industry executives said. A combination of hyperscalers and enterprises with long histories in the cloud will generate such offerings.
"We will see an increasing number of industry cloud solutions available," Thompson said. "As they mature, this model of co-innovation to create them will flip to consumption of industry clouds," he added.
The consumption phase will provide democratized access to industry clouds but will also change the nature of differentiation. As co-created clouds become commoditized, the secret vertical sauce will move higher up the cloud stack. At that point, differentiation will stem from the unique AI algorithms layered on an industry cloud, according to Thompson. Those algorithms will illuminate a client's data and create novel customer experiences, he said.
An industry cloud in healthcare, for instance, could harness several converging trends: emerging standards for secure, longitudinal patient records; innovative technology such wearables; healthcare data exchange standards; and new data types including genomic and behavioral varieties. That data could be streamed continuously into algorithms to drive more useful and timely insights. Those insights, in turn, could inform a patient's discharge plan, which might call for digital therapeutics to be delivered via smartphones or other consumer devices.
Such initiatives will take time to solidify as the initial co-innovation phase of industry clouds will take years to unfold. Partners acknowledge the exact shape of clouds to come remains unknown.
"What is commodity today and what is differentiated today will look different tomorrow," Merizzi said. "The bar constantly changes at the rate of innovation."