During Huawei Connect 2016 last year in Shanghai, Thomas Aschenbrenner, director of sales and marketing for Open Telekom Cloud at T-Systems International, spoke about the importance of the cloud, cultural changes and the launch of the Open Telekom Cloud platform.
Good morning, Shanghai! It's my pleasure to be here in this astonishing and impressive high-tech metropolis of Shanghai. Thank you for inviting me.
Cloud is really impacting, moving and changing IT and the business world. This has been a trend over the last couple of years, as stated by Gartner. Some big analysts have already prognosticated that cloud, IoT and Industry 4.0 will be the main trends. It will be the main trend. They will push it and even accelerate it very much if you go to the numbers driven not only by technology, but also by businesses and customer requirements and a sort of new digital DNA and other areas where we are getting into.
There is a big digital meteorite punch hitting the IT and business world. And those companies and customers who are not really following that trend might be pushed out very soon. So there is a digital revolution going on, or the so called "survival of the fittest" in terms of a digital change. So the question of being cloud or being out continues to be the main trend in terms of the forecasts and prognoses.
We all know the autonomous cars and intelligent cars. This is also a subject and a field where we are heavily engaged with Daimler, BMW and Audi. About 75% of the vehicles in the future might be completely autonomous, being driven by IoT and big data, and connected to the cloud. And this is also a huge business in terms of future devices being connected. So there will between 40 billion to 50 billion devices being connected through IoT in the future. And the IoT business, according to Gartner, is about $1.9 trillion across various markets by 2020.
So the cloud is actually everywhere, and the cloud is growing. It's also a nice comparison if we look at our children. I mean, if we look back, we just realize how big they became during the last couple of months and years, and this is pretty much the same for the cloud business.
The total revenue that Gartner prognosticated for cloud is about $1 trillion. IT spending within the next five years on the cloud will be most affected by IaaS [infrastructure-as-a-service] and platform-as-a-service [PaaS] would be about $300 billion. So we will turn in huge numbers for the next five years. And 46% of the spending from the IT department will be IaaS in 2020, according to IDC.
The growth rate of public cloud in 2015 already exceeded 50%, according to Synergy Research Group. Cloud has already become mainstream across the classical tipping point stage, and it will continue to be the main trend in the future.
Digital management, cultural transformation are key
Finally, the question is not only about technology and business. This is why I bring it up very often when I'm talking cloud. It's also about a sort of digital DNA: digital management and leadership. Obviously, the question is: Are we on the right-hand side, being a classical and hierarchical organization top-down, stiffly regulated, strategic long-term release cycles and planning organized and cost-driven, rule-driven step-by-step approach, with complex solutions and being heavily planned?
Or, are we working on the other side in terms of how we run our company and how we go to customers in terms of being a digital leader, being free-spirited, working dynamically, fast-speed task forces being tactically decentralized, having a loose organization which is not only focused but has the freedom and flexibility to innovate and go further?
Normally, I'm not quoting competition, but I've just found a very nice quote, which is from Amazon Web Services Inc. They just have one principle. They have a "two pizza" rule. I'm not sure how many people know that rule. The "two pizza" rule says that a team that cannot be served with just two pizzas being ordered late at night might be too big, too complex and too slow.
Google (Nasdaq: GOOG) also has a very similar principle, something like improve something by ten times rather than by 10%, which will be a business rule in terms of revenue and customers, and everything of innovation coming from everywhere. This is a very nice saying and rule for this digital leadership and DNA.
What I also found interesting in terms of the change of the cultures and thinking in this digital area and cloud world is thinking about the stages of digital transformation.
There are different models, and I have just picked up one. Starting with the first stage, where we might just do business as usual with no changes, and cloud, Internet and digitization are just nice. But things are just going on, and it's a more or less a wait-and-see approach.
The next stage is where active customers who are already aware that first pilots are running, and that projects and cloud are being tested, and there are several projects of experimentation going on.
The next stage is being more formalized: You have plans and projects structured to waves of innovation going on, up to the strategic step. I think this is a major step from formalization to strategic. Within this strategic step, you will have full high-level executive support and involvement in a transformation process and change process within the company.
Converge is the next material level. Within that converge model, you are setting up dedicated digital organizations in your company. You have dedicated systems in place, which are leading in terms of innovation. You have a digitization quota of over 50% within your company.
Last but not least is the highest level, that is the innovative model, running really leading-edge projects. I'm not talking about basic cloud or online shops or applications. This is really about trying to be on the top of the evolution, and everything within the company might be digital. You have been setting up completely new ecosystems, teams and structures, and you are facing constant change and dynamic transformation within your company. So I think the question for all of us is: What do you honestly think might be your current stage? I think many of us might probably be in the first three or four levels, and the five or six are exaggerated, very down the street.