July 2021

The Future Of Digital Engagement

How Cloud-Native Services Enhance Transformation, Innovation, And Speed Of Delivery

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Cloud-native technologies are container orchestrators, containers, microservices, and serverless technologies that empower organizations to build and run scalable applications in modern, dynamic environments, such as public, private, and hybrid clouds.

Cloud adoption took center stage during the COVID-19 pandemic as enterprises accelerated their digital transformations. Enterprises ran more applications on the cloud to achieve greater business and IT speed, agility, and flexibility, while remaining competitive and supporting an increase in online customer interactions. But enterprises face a dilemma — while they want to enjoy the benefits of cloud, they don’t want to give up control.

Cloud-native is a next-generation approach towards application development and management. It’s rapidly garnering interest and making the convenience-versus-control discussion obsolete.

HCL Software commissioned Forrester Consulting to evaluate organizations’ cloud journey and plans towards adoption and implementation of next-generation cloud-native technologies. To explore this topic, Forrester conducted an online survey with 300 business and IT decision-makers across the US, the UK, and APAC, who are responsible for their organizations’ cloud solutions and cloud strategy regarding customer-facing applications.

Project Director: YiQin Teow, Market Impact Consultant
Contributing Research: Forrester’s Infrastructure & Operations research group

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Key Findings

  • Cloud adoption was a key pillar of organizations’ accelerated digital transformation initiatives during the COVID-19 pandemic.

    Business priorities shifted during the pandemic, causing organizations to pivot their strategies to stay competitive. Many firms focused on rebuilding topline growth, and the transition to remote working highlighted the need for a more innovative, flexible, and scalable way of working. In response, organizations ran more applications on the cloud, especially customer-focused applications, such as commerce software.

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    A cloud-native approach to running applications has garnered much attention over the past five years as it gains a reputation as an agile alternative to multitenancy.

    Over 50% of surveyed decision-makers deemed cloud-native capabilities as extremely important. However, technology-driven (instead of business-driven) business cases dilute expected financial ROI, limiting the pace and scale of cloud-native deployment among organizations.

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    Cloud-native offers the best of both worlds: the full advantage of the cloud convenience without a trade-off in control.

    The future of enterprise software is cloud native and this solution has huge potential for organizations. Embarking on a cloud-native journey will allow organizations to excel in the new digital economy, which transformation, innovation, and speed of delivery mark.

Digital transformation has been a buzzword for many years with many organizations embarking on a slow and tepid journey with measured approaches towards moving operations to the cloud. The onset of the COVID-19 pandemic saw a quantum leap in digital transformation initiatives, especially among customer-facing interactions. This was in response to dramatic shifts in consumer demands towards online channels.

Amidst this reactive chaos, the value and flexibility of cloud computing has once again been established, serving as a catalyst for accelerated cloud adoption. In a recent Forrester Analytics Business Technographics™ Infrastructure Survey, which surveyed 3,354 infrastructure decision-makers, it was found that organizations plan to migrate an average of 60% of their total application portfolio to the cloud over the next two years.1

Reducing IT costs was the lowest IT priority, showcasing the COVID-19-driven shift from bottomline improvement to topline growth.
  • COVID-19 prompted a pivot in organizations’ strategy to stay competitive.

    Business priorities around cost management and savings were thrown out of the window when the COVID-19 pandemic struck. To maintain competitiveness and retain market share amidst the uncertain and evolving business environment, organizations shifted their focus back to rebuilding topline growth. The top business priorities according to surveyed decision-makers included improving customer experience and growing revenue (see Figure 1).

  • Shifts in IT priorities to support business growth were also observed.

    Improving speed and efficiency of IT operations and processes (50%) emerged as the top priority for respondents as the business moved towards interacting with customers through digital channels. To ensure the organization stayed ahead of business needs, IT teams focused on enabling more cloud-based development environments and increasing IT deployment agility. For business functions, improving organizations’ data and analytics capabilities were critical for understanding customer needs and enabling smooth and seamless digital experiences.

  • Organizations began to run more applications on the cloud than before, especially customer-focused applications.

    According to Flexera’s 2020 State Of The Cloud study, 57% of surveyed cloud decision-makers mentioned higher than planned cloud spending and usage due to COVID-19.2 While an increase in cloud adoption is observed across various elements of organizations’ operating models, more weight has been put on customer-focused applications in a bid to drive business growth. Customer-facing supply chain management software (56%) and commerce software (53%) are amongst the top three applications organizations run in the cloud today (see Figure 2).

  • Remote working required organizations to come up with more innovative, flexible, and scalable ways of working.

    Sixty-three percent of surveyed decision-makers reported their organizations experienced a change in strategy for their commerce cloud platforms because of COVID-19. Scalability was a key reason as they transitioned offline sales to online sales. Other reasons included the need for a better cloud option to handle commerce orders, which calls for greater speed and agility.

POLL

Has COVID-19 changed your organization’s digital commerce strategy?

POLL

Has COVID-19 changed your organization’s digital commerce strategy?

How other companies answered:

DID YOU KNOW?

63% of IT decision makers agreed to having changed their digital commerce strategy since the onset of COVID-19 to drive greater scalability, speed and agility.

Base: 63 IT decision makers and influencers responsible for their organization’s cloud solutions and cloud strategy with regard to customer-facing applications (e.g., for Sales, Marketing, CX)
Source: A commissioned study conducted by Forrester Consulting on behalf of HCL, May 2021

Figure 1
“To what extent is your organization prioritizing the following business priorities over the next 12 months?” (Showing "Critical priority")

Click to see data


Base: 300 business and IT decision-makers and influencers responsible for their organizations’ cloud solutions and cloud strategy regarding customer facing applications (e.g., for sales, marketing, CX)
Note: Showing top 8 business priorities
Source: A commissioned study conducted by Forrester Consulting on behalf of HCL Software, June 2021
Base: 100 business and IT decision makers and influencers responsible for their organization’s cloud solutions and cloud strategy with regard to customer-facing applications (e.g., for Sales, Marketing, CX)
Note: Showing top 8 business priorities
Source: A commissioned study conducted by Forrester Consulting on behalf of HCL Software, June 2021
Base: 100 business and IT decision makers and influencers responsible for their organization’s cloud solutions and cloud strategy with regard to customer-facing applications (e.g., for Sales, Marketing, CX)
Note: Showing top 8 business priorities
Source: A commissioned study conducted by Forrester Consulting on behalf of HCL Software, June 2021
Base: 100 business and IT decision makers and influencers responsible for their organization’s cloud solutions and cloud strategy with regard to customer-facing applications (e.g., for Sales, Marketing, CX)
Note: Showing top 8 business priorities
Source: A commissioned study conducted by Forrester Consulting on behalf of HCL Software, June 2021

Figure 2
“Which of the following applications within your organization are running in the cloud today?”

Click to see data


Base: 120 IT decision-makers and influencers responsible for their organizations’ cloud solutions and cloud strategy regarding customer facing applications (e.g., for sales, marketing, CX)
Note: Showing top 8 applications
Source: A commissioned study conducted by Forrester Consulting on behalf of HCL Software, June 2021
Base: 40 IT decision makers and influencers responsible for their organization’s cloud solutions and cloud strategy with regard to customer-facing applications (e.g., for Sales, Marketing, CX)
Note: Showing top 8 applications; Sample size is small (n<100), and data should be used for directional purposes only
Source: A commissioned study conducted by Forrester Consulting on behalf of HCL Software, June 2021
Base: 40 IT decision makers and influencers responsible for their organization’s cloud solutions and cloud strategy with regard to customer-facing applications (e.g., for Sales, Marketing, CX)
Note: Showing top 8 applications; Sample size is small (n<100), and data should be used for directional purposes only
Source: A commissioned study conducted by Forrester Consulting on behalf of HCL Software, June 2021
Base: 40 IT decision makers and influencers responsible for their organization’s cloud solutions and cloud strategy with regard to customer-facing applications (e.g., for Sales, Marketing, CX)
Note: Showing top 8 applications; Sample size is small (n<100), and data should be used for directional purposes only
Source: A commissioned study conducted by Forrester Consulting on behalf of HCL Software, June 2021

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Long-term ROI wasn’t a top priority; maintaining business competitiveness and ensuring business survival were.

Businesses recognize that modern cloud IT systems are key to powering modern adaptive enterprises. Over 90% of surveyed decision-makers cited keeping up to date with the most current version of cloud technology as “Very important” or “Extremely important.”

Cloud-native, a concept started in 2015, offers a more agile and scalable approach towards running applications in the cloud as compared to cloud-based and cloud-enabled solutions. While lift-and-shift has traditionally been the predominant approach towards cloud adoption, the apparent benefits and value of cloud native have positioned it as an attractive alternative. The demand for cloud native is expected to continue to grow post-COVID (see Figure 3).3

  • The level of proficiency with cloud-native is catching up with multitenant software-as-a-service (SaaS).

    Organizations’ proficiency with multitenancy ranked the highest overall and this is of no surprise, given that it has been around for quite a while. However, cloud native is relatively new and in just five years, organizations’ level of comfort with cloud-native single tenant has almost reached a level equivalent to that of multitenant SaaS (see Figure 4). In APAC, as a reflection of lower levels of cloud adoption, organizations remain most comfortable with dedicated hardware or bare metal servers.

  • Over 50% of surveyed decision-makers deemed cloud-native capabilities as extremely important for their business and IT strategy going forward.

    COVID-19 has increased the need for greater operational speed, agility, scalability, and innovation. These improvements allow organizations to adapt to changes in the dynamic business environment, fueling increased interest in cloud-native capabilities. Over half (51%) of decision-makers cited cloud-native as extremely important for organizations’ future software development and deployment strategy. Fifty-eight percent of respondents identified cloud-native capabilities for core business applications (e.g., B2B or B2C commerce platforms) as extremely important.

POLL

What are your organization’s plan in deploying cloud-native technologies for commerce software?

Select one:

POLL

What are your organization’s plan in deploying cloud-native technologies for commerce software?

How other companies answered:

DID YOU KNOW?

60% are planning to expand or upgrade the deployment of cloud-native technologies for their commerce software, with 68% considering to outsource their e-commerce platform.

Base: 63 IT decision makers and influencers responsible for their organization’s cloud solutions and cloud strategy with regard to customer-facing applications (e.g., for Sales, Marketing, CX)
Source: A commissioned study conducted by Forrester Consulting on behalf of HCL, May 2021

  • However, technology-based business cases for cloud-native deployment dilute the ROI.

    The cases for adopting cloud-native technologies are IT-driven with the top three expected benefits relating to IT, including IT agility, efficiency, and speed (see Figure 5). This is in contrast to organizations’ business priorities that are topline-focused and customer-centric. As such, organizations struggled with achieving the planned ROI (41%), demonstrating the financial impact (39%), and faced lack of alignment between IT and business functions.

Figure 3
“Please select which of the following are now the primary parts of your organization’s current cloud strategy specifically as a result of the COVID-19 pandemic.”
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Base: 3,402 infrastructure decision-makers whose firms are adopting cloud platform(s)
Note: Showing top 8 cloud strategy components
Source: Forrester Analytics Business Technographics™ Infrastructure Survey, 2020.

Figure 4
“How comfortable is your organization with the following levels of cloud tenancy?”
figure

Base: 120 IT decision-makers and influencers responsible for their organizations’ cloud solutions and cloud strategy regarding customer facing applications (e.g., for sales, marketing, CX)
Source: A commissioned study conducted by Forrester Consulting on behalf of HCL Software, June 2021

Figure 5
“What will be the top three benefits that your organization expects in deploying cloud native technologies?”

Click to see data


Base: 120 IT decision-makers and influencers responsible for their organizations’ cloud solutions and cloud strategy regarding customer facing applications (e.g., for sales, marketing, CX)
Note: Showing top 8 benefits
Source: A commissioned study conducted by Forrester Consulting on behalf of HCL Software, June 2021
Base: 40 IT decision makers and influencers responsible for their organization’s cloud solutions and cloud strategy with regard to customer-facing applications (e.g., for Sales, Marketing, CX)​
Note: Showing top 8 benefits; Sample size is small (n<100), and data should be used for directional purposes only
Source: A commissioned study conducted by Forrester Consulting on behalf of HCL Software, June 2021
Base: 40 IT decision makers and influencers responsible for their organization’s cloud solutions and cloud strategy with regard to customer-facing applications (e.g., for Sales, Marketing, CX)​
Note: Showing top 8 benefits; Sample size is small (n<100), and data should be used for directional purposes only
Source: A commissioned study conducted by Forrester Consulting on behalf of HCL Software, June 2021
Base: 40 IT decision makers and influencers responsible for their organization’s cloud solutions and cloud strategy with regard to customer-facing applications (e.g., for Sales, Marketing, CX)​
Note: Showing top 8 benefits; Sample size is small (n<100), and data should be used for directional purposes only
Source: A commissioned study conducted by Forrester Consulting on behalf of HCL Software, June 2021

The decisions between cloud-versus-on-premises deployment and private cloud versus public cloud-hosted are laden with various control and convenience considerations. However, the emergence of cloud-native technologies, which serve to offer the best of both worlds, point to vast possibilities that can change the way organizations acquire software solutions going forward.

While cloud-native technologies have made their foray into organizations, especially since the COVID-19 pandemic, there remains hurdles for organizations to cross before they can fully maximize the benefits and value that cloud-native can provide.

  • Cloud-native enables both the convenience of cloud solutions and the level of control based on individual organizations’ discretion.

    While organizations are receptive towards multitenant SaaS applications, most are unwilling to trade off control for greater convenience. Sixty-two percent of surveyed decision-makers reported that their organizations prioritize control over convenience in their decision to run applications on the cloud. In APAC, where majority of organizations are most comfortable with dedicated hardware or bare metal servers, the figure stands at 70% (see Figure 6).

    Cloud-native technologies offer the sweet spot between the control-versus-convenience dilemma. They offers organizations the full advantage of numerous cloud benefits, including faster time-to-market, greater resilience, convenience, flexibility, and scalability, all while maintaining control for privacy and security choices.

POLL

How would you rate the relative importance of control and convenience in your organization’s decision to run applications in the cloud?

Select one:

POLL

How would you rate the relative importance of control and convenience in your organization’s decision to run applications in the cloud?

How other companies answered:

DID YOU KNOW?

More than three-fifths of IT decision makers prioritize control over convenience in making decisions to run applications in the cloud.

Base: 63 IT decision makers and influencers responsible for their organization’s cloud solutions and cloud strategy with regard to customer-facing applications (e.g., for Sales, Marketing, CX)
Source: A commissioned study conducted by Forrester Consulting on behalf of HCL, May 2021

Figure 6
“How would you rate the relative importance of the following factors (control and convenience) in your organization’s decision to run applications in the cloud?”
figure

Base: 120 IT decision-makers and influencers responsible for their organizations’ cloud solutions and cloud strategy regarding customer facing applications (e.g., for sales, marketing, CX)
Note: Percentages are representative of respondents who gave a score of more than 50% for each of the factors.
Source: A commissioned study conducted by Forrester Consulting on behalf of HCL Software, June 2021

  • Microservices and Kubernetes are key starting blocks towards cloud-native deployment.

    In contrast to a monolithic approach, applications developed and managed via microservices allow for greater scalability, flexibility, and customizability as each microservice unit is developed autonomously and deployed independently. Any updates or changes to discrete features in a complex application is performed quickly and more frequently with less risk of disrupting the entire system. For instance, microservices in a commerce software bundled via business services (e.g., storefront, search, customization, transaction) allows organizations to change, add, or update the business services independently.

    To better manage the complexity of multiple microservices and containers, Kubernetes optimize the orchestration of computing resources for automated deployment, scaling, and management of applications. In this study, 58% and 29% of surveyed cloud-native users have microservices and Kubernetes deployed in production, respectively.

  • However, effective cloud-native deployment hinges on closing the skills gap that organizations are facing.

    Thirty-seven percent of surveyed decision-makers identified inadequate relevant internal skills as a key business challenge in the deployment of cloud-native technologies. Faced with tightening data and privacy regulations, organizations are concerned about missteps in securing cloud-native architectures, which could lead to issues like compromised security or exposure of customer data. For instance, the complexity of Kubernetes itself, coupled with the need to have a minimal working understanding of how the various components of a cloud-native environment work, has made it less viable for organizations to run their own Kubernetes clusters.

  • Outsourcing is a favorable option in organizations’ shift towards cloud-native.

    Given the scale and complexity of core business applications like commerce software and the fast-moving nature of the operations, leveraging a third-party vendor that offers cloud-native capabilities is a more cost-and time-efficient option than setting up the infrastructure in-house. Furthermore, the dynamic and constantly evolving business environments demand organizations to adapt to changes in customer needs quickly, and the lack of internal skills would pose a significant barrier in maximizing the utility of cloud-native capabilities. Recognizing this struggle, 68% of surveyed decision-makers agreed to considering outsourcing of their e-commerce platform as an option going forward.

Business and technology decision-makers are looking to accelerate revenue growth, improve customer experience, and better align IT capabilities to business objectives. Because of this, they expect the software services they purchase to take advantage of the new wave of cloud-native technologies that allow them to combine improved efficiency with greater control over their infrastructure investments.

Forrester’s in-depth survey of 300 business and IT decision-makers and influencers about their organizations’ cloud strategy and cloud-native deployment journey yielded several important recommendations for business executives looking to their next wave of cloud-accelerated transformation:

Appendix A: Methodology

In this study, Forrester conducted an online survey of 300 decision-makers across the US, the UK, and APAC to evaluate their cloud solutions and cloud strategy with regard to customer-facing applications. Survey participants included senior managers and above across both IT and business functions (e.g., customer experience, digital, marketing/advertising, operations, sales, and strategy). Questions provided to the participants were focused on understanding their organization’s cloud journey and plans towards adoption and implementation of next generation cloud-native technologies. The study began in May 2021 and was completed in June 2021.


Appendix B: Demographics/Data


Demographics of the study

Note: Percentages may not total 100 because of rounding.


Appendix C: Supplemental Material

Related Forrester Research

“Plan Your Microservice Application Platforms Using A New Structure For A New Era,” Forrester Research, Inc., February 11, 2020.

“Mind The Cloud Skills Gap,” Forrester Research, Inc., March 11, 2020.

“Trend: Cloud-Native Technologies Accelerate Software Innovation Everywhere,” Forrester (https://www.forrester.com/fn/39a1pe7ELt8lzKvGSqX1Wp).

“Developers Favor Three Approaches To Deploying Cloud-Native Code,” Forrester (https://www.forrester.com/fn/41tQEgvbaQPdhjSnbeN4hY).

“Understanding The Cloud Service Provider Landscape,” Forrester Research, Inc., December 23, 2020.

Additional Resources

Cloud Native Computing Foundation, https://www.cncf.io/

Appendix D: Endnotes



1Source: Forrester Analytics Business Technographics™ Infrastructure Survey, 2020.

2Source: Flexera 2020 State of the Cloud Report, https://info.flexera.com/SLO-CM-REPORT-State-of-the- Cloud-2020

3Source: Forrester Analytics Business Technographics™ Infrastructure Survey, 2020.


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