Hong Kong companies are fully embracing the cloud. While many started their cloud journeys as rewiring their internal environment for agility and cost efficiency, others are closely examining cloud-native enterprise services to replace their on-premise mission-critical applications.
Shifting to a Software-as-a-Service (SaaS) offering is not a trivial question, however. Companies need to balance regulatory, security and performance concerns. The TalkTech Executive Roundtable, organized by Computerworld Hong Kong with Workday and entitled Moving Enterprise Applications to Cloud: The CIO playbook for enterprise SaaS adoption, asked leading Hong Kong IT leaders their insights into achieving the right balance.
Hong Kong enterprises are not shy about moving to the cloud. While regulatory concerns continue to dampen sentiment, the overall outlook is bright. But the lingering question is whether companies should become cloud-first businesses in the first place.
Data and privacy regulations are other limiting factors. “We are 80% in the cloud. But we have data that we do not want to be exposed to the cloud for regulatory reasons,” said Jacob Wai, chief data officer, MoneySQ.
Many, like Rajagopal Gampa, group vice president of IT, Rosewood Hotel Group, argued that the cloud journey is entering a new phase. Many first saw it as an infrastructure play. But when it comes to adopting enterprise applications in the cloud, companies are at a crossroad: should they move to a standardized offering, retain their current on-premise infrastructure or “lift and shift” their apps to the cloud.
The debate is shifting towards SaaS offerings, observed Anil George, SaaS market analyst – APJ, Workday. “One of the big narratives against cloud [enterprise apps] is that it is too standardized for companies to use. Yet, companies like Walmart, Amazon, and FedEx use Workday to run their operations.”
George noted that one big advantage is managing versioning and upgrades – all Workday customers, for example, regardless of size or location, will always be “on the latest version.” “so when we add new capabilities like artificial intelligence (AI) and machine learning into the fabric of the Workday application, it is immediately available to our over 2,600 customers worldwide,” he said.
Participants noted that sentiment about SaaS is slowly shifting for the positive. “I think internally we are debating what we can and what we should not move to the cloud. But there is a big improvement in sentiment as I think over the past year cloud-based technology has improved a lot,” said Akina Ho, director of technology & business solutions, Great Eagle Company.
Deciphering SaaS challenges
While cloud offers a host of benefits for modern business, especially in terms of agility and access to key resources, it also requires IT teams to address new challenges.
The chief one at Haitong International Securities is performance.
“We are in the early stages of moving some of the applications to the cloud. One thing we have to mention is the performance issue on the cloud,” said Henry An, the company’s assistant director for Global Markets Technology.
He opined that if you have time-sensitive or latency-sensitive applications, like algorithmic trading, “cloud does not have very good performance when compared to on-premise infrastructure.”
“Generally speaking, our experience of [moving to the cloud] has been good. But we faced some performance issues as well,” added Derry Fong, director of information systems, Hong Kong University of Science & Technology.
At Langham Hospitality Group the question was about prioritization and cost efficiency. Shrikant Shenoy, the Group’s senior vice president, innovation, digital transformation, and strategy pointed out that it becomes a big concern when migrating the applications to the cloud.
Equally important for Shenoy is the promise of variable cost – essentially the promise of pricing the cloud service according to actual use. “But what we have not seen yet in the pricing models of cloud providers is how to truly make it a variable cost when we move to the cloud,” he said, alluding to the inability to easily reduce costs if the app usage decreases.
Stephen Lui, director of IT, Hong Kong Broadband Network noted that the march towards SaaS offering is, however, inevitable. “If you look at the Gartner Magic Quadrant, most of the leaders are actually cloud vendors.”
Changing business-IT landscape
One reason why companies are starting to consider SaaS is the lack of resources – a key concern across all company sizes.
Rosewood Hotel Group’s Gampa saw the role of IT is also shifting as more companies embrace the cloud. “IT is moving from a service organization to becoming a strategic part of the business.”
Making IT strategic becomes a big advantage in today’s dynamic landscape where companies are constantly streamlining operations, buying other companies and merging with others.
“It really depends on your core business. But if you are looking to buy or merge new businesses, you cannot turn off a bare metal infrastructure because of amortization costs and such. But in the cloud, you can. That allows the board to make strategic decisions,” said MoneySQ’s Wai.
User experience is another reason why companies are embracing SaaS. “The general concern is whether users [of an enterprise app] are really getting value out of the system.”
With millennials entering the workforce, companies are looking to build an environment that helps them to be productive and retain these talents.
“[Millennials] have had a great experience in engaging through mobile apps. But when they come to work, they need to go through a process-driven screen to get anything done. And so [many become] disengaged. One of the primary reasons [for our customers to deploy SaaS] is to make sure that whatever they put in place is used and consumed by their end users,” George commented.
A matter of corporate will
Many participants acknowledged that companies will need to rethink their value proposition and purpose when adopting SaaS offerings. Traditional mindset or viewpoints need to upgrade.
For example, Haitong International Securities’ An noted that migrating an on-premise app to the cloud and migrating the data to a cloud-based SaaS offering are two “very different things.”
“Cloud apps are designed differently, so we need to examine from architecture and compliance perspectives,” commented An.
For the most part, companies understand this. However, the real question is whether corporate has the will to take action. “The issue is that from a senior management perspective, they rather not take the risk at the moment,” he continued.
Negotiating with cloud providers also adds a different dimension to the debate. “In the hotel industry, we see the big cloud providers like Amazon and third parties that we exchange personal information with, like Booking.com and Google. Good luck trying to get them to accept your clauses,” said Langham’s Shenoy.
Transformation should be the driver
In the end, it is about how companies handle change management.
Workday’s George admitted that with SaaS you are selecting a partner, not a vendor. “This is why we have put in a lot of effort to ensure that our customers are consistently going live on time, on budget and within a short period of time,” he said, adding that the company is moving toward zero system downtime.
George also noted that if the company is not looking to transform their business and IT systems, then “we feel it is not the right time to engage with them.”
Hong Kong Broadband Network’s Lui echoed the same sentiment. “Moving to the cloud will not have much [impact] unless you are willing to change your organization first,” he said.