Andy Jassy’s 12 Boldest Remarks On The Future Of Cloud Computing
‘There's this new generation of systems integrators that's really picked up steam, and that's carrying a lot of the new market segment share in companies moving to cloud,’ AWS CEO Andy Jassy tells CRN. ‘And these are companies that...don't have the legacy where they have to worry about cannibalizing existing businesses. They aren't worried about hedging their bets across every imaginable partner you can imagine.’
It’s still the very early days of cloud adoption, and Amazon Web Services CEO Andy Jassy says AWS channel partners should prioritize customers’ long-term success over any short-term gains for themselves to build sustainable businesses.
“There is so much opportunity for all of us if we can make sure that we get deep in the cloud and in the services, that we give the right advice to customers, we make sure that we focus on what matters most to customers,” Jassy told CRN. “If you do right by customers over a long period of time, the business usually follows as well.”
CRN sat down with Jassy in October for an exclusive interview at AWS’ headquarters in Seattle, where he shared his thoughts on the future of cloud computing, including what’s driving public cloud adoption, the cloud cost equation, AWS’ customer base, the AWS Partner Network and AWS’ new channel chief. He also addressed where partners should be channeling their investments, AWS’ market-leading position and competition, the U.S. Department of Defense’s Joint Enterprise Defense Infrastructure (JEDI) contract and Oracle among other topics.
“We're still at what I think of is the early stages of the meat of enterprise and public sector adoption in the U.S.,” Jassy said. “Outside of the U.S., they're about 12 to 36 months behind, depending on the industry or the country. We're still at the beginning of this titanic shift to the cloud.”
Here’s some more of what Jassy had to say.
Top Reason Why Customers Move To The Cloud
The No. 1 reason that companies are moving to the cloud is because of speed and agility and the ability to innovate at a much faster clip than before. If you talk to people who have on-premises infrastructure, it typically takes them 10 to 18 weeks to get a server to try something, and then they've got to build all the surrounding infrastructure software around it. In the cloud, you can provision thousands of servers in minutes. And then because we have 165 services that you can mix and match and choose from whatever you want, and only pay for what you use, you can get from idea to implementation several orders of magnitude faster. So this has totally changed the game for companies that are trying to innovate quickly and cost-effectively for their customers.
Almost always, cost is the conversation-starter when you think about the cloud. If you can turn capital expense that you lay out for servers and data centers into a variable expense that you pay as you consume, that's appealing. It's a lower variable cost than companies can do on their own, because we pass on cost savings to them.
We've lowered our prices on 75 different occasions (since AWS’ 2006 launch), largely in the absence of competitive pressure do so, just because we have a core tenant inside of Amazon that we work relentlessly to take costs out. And when we do, we give them back to customers in the form of lower prices. We don't target a margin. We talk a lot about the fact that it's pretty easy to lower prices; it's much harder to be able to afford to lower prices.
AWS’ Broad And Diverse Customer Base
Most successful technology startups have built their businesses from scratch on AWS. These are companies like Pinterest, Airbnb and Slack and Domo and Robinhood and GRAIL. But what's happened over the last five years, particularly, is that the enterprise and public sector have really adopted AWS in the cloud in a very meaningful way.
In financial services, you see it with companies like Capital One and Goldman Sachs and Barclays and Commonwealth Bank of Australia and Intuit. In health care and life sciences, you see it with J&J (Johnson & Johnson) and Merck and Pfizer and Bristol-Myers Squibb and Novartis. In manufacturing, you see it with GE (General Electric) and Schneider Electric and Siemens and Philips. In media, of course, Netflix runs everything on top of AWS, even though it competes very aggressively with Amazon's Prime Video business, (and also) Warner, Fox and Disney and HBO and Turner.
Every imaginable vertical business segment is using the cloud in a meaningful way now and so is public sector, where there's about 5,000 government agencies worldwide using AWS. Very broad, diverse customer growth.
The Importance Of The AWS Partner Network
Our partner ecosystem is not somehow like a side project with a very small amount of our total business. Our partner ecosystem -- really from the very start of AWS, but particularly so in the last five years -- has continued to become a very significant part of our AWS business, and it's super strategic and important to us.
Partners in our ecosystem have been a giant part of customer success in moving to the cloud and in our strategy. It's both the many thousands of ISVs (independent software vendors) and SaaS (software-as-a-service) providers who've built their businesses and made their technology and software work on top of AWS as a technology infrastructure platform, as well as the thousands of systems integrators (SIs) and consulting partners who are helping companies move thoughtfully to the cloud.
Doug Yeum’s Appointment As AWS’ Channel Chief
We always are moving people around for career development. It's good to actually...let people try different jobs and to get new perspectives on some of these roles. We thought, for the partner role, that Doug was particularly well-suited. Doug ran Korea for us, and so the experience of being in charge of running a country for a business is really great general managerial experience, where you have to think about a really broad degree of issues. Then, doing the chief of staff role for me, he got exposure to every issue you can imagine across the business.
So he has a great background, he's very smart, he's very analytical. He's a great general manager, and one of the things we want to keep evolving with our partner ecosystem is trying to continue to find ways to help them get access to more customers and building programmatic partnership ideas that are not just selling ideas, but have to do with selling…marketing…product development and…integration. His general managerial background, I think, will be very helpful in building those broader general managerial programs.
One of the things I've always appreciated about Doug, is that he's an amazing listener. A lot of what we do is driven by what our customers and our partners tell us matters. I think listening to partners and listening to how their businesses are changing and listening to what they care about most is incredibly important. You need someone who's a great listener and then who has the credibility across the team to take that feedback and distill it, and then actually boil it down into a few points that you really want to see (in) changes or opportunities from the product teams. I think Doug has the unique credibility and capabilities to do that.
New Generation Of Systems Integrators
There's this new generation of systems integrators that's really picked up steam and that's carrying a lot of the new market segment share in companies moving to cloud. And these are companies that...don't have the legacy where they have to worry about cannibalizing existing businesses. They aren't worried about hedging their bets across every imaginable partner you can imagine. They're going deep in training and certifying their people in the cloud and on AWS. They have a big dedicated team that's focused on the cloud and AWS, and they're willing to pick up small projects at relatively low price points to do pilots for companies who are thinking about getting some experience in the cloud. It's very impressive to see how much progress they've made and how much customer resonance they have.
These are companies like Slalom, who...were one of the first significant-sized systems integrators to understand the benefits of the cloud for their customers and the fact that, whether you wanted to or not, key customers were going to move to the cloud. They really changed and pivoted their business a few years ago, and they're doing amazingly well in the cloud. Or companies like Onica or ClearScale, who really kind of built brand-new businesses thinking about cloud first. They were born in the cloud and...they decided to get very deep in AWS and have a lot of dedicated, well-trained certified people so that they can handle lots of customers simultaneously. Or Cloudreach in the UK. In the beginning of AWS, Rackspace used to be a competitor to AWS on the infrastructure technology side. They've really pivoted their business over the last five to six years to be primarily a managed service provider and systems integrator, and they have a really large business on top of AWS.
These types of companies -- who don't have to worry about cannibalizing their existing business, can be all-in on the cloud and have trained lots of people and dedicated lots of people -- are picking up a lot of the business.
Some Areas Where Partners Should Be Investing
There's a very large number of enterprises and government organizations that want to make a mass migration to the cloud, and they need help. So building a practice around modernization and mass migration is a giant opportunity. There's just not enough qualified people to help with the demand that's there right now.
The edge is another really big one where there are billions and billions of devices that are going to be in people's homes and office places and factories and trains and planes and ships and oil fields and agricultural fields -- I mean everywhere. Helping companies realize value from those assets at the edge -- to be able to collect data and take that data, move it to the cloud and do analytics, and then provide useful feedback and action back to the assets themselves. To be able to figure out which actions should be done in the cloud and which actions should be done on the assets themselves.
We have about 20,000-plus APN (Amazon Web Services Partner Network) systems integrator partners who are building products and capabilities that are serverless. This next generation of companies are going to grow up thinking serverless first, as opposed to having to deal with the server in the cluster level. If you're not starting to build a practice that is deep and understands how to help companies leverage serverless as a partner, you're going to be in trouble.
Those to me are on the SI side. On the ISV and the SaaS provider side, gosh, there are so many areas that people are building businesses (in) very successfully today. Really, you're only gated by your imagination.
I've been saying this for many years, but I continue to believe that there aren't enough easy-to-use disaster recovery solutions for customers. As enterprises are moving to the cloud, one of the first things they think about is do I have a good disaster recovery and business continuity plan.
Those are some of the areas, but I don't think there's any area that is so mature or so locked down, that they're not opportunities. Very early days.
AWS’ Market Dominance Versus Microsoft Azure And Google Cloud
It's always hard to predict what's going to happen in the future. We remain very optimistic that we will continue to be the significant leader. There are a few things that matter when you think about the different providers, and these are the things we hear over and over again from customers when they're thinking about who to use.
The first is just if you're going to move all your applications to the cloud, and you want to unleash your builders to build anything that they can imagine, it turns out that having as much functionality and capability as possible matters a ton. And we just have a lot more capability than anybody else, in part because we started six years earlier, but also in part just because we're iterating at a faster clip than anybody. When you get into the details of it, that gap is widening. Having the most amount of functionality that allows builders to have the right tool for the right job, saves them money and time, is incredibly important.
The (partner) ecosystem is a second really important part. It's not just thousands of systems integrators that build practices on top of AWS, but most ISVs and SaaS providers will adapt their technology to work on a technology infrastructure cloud platform. Some will do two, very few will do three, it's just too much work. They all start with AWS just given our market segment leadership position.
The third thing is that you can't learn certain lessons until you get to different elbows of the curve and scale. That's why we often say there's no compression algorithm for experience. With a business that's significantly larger than the next few combined, it's just harder for those companies to have learned some of those lessons, until they get to that scale. It's really different running infrastructure for yourself -- even at large scale, where you get to tell everybody the way it's going to be -- than it is running it for millions of customers all over the world, in every imaginable country and vertical business segment, using you however they want without warning. It's just a very different operating rigor and discipline.
I think the combination of our having a lot more functionality and much larger, more vibrant partner ecosystem and much more maturity in the offering are significant differences today. Also, we tend to partner with customers and be customer-focused in a way that's different from most companies.
Google Cloud CEO Thomas Kurian And Google’s Anthos Platform
I don't have a strong opinion about the moves he's been making. I have respect for Thomas. I've known him a little bit. I think that they have a chance to have a meaningful business. We'll have to see. What we what we hear a lot in the market right now is excitement about Outposts. We're working really hard to be able to deliver Outposts to customers, and we have enough requests and things people would like us to add to Outposts to keep us focused on that.
Why AWS Was The Best Choice For the JEDI Cloud Contract
Editor’s note: (Jassy talked about JEDI two weeks before the U.S. Department of Defense awarded the contract to Microsoft, the other finalist, a decision that AWS is appealing.)
We would be very excited and very honored to earn the JEDI contract. We will be the best choice for them (because) we have a lot more capability than anybody else by a large amount. We bring a broader ecosystem to bear. We have a lot more operating maturity than anybody else. We've also operated at very large scale, and I think very successfully, with the intelligence community, who I think if you asked how the partnership has been with AWS, would tell you it's been one of the very best partnerships they can remember having. For us, it's incredibly important to partner with the government. I think if the U.S. government doesn't have access to the most sophisticated modern technology, that the country's in trouble, and we're very committed to providing that to the government.
Oracle As A Competitor
For whatever reason, they spend most of their keynotes in their conference talking about us. I think somebody counted that they mentioned us more than twice as much as they mentioned the word 'customers.' And so people ask us what we think, and we just respond. I'm not sure it's a back and forth. I'm not sure we have a strong opinion. We just try to share what we hear from customers, and I would say that in the big enterprise cloud deals, we don't see them very often.
Growth Of The APN
The growth has been pretty unbelievable in the partner ecosystem. What's most interesting to me about the growth is just that the way things are changing as the cloud becomes the default mode. If you look at ISVs and SaaS providers -- companies like Salesforce, Workday and Splunk and Informatica and Infor and TIBCO and Acquia -- there's this huge shift where the majority model in their implementations is moving to the cloud. And the vast majority of these companies either run exclusively on AWS or the majority their workloads on top of AWS.
We have worked hand in hand with ISVs as they have either built from scratch -- like an Acquia on top of the cloud -- or taken their products and thoughtfully evolved their products to work well and scale well in the cloud and taken advantage of AWS. There's a lot of partnership and a lot of integration. If you look at all those companies and the composition of their customers and sales now, the cloud is a much more significant part than it was five years ago and on its way to being the vast majority.
The systems integrators' evolution is quite interesting as well. This is true with ISVs and SaaS providers as well, but as companies make the decision to make mass migrations to the cloud, they really reconsider everything. All bets are off, and it makes sense. It's a big shift, and it's a big opportunity to pick your head up and decide how you want to change the way you're doing things. So companies really think about what are the new software products I should think about using as I move to the cloud that maybe I haven't taken advantage of in the past, where I've been using old legacy products that I want to move away from. And the same is true with systems integrators, where companies aren't necessarily taking the same systems integrators they've worked with for many years on premises to the cloud. What we've seen are the large, global systems integrators who've really embraced the cloud and invested very deeply are doing well. Accenture is a good example of that, Deloitte is a good example of that.