Today’s industry clouds are different

Here’s an observation I’ve made many times in my career: If your business is plateauing, it’s time to go vertical. In other words, when you run out of potential market runway, look for horizontally focused products (cross-industries) such as databases, integration brokers, or development systems. Develop those products to fill a niche, then announce that you’ll be vertically focused moving forward.

This is an old story about building new capabilities into a technology product or service that solves industry-specific problems. For example, a database can have industry-specific schemas like those used by banking. Development services can support healthcare application development, or security and governance services can focus on an industry’s requirements. The idea is to get a business closer to a needed solution faster than if it had to start from scratch.

Don’t confuse vertical capabilities with industry-specific application solutions. Here we’re talking about systems built to provide industry-specific services that an enterprise does not need to build for itself.

Businesses have always sought ways to build solutions faster and with fewer resources. This is a good strategy. However, in the past, only some industry-specific solutions provided expected value. A few fundamental problems created shortfalls:

• The solutions were too coarse-grained. For instance, a service could offer a generic risk analytics service for the finance industry, but that service was typically all or nothing. You had to use this big, coarse-grained service as it existed or not at all. You were out of luck if you wanted any changes to how the service worked. This was the real reason industry-specific solutions were not popular.
• These services didn’t integrate easily. You often had huge software services where many things had to run simultaneously. The use of discrete services (such as microservices) had not yet taken hold. Those deploying these systems looked at the trouble required to integrate and deploy them and could rarely find the value.

Considering our past minor success with industry-specific services, what will industry clouds bring to the table in 2023? The value and differences are clear to me.

First, we can use these cloud services at most layers of granularity, meaning coarse-grained, fine-grained, or micro. You no longer need to use everything if you only need a small part of a service. For instance, the healthcare industry once had to use PIP filtering for the entire patient database. You can now use only a part of those services to filter a single database attribute because that attribute is all you need to solve your problem.

The second advantage is cloud-native integration. Cloud providers will be all over the place regarding what enabling technology they use and the industry-specific services. These technologies will include containers, container orchestration, APIs, and microservices. The focus must be on lightweight integration with well-documented interfaces. This is the only way this stuff works at scale.

Also, remember that the cloud providers own and support the cloud-native tools or have key partners that do the same. It’s much easier to provide seamless integration if you own or have control over the consuming platforms. If the cloud provider owns the development platforms and the databases, they will be tested to ensure they work well with the industry-specific services from their products. Of course, this includes the standard lock-in alert that comes with using a single cloud provider to build major business systems.

Given all these reasons, indicators point toward industry-specific clouds that will work this time. They’ve always been a good idea, but until now, it was a much more challenging feat to pull off.