Every now and then, a term comes along that is so overhyped we can no longer make sense of it.
In 2022, "industry clouds" was that term. Let me ask you something:
If every vendor has a perfectly wonderful, fully-mature industry cloud, then how are customers supposed to evaluate them?
This VentureBeat article, Industry clouds might be the next big thing, stoked my irritation:
Industry clouds are collections of cloud services, tools, and applications optimized for the most important use cases in a specific industry.
We need a better definition of "industry clouds"
But does that definition cut it? As I later ranted on DisrupTV, "an industry cloud is not a cloud service." A proper industry cloud is much more than that. Don't we collectively owe it to customers to define what the characteristics of a proper industry cloud look like?
As it turns out, I'm not the only one bothered by "we've got industry clouds" hyberbole. At Oracle CloudWorld 2022, Steve Miranda aired out his views.
I get why Miranda is bothered. Oracle regularly issues a slew of industry-based cloud updates. Vendors deserve scrutiny based on what they update - and what they don't. As Miranda, Oracle EVP of Application Development, told me:
Earlier this week, somebody used the term industry-washing. It's very en vogue to say, 'We're industry-focused,' and that's again, the difference between innovation and execution.
Miranda believes industry clouds can be transformative - as do I. But when I described the cloud services some hyperscalers are trying to pass off as robust "industry clouds," Miranda went off:
If that's what you mean then no, I don't think that's transformative value. I think that's providing infrastructure. Maybe there [is some value in] securing things in infrastructure and HIPAA compliance, but that is very table stakes. It's a stretch to call that an industry cloud. Our view is: we want to have end-to-end industry processes; those become our industry clouds. If we have that, then that's an industry cloud. If you say that is transformative and driving value, I 100% agree.
Green screens must go - the future of cloud ERP is vertical
Miranda is right; industry cloudwashing is a thing, but industry clouds aren't a buzzword to toss aside either. Vendors won't stop using it in 2023; that much we know. So when I hit the enterprise video circuit to mock industry clouds, I also made the case for why they matter.
I believe the future of most software - in particular, cloud ERP - is vertical. I stepped in last-minute for Vinnie Mirchandani on CRMKonvos, and explained why the era of industry green screens must end. CRMKonvo co-host Thomas Wieberneit pressed the question: why should we care about industry clouds, as compared to their prior on-premise equivalent? What is different? I responded:
I'm biased towards the multi-tenant approach to industry cloud. I don't want to get too hung up on multi-tenancy per se, because the architecture is getting more sophisticated now, and you don't necessarily have to stick with one purist concept. But the idea is: your cloud vendor should be applying applications that you can consume and use at economies of scale - applications that are easy to update, and easy to get new functionality from.
That's where the "green screen" problem comes in:
This was always a trap with industry software, as you got caught on this green screen, proprietary software to run your business. Then you had your CRM and your ERP or whatever, and you were trying to integrate these things and make them work. Even from a data/analytics perspective, this was always difficult. You have these analytic silos - now how are you supposed to make sense of your business?
Today, it gets more and more difficult, because now you want to start automating workflows across these things. You want empower business users to do that on their own, and you want to apply artificial intelligence and predictive technologies onto these silos - have fun with that.
I still see vendors delivering way too much horizontal cloud ERP. That's not the way forward:
We need a more modern approach to delivering it. Ideally, an industry cloud will provide that - it would allow you to get rid of some of your legacy industry software, and begin to view this as a flexible environment. Some of that could just be templates, but it can be far beyond templates as well.
So that's the case for an industry cloud mindset: the era of proprietary industry software sitting in their own silos needs to end. Whether that's your shop floor/MES system, or your restaurant management system, application and data silos are the enemies of workflow automation, not to mention accurate scenario planning, and any hope of useful predictive, or "smart" technologies in the mix. And, to address Wieberneit's point, that's very difficult to do on-premise.
But it's not just technology - it's user experience. Complex industry solutions are the domain of disappearing super-users. In many industries, these super-users are aging out. Line of business users struggle with these systems. Modern industry software, on the other hand, is far easier to train on - and can be an asset recruiting younger talent - when they see how they can access and collaborate, via their device of choice.
How should customers evaluate industry clouds?
The term isn't important - it's what the customer gains from such investments. Thus the burning question: how should customers evaluate industry clouds? On DisrupTV, I laid out a working definition on what industry clouds should offer:
- An industry cloud isn't purely technical. It's an "ecosystem" that builds up around an industry's needs - ultimately, it's a community. Are we seeing any signs of that with your industry cloud?
- Do you have industry experts that can advise customers? Do you have specialist consulting partners, embedded in that industry's professional associations? Can they benchmark against other customers in your industry - and tell you what the boldest companies are doing (e.g. rolling out B2C marketplaces)?
- Do you have industry templates and "low-code" that reduce coding or complex config?
- How well does it integrate with other things? Too many of these "industry clouds" are really lift and shift operations, weird patchwork quilts of old and new software.
- Can customers extend with industry functionality, without acquiring technical debt or making upgrades/integrations more difficult? This includes add-on apps from partners, ideally via an apps marketplace. Speaking of which:
- Are partners building micro-verticals, or even full-fledged verticals on your platform? If not, there is work to do.
- Is there an industry consortium of customers gelling around shared needs - perhaps even sharing open source components?
Add another from my chat with Miranda:
- The ability for business users to further automate processes, in an end-to-end context.
But Miranda made a really interesting point: what if we think of industry clouds, not in absolute characteristics, but as different levels of maturity?
To be fair, you could probably categorize different levels. Even if you just said, 'We're somebody who's just infrastructure, and or if somebody's just interested in Oracle infrastructure, well then yes, it's important that you have HIPAA for healthcare or what have you.
And maybe that could be level one, or category one. And then you have other industry systems - that's category two, and then you have - to your point - advisors, and maybe that's level three.
[And then you build a customer community around all that.]
So if we get real about industry clouds, what else should customer be looking for? Miranda advises customers to look hard at analytics. Those who truly know your industry will stand out:
Business intelligence and verticals - because I think every industry has a unique set of metrics that they drive to, and are important. It's more than just, 'Let's put up your financial metrics.' Some industries are very cashflow sensitive; other industries are very asset-intensive.
Miranda cited a good example: an Oracle CloudWorld gathering of casino and gaming CFOs.
When we were at dinner at the casino, it was very clear they were going after the same type of metrics. It wasn't just revenues, expenses, margins - it was getting customer acquisition costs right, and hotel occupancy rates, and freight, and a number of other things that are very particular to this industry.
My take - industry clouds must go beyond technology
Readers may have more to add. Here's what I do know: when we get skeptical about industry cloud hype, we get closer to evaluating it properly. As I said to the CRMKonvos team:
Don't think of this as technology. I hate to use the word "ecosystem," but you need to evaluate the ecosystem around the software, the community, the expertise - what you can do with those solutions, what your peers are doing. All those things are really important versus, 'Oh, the vendor has some industry cloud for me, this is going to be great.' That's not gonna work.
For his part, Miranda thinks Oracle is in position to deliver on these things. No surprise given the themes of CloudWorld, such as the prominence of healthcare in Larry Ellison's keynote. Miranda acknowledged that adding features and deepening integrations with Cerner and Oracle cloud ERP isn't done. But he believes that years of working with the likes of Cleveland Clinic, Kaiser, Providence St. Joseph Health et al is how you get to to a real industry cloud:
It's sort of stunning to us that you can compare that to somebody who doesn't even have [industry] applications, be those Cerner or ERP, right? Now we have a healthcare cloud as an example. If, by transformative value, you mean that you're helping customers get fully automated, and processes are fully capturing data in an end-to-end process, then I agree.
On DistrupTV, Ray Wang made an important point: some of these industry practices translate across industries (example: subscription billing models). Vendors would do well to bring those capabilities across. On the other hand, vendors can't be all things to all industries. Probing questions about which industries a vendor truly focuses on are in order, as you can't always figure that out from the industry cloud marketing.
Industry clouds are a worthwhile concept, but if customers are going to realize value from these initiatives, we need to ask harder questions. And: customers may need to change also, and be willing to share information - and perhaps even code - more openly with their peers. During the pandemic, competitors were compelled to work together in unprecedented ways, even while competing. I see no reason why that changes now. Unless there is some level of collaboration on industry standards, I don't see how industry clouds can truly succeed.