The Cloud Native Application Economy

Gartner predicts that 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.

Progression to the cloud has been an undeniably gradual process for many firms. That progression - and let's call it by its proper name i.e. migration - has been a process of prototyping, testing and in some cases experimentation that has spanned many of the post-millennial years that we have all now lived through.

With so many of the early stage elements of cloud now having so manifestly evolved from their early beginnings, we can now reap the benefits and exploit the new opportunities that the service-based model of cloud 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 with us by now for quite a while, but this is cloud-as-a-platform that can deliver the increasingly high-performance related needs of the IT department. At the same level, the IT function wants to be able to depend upon the cloud for flexibility, scalability, security and the chance to gain a global reach from the massively connected datacentre systems that form the planet's cloud backbone.

The more modern notion of 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, by which we mean that 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 upon an application's intended use case.

The modular and changeable nature of cloud-native applications means they can be rapidly changed at high velocity 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 services… and so on, the list (as we all know) is immense.

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 today. This all paved the way to cloud 3.0 (there could be more stages by differently graded definitions, but you get the point), which is all about experience, users and customer service.

At one level, the cloud now works to provide application services for customers. But equally and at the same time, employees have now rightly come to expect the same level of cloud-native application economy services themselves in the workplace. It's a natural extension and it's a reality that forward-looking organisations should be aware of from the start.

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 and in concert 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 cloud-native fundamentals is personalisation power and the ability to now 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, was simply not possible at the granular level that it is today before the personalisation control offered by the cloud.

Avoiding application backlog

In this scenario, which is known as application backlog, we see systems becoming potential fragile, brittle and unsecured. This means that new features and functionalities almost never get to customers, users, intermediaries and partners. This means IT focuses on fixing existing software in a hole-patching process that inevitably leads to leaks.

We can circumvent application backlog by using high-performance application platform tools with low-code functionalities to tackle multiple vectors that will transform a business towards a path to cloud-native. At this point, applications can be built much more rapidly on a high-performance platform using the software engineering talent that an organisation already has.

IT from cost to profit centre

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

Today we work at a time when we see 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 that IT itself 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, we can hold onto that energy and now 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.

About OutSystems

OutSystems was founded in 2001 with the mission to give every organization the power to innovate through software. The OutSystems modern application platform's high productivity, connected, and AI-assisted tools help developers rapidly build and deploy a full range of applications anywhere the organization requires. With more than 435,000 community members, more than 1,500 employees, 350 partners, and active customers in 87 countries and across 22 industries, OutSystems has achieved global scale while helping organizations change the way they develop applications. Visit us at www.outsystems.com or follow us on Twitter @OutSystems or LinkedIn at https://www.linkedin.com/company/outsystems.

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