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How industry cloud platforms are shaping the future of business applications

More than half of enterprises are expected to use industry cloud platforms that combine cloud-based infrastructure, platform and application services to accelerate their business by 2027

This article can also be found in the Premium Editorial Download: CW Asia-Pacific: CW APAC April 2023 – Trend Watch: Business applications

In Hangzhou, China, thousands of traffic lights and sensors spanning an area of 420 km2 are connected to a smart city platform, delivering data and insights for the city’s officials to improve traffic conditions and facilitate the passage of emergency vehicles.

Underpinning the platform, which was developed by Alibaba Cloud, is a “smart city brain” that combines cloud infrastructure, a central data platform and massive applications to manage daily scenarios such as firefighting.

Once ranked the fifth most congested city in China, Hangzhou dropped to rank 57th after implementing the platform, which has also been adopted in other locations, including the Malaysian capital of Kuala Lumpur.

Hangzhou’s smart city platform is an example of how bringing together cloud-based infrastructure, platform and applications into an industry cloud platform can bring benefits for organisations.

According to Gartner, over half of enterprises are expected to use industry cloud platforms to accelerate their business initiatives by 2027, particularly among those in healthcare which have been one of the front-runners in adopting the concept.

Unlike software-as-a-service (SaaS) applications that can meet the needs of specific industries, industry cloud platforms come with deeper capabilities that enable an organisation to address more unique use cases – like a recipe modification process in food manufacturing – by leveraging application programming interfaces (APIs) and connectors, underpinned by an open and composable architecture.

Gregor Petri, Gartner’s vice-president and industry analyst for CIO and industries research, noted that advanced digital natives such as Uber have already built some form of industry cloud platforms, integrating infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS) and SaaS offerings from different suppliers.

“More organisations are now looking to do the same but want a much shorter path to value, going from enabling the way they use technology to enabling the way they do business,” he said.

Capitalising on this new opportunity, cloud suppliers have been doubling down on their industry cloud platform offerings by stitching different parts of their portfolio into a platform offering.

Take Microsoft, for example. The software giant has a wide portfolio of cloud services, from the Microsoft 365 suite and Dynamics business applications to Azure’s IaaS and PaaS services, but organisations that wanted to build an industry cloud platform out of those services had to do it on their own.

“In order for all of these services to work together, you need to break down data silos and have a common data model,” said Mike Chan, business development lead for Asia at Microsoft. “But we realised that even among our own technologies, we didn’t have one.”

That prompted the company to launch a slew of industry cloud offerings in 2021, bringing together common data models, cross-cloud connectors, workflows, APIs, and industry-specific components and standards.

Mike Sicilia, executive vice-president for vertical industries at Oracle, stressed the importance of having a unified data model in industry cloud offerings.

“A unified data model is the cornerstone of an industry cloud. For example, with human capital management and enterprise resource planning together, customers can automate manual processes otherwise required for tasks like strategic compensation planning, payroll integration, and workforce budgeting.

“In our retail cloud services, for example, Oracle has decoupled the data from each individual cloud service and made all data accessible in a common data model – the Retail Data Store. By doing this we make the ‘customer’ and all their data that historically sat within a single cloud service, accessible to all stages of the retail process.

“It makes more sense – and is less risky – to apply the industry cloud platform as an exoskeleton that you add to the outside with new functionality like AI, analytics, automation and maybe security integration with third-party products
Gregor Petri, Gartner

“Having this insight across their operations is helping our retail customers make more intelligent decisions around everything from inventory management and pricing strategies to staffing and the guest experience. It’s enabling them to distance themselves from competitors through data-driven decisions and building better customer relationships,” Sicilia said.

German software giant SAP has similar capabilities in its business technology platform that provides a common data model, APIs, process models and business services that underpin its industry cloud applications.

Casey Kwan, head of enterprise cloud at SAP Southeast Asia, said the company’s industry cloud offerings also integrate analytics capabilities and provide a unified and contextual view of real-time data and transactions across different processes.

“This allows users to make real-time decisions, supported by predictive analytics and machine learning without developing or building data models, or semantics from scratch,” he said.

Infor, another supplier of cloud-based business applications, took the platform approach from the start with Infor OS, a core technology backbone with integration, automation, extensibility, data and analytics capabilities that power each of its applications.

“No customer is going to be able to consume SaaS applications for business transformation without a platform underneath,” said Soma Somasundaram, chief technology officer at Infor, noting that Infor OS offers a data lake and a rich library of APIs with a single user experience.

The open, extensible and composable nature of Infor’s industry cloud platform has also enabled the supplier to leverage capabilities such as artificial intelligence (AI) and machine learning from Amazon Web Services (AWS) to enhance its applications.

Infor’s AI capabilities are powered by Amazon Sagemaker while its data lake uses the Amazon S3 storage service. Its relational database and datawarehouse capabilities are built on Amazon Aurora and Amazon Redshift, respectively.

Somasundaram said organisations that wish to tap services from other suppliers can still do so within the Infor platform: “They may have Salesforce, ServiceNow or Power BI, and our architecture is built in such a way that you can have those components easily plug into the ecosystem.”

And through APIs, Somasundaram said Infor customers can also leverage AI services from cloud suppliers other than AWS such as Azure and Google Cloud, though they would incur egress charges for moving data out of Infor’s data lake.

Despite the merits of industry cloud platforms in tearing down data silos, tapping cross-industry innovations and speeding up deployment of capabilities to address changing business requirements, Gartner’s Petri said organisations should not replace their core systems – at least initially.

“If you start replacing all your critical core systems with an industry version, which could be better or more modern, you end up with a risky migration project where you’ll get another inventory or invoice system, which is not what people want to do.

“It makes more sense – and is less risky – to apply the industry cloud platform as an exoskeleton that you add to the outside with new functionality like AI, analytics, automation and maybe security integration with third-party products.

“The interesting side effect of that is that as you apply such an exoskeleton, you apply more structure to what you’re using, and you better understand how systems interact. Over time, it makes you more prepared to replace some of your core systems eventually, but that should not be your first step.”

Petri said taking an exoskeleton approach will also help organisations in regulated industries like financial services reduce the “concentration risk” of becoming too dependent on specific suppliers.

On the supplier side, Petri said while there are those that may, for example, only offer analytics to customers that use their core systems, they should consider extending their capabilities to customers that use competing systems “because if they don’t do that, they are severely limiting their opportunity”.

SAP’s Kwan noted the importance of partners in driving the success of industry cloud deployments across all domains. “Jointly, SAP and systems integrators advise customers on industry best practices and process automation approaches leveraging industry cloud solutions and capabilities”.

Petri said systems integrators, in particular, are taking on a more proactive role, not just by implementing an industry cloud from a supplier but bringing together different components available in the industry.

“The systems integrators could have a proposition that is unique for an industry, such as a specific area in healthcare like diabetes care, and as a result, they are adding more value with their own intellectual property,” he added.

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