The COVID-19 pandemic has accelerated the adoption of cloud technologies by several years, according to the market leader AWS, which today urged its customers to reinvent themselves to fend off disruption and hit back at criticism of its growth rate.
Speaking at AWS re:Invent, held virtually for the first time this year, AWS CEO Andy Jassy said enterprises in particular have developed migration plans in 2020 after years of mulling a move.
“This happens a lot of times when you have a period of discontinuity like a pandemic. [It is] that companies take a step back and they rethink what they’re doing and what they want to stop doing,” Jassy said in the first keynote of the multi-week event.
“And one of the things that we’ve seen is that enterprises that we’ve been talking with for many years about moving to the cloud – where there’s a lot of discussion and dipping your toes in the water but not really moving – so many of those enterprises have gone from talk to having a real plan.”
Jassy said history will likely show the pandemic “accelerated cloud adoption by several years”.
The AWS chief argued cloud will be key to the survival of these large businesses, which historically have struggled to survive for the decades many might expect.
“If you look at the Fortune 500, just 50 years ago in 1970 you can see that the only 83 companies – or 17 per cent of them are still in the Fortune 500 [today],” Jassy said.
“If you look at just 20 years ago, [at] the 2000 fortune 500, only half of them are still in that list. It is really hard to build a business that lasts successfully for many years .”
Those that survive, Jassy says, are enterprises that “reinvent” themselves – the theme accompanying this year’s AWS announcements, which included more powerful and cost effective hardware and cloud services.
According to Jassy, many enterprises are waiting too long to reinvent, often not until the point of near bankruptcy, pivoting only out of desperation.
“It’s a little bit like borrowing money. Everyone will tell you that you don’t want to have to be borrowing money when the business is in bad shape. Because you may not get the rates you want or you may not get money at all.
“You want to be reinventing … all the time.”
Constant reinvention requires a mix of culture, technology and an awareness of the competition, according to Jassy, who detailed several steps in the keynote:
- Leadership will to invent and reinvent.
- Acknowledge that you can’t fight gravity.
- Talent that’s hungry to invent.
- Solve real customer problems.
- Don’t ‘Complexify’.
- Use platform with most capabilities & broadest set of tools.
- Pull it all together with aggressive top-down goals.
Examples of companies who do it well offered by Jassy included AirBnB in hospitality, subscription exercise bike company Peloton in the exercise industry, and Stripe in the payments market.
But Netflix in particular stands out, said Jassy. The company, originally a mail out DVD business, effectively cannibalised its own business with streaming because it recognised where the technology and industry was headed. “I think it turned out to be pretty good decision for them,” Jassy said.
For established enterprises there may be more blockers, however. Jassy says it means those trying to change need to be “relentless”.
“You have to know what’s working and what’s not working,” Jassy said. “And you will always have a lot of people inside the company who will try to obfuscate that data from you. Sometimes they think they’re doing you a favor and sometimes it is for self preservation reasons .
“But it’s hard to get that data, you have to be relentless about it. You have to challenge people.”
Jassy opened his keynote with a brief history of AWS’s rapid growth and argued there is plenty of room left because of the company’s relentless focus on customers and its own culture of reinvention.
AWS is far and away the market leader in public cloud market share, and popular with analysts. In recent years, however AWS has ceded some ground to competitors in market share and been criticised by investors for the company’s growth rate – below its main competitors in the most recent quarter.
According to Jassy, though, AWS still enjoys a mich larger revenue base.
“It took us a little over 10 years to grow to a $10 billion business, then it took us only 23 months to go from $10 to $20 billion, 13 months to go from $20 to $30 billion, and then 12 months to go from $30 to $40 billion,” he said.