Why businesses are embracing industry clouds

The health care provider St. Luke’s, whose network includes 13 hospitals and 322 outpatient centers in Pennsylvania and New Jersey, allows patients to schedule appointments online. Demand spiked after the COVID-19 vaccines began rolling out, vice president and chief information officer Chad Brisendine recalls.

“Let’s say that we [normally] I had 1,000 people hitting our scheduling system,” says Brisendine. “That went to, like, 7,000 people all of a sudden.”

Fortunately, St. Luke’s, based in Bethlehem, Pa., was prepared, having moved much of its workload to Microsoft Cloud for Healthcare before the pandemic. Previously, it would have taken the nonprofit a day, a week or more to scale to meet that demand, Brisendine notes. But the St. Luke’s cloud team quickly took it in stride.

“As that capability started to be needed, they just applied it directly from the cloud,” says Brisendine. “When you have these fast-paced workloads where you need to be able to scale your infrastructure, the cloud makes it really great because it has all the resources available.”

St. Luke’s is one of a growing number of organizations turning to industry clouds, specializing in industry-specific business processes. This change seems like a technological trend, but in fact, it’s about strategy. By using these vertical offerings for tasks that have little or nothing to do with their secret sauce, companies can focus on what sets them apart.

Industry clouds gained momentum over the past three to five years, says Brian Campbell, director of Deloitte Consulting’s strategy practice. So-called hyperscalers such as Amazon Web Services, Google Cloud and Microsoft Azure have played an important role.

“There was a real push in the market in favor of, first, infrastructure, in a way, computing and storage, and then the emergence of all these different services that each of them offered,” Campbell says. “And really, over the last couple of years, the next frontier of moving from a lot of functional and IT benefit to the real heart of your business and the specificity of industry processes.”

On this note, Campbell offers an analogy. “We talk about this as not needing to do open-heart surgery to be able to deliver on the promise of the clouds in the industry,” he says. “It’s almost the ability to put an exoskeleton on the core and be able to make these improvements in different areas without having to open everything up.”

Businesses sound bullish on industry clouds. In a recent Deloitte survey of 500 cloud decision makers from a variety of industries in the US, 74% of leaders surveyed strongly agreed that industry clouds would be an enabler and catalyst for transformation and automation of business processes specific to the sector.

In addition to hyperscalers, enterprise resource planning (ERP) players, independent software vendors (ISVs) and customer relationship management (CRM) vendors are investing heavily in the space, Campbell observes.

“Because the frontier that the entire Fortune 1000 is moving to is, ‘OK, we’ve been very focused on our back office, we need to focus on the front of the house,'” he says, noting that Deloitte has invested in industry clouds as a systems integrator, business advisor and software provider. “Especially given the environment everyone is in today, given that this is where the winners and losers will separate from each other others”.

Microsoft has done two things with its industry clouds, says Alysa Taylor, corporate vice president, industry, applications and data marketing, at the Redmond, Wash.-based company. “We’ve organized all of our assets to be very specific to the use cases within the industry,” Taylor explains. “Then we have certain clouds that have a subscription model that allows you to have additive access to things like very unique industry data models and connectors.” So far, Microsoft has released these subscriptions for financial services, healthcare, manufacturing, nonprofits, retail, and sustainability.

For St. Luke’s, the move began in 2018, the year after creating a digital strategy plan with Microsoft. Part of that plan was to leverage cloud services to be more secure, agile and flexible, Brisendine recalls. “How do we get rid of the things we think we shouldn’t do as a basic strategy and basic discipline? At the end of the day, we don’t necessarily need or want to manage the infrastructure.”

Until now, St. Luke’s has moved almost 80% of its workload to the cloud. After changing many of the more than 1,000 applications it manages, it became one of the first healthcare organizations to migrate Epic, its main ERP platform, Brisendine says. “We did a lot of this work in 2020 and 2021, when we changed a couple of thousand servers.”

what’s left Applications that require more bandwidth than the cloud can currently handle, such as those that provide X-ray imaging. At the same time, the modest margins of St. Luke was given a compelling reason to manage costs by using cloud services, Brisendine says.

St. Luke’s has brought together disparate systems into a common data model that provides a holistic view of patients and their medical history, Taylor says. “This saves them time and money. It takes the IT burden off them, but it also helps preventive medicine and, in severe cases, saves lives.”

Using industry clouds allows companies to focus on what makes them unique. “The way we’ve described it is: Make sure your secret sauce is more frequent,” says Campbell. “These are the areas where you’re really going to hang your strategy, you’re going to hang your customer experience, you’re going to hang your differentiation in the marketplace.”

Industry clouds also provide “building blocks to be able to further customize, achieve that differentiation faster, and be able to do it more innovatively over time, compared to one-and-done,” adds Campbell.

Ingredion, a supplier of plant-based ingredients to the food and beverage, pharmaceutical and other industries, is also going the industry cloud route. The Westchester, Illinois-based company began building a data repository in 2018 to analyze how environmentally and socially sustainable it is and track progress on All Life 2030, its broad plan of sustainability.

Much of this work was done manually and spread across nearly 70 locations around the world, with Azure as the data link. Microsoft then approached Ingredion with its Microsoft Cloud for Sustainability, says Bob Border, Ingredion’s chief information officer.

To begin building a system that would standardize and automate data collection, while making that information faster and easier to analyze, Ingredion entered data on past decisions its US operations had made about emissions. ‘scope 1 and 2 in a tool called Microsoft Sustainability Manager. (Scope 1 and 2 emissions are those that an organization produces directly and indirectly, while scope 3 is those for which it has indirect responsibility.) The objective: to see if the use of Sustainability Manager could have produced different results.

“We’re learning a little bit more about this as they’ve been developing and deploying this platform, and we’re seeing benefits,” Border says. “Especially when we get to Scope 3, we’re definitely seeing some big benefits, although we’re already starting to see some benefits from Scope 1 and Scope 2.”

While Ingredion doesn’t have a formal industry cloud strategy, it’s on the lookout for new opportunities after this first foray. “Because it should save us some work, which could end up being a savings,” says Border. “So we will always look at the value of doing things from an industry perspective rather than building ourselves.”

Border’s advice for other organizations weighing a move to industry clouds: Understand how your data is being used so it doesn’t fall into the wrong hands.

“Some of the industry clouds that we looked at, they’re kind of a black box,” he says. For example, a cloud provider can use artificial intelligence on your data to create a formulation for you. “Well, what about this data?” Border asks. “Now some of my products are in this formulation engine that my competitor might be using.”

Brisendine’s first piece of advice is to decide whether you plan to manage your own infrastructure and, if so, what the plan is. It also recommends using financial transparency tools, in addition to those provided by Microsoft and other vendors, to monitor cloud resources. Auditing your security tools is also crucial.

And if you’re managing your own infrastructure, give your team time to learn how to build it. To help everyone get comfortable with the cloud, St. Luke’s also moved lighter workloads first, Brisendine says. “I would definitely say start small and grow big.”

For St. Luke’s, probably the biggest lesson was around application modernization. And business and IT must be strongly aligned with strategy, Campbell warns. “Without that, don’t go here.” Oh, and the time to embrace industry clouds is now: “If you look at this space even 18 to 24 months from now, you’re going to be on the back foot of where your industry is.”

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