The economics of cloud-native go much deeper than sticker price

February 3, 2020 Derrick Harris

In previous eras of computing, when pre-packaged commercial software was the norm inside most companies, focusing on the cost to buy or license those products made a lot of sense. If everyone in the industry is using basically the same tools to power basically the same applications, the only real competitive advantage is being able to get them for less money. Today, however, the opportunity costs of choosing the wrong technology can significantly outweigh the actual costs of choosing the best one.

This is especially true in the application platform space, which encompasses everything from deploying applications down to managing the underlying infrastructure. Today, custom software is a major driver of competitive advantage. More specifically, custom software developed in-house and managed in-house is a major driver of competitive advantage. These are the applications that make your business processes more efficient, keep your employees more informed, and, often times, serve as the primary point of engagement with customers. 

And better software is the raison d'être for cloud-native computing: It’s a collection of technologies (e.g., Kubernetes, Cloud Foundry, service mesh), architectures (e.g., event-driven, microservices, Reactive), and processes (e.g., CI/CD, SRE, agile) aimed at powering more flexible, scalable, and responsive applications. Modern applications that, in turn, help their creators compete in a more connected, real-time, and, frankly, unpredictable world

How does a 142 percent ROI sound to you?

The Total Economic Impact Of The Pivotal Platform 2020Recently, analyst firm Forrester conducted a Total Economic Impact study—based on information provided by companies about their actual usage of and results from Pivotal Platform—that highlights the benefits of using the cloud-native Pivotal Platform to deploy and manage applications. The top-line number speaks for itself: Over the first 3 years, Pivotal Platform customers can expect to see a 142 percent return on investment. Forrester estimates benefits in excess of $26.2 million, against a cost of approximately $10.9 million, for a net benefit of more than $15.4 million.

Any investment that nets a 142 percent return looks pretty wise—but the even greater thing about this one is that it’s a conservative estimate (you should read the whole report for details on the methodology). The analysis makes some necessary assumptions in order to provide a standard estimate, but does not account for usage (in terms of number of applications hosted) beyond those assumptions. It also acknowledges other non-quantifiable benefits, such as the reduced employee attrition that customers report upon modernizing their application platforms with Pivotal.


Want to hear even more? Register for our Feb. 27 webinar with Forrester TEI consultant Sarah Musto: "Prod or it Didn’t Happen: The Value of Getting Code Into Production"


Line by line, the breakdown of economic benefits looks like this:

  • Increased developer productivity: $10.79 million

  • Increased revenue from reduced cycle times: $6.16 million

  • Reduced downtime: $5.44 million

  • Hardware cost savings: $2.05 million

  • Security patching efficiency: $1.85 million

These are all important areas, but let’s assume that increased developer productivity, reduced downtime, and hardware cost savings don’t need much explanation. The benefits of productive developers have become well understood over the past several years. And it should go without saying that we want our applications available and our hardware footprint minimized. Instead, we’ll focus on the benefits of increased revenue from reduced cycle times, and security patching efficiency

Automated deploys mean happier users and more money

Reduced cycle times is code for continuous integration and deployment (for more on that, check out “The CIO’s guide to CI/CD”), as well as the general idea of pushing regular, automated application updates in order to fix bugs, improve performance, and/or add features. This is in contrast to traditional development processes based around major releases every month, quarter, or year, with all hands on deck in case something goes wrong. 

Beyond supporting a wide array of CI/CD tools, Pivotal Platform generally provides a smoother path to production by minimizing the delta between development and production environments—if new code passes integrations tests in the dev environment, you can push it to production with confidence.

When analyzing this factor, Forrester focused on revenue-generating applications (6 of them in Year 1, up to 8 by Year 3) estimating that embracing its built-in automation and tooling gives Pivotal Platform customers an additional 2 weeks of application availability—i.e., revenue-generating features being available—each year. That increased availability is where the extra revenue comes from. 

What does that look like in practice? For example, Liberty Mutual used Pivotal to get a motorcycle-insurance-quote application live in just 28 days, and then responded to customer interaction and feedback by pushing 45 production updates in just 55 days—resulting in an above-average conversion rate with virtually no advertising.

However, CI/CD and automation are not just about improved feature availability. Continuously updated applications also function better, meaning they’re available to customers and those customers aren’t fighting against bugs or performance issues that might not be resolved for months. Just 9 months after first engaging with Pivotal, DICK’S Sporting Goods was able to improve mobile-app load times by 65 percent; and as it has continued to modernize its application environment, its business has flourished.

Regularly pushing small, focused changes, and automated testing, also results in more secure applications. Secure code might not make organizations money, but insecure code certainly can cost them a lot. This is why Pivotal customers such as Fidelity are building security validation into their code-deployment pipelines, and why many customers in heavily regulated industries are beginning to realize the benefits of security automation in order to speed the development process.

And speaking of security ...

It pays to get ahead of security patches

Pivotal Platform users have long benefited from its automatic security patches, many of which—especially on platform components and installed services—happen behind the scenes with little or no user intervention. We’ve highlighted this process in previous posts about high-profile vulnerabilities, including Meltdown/Spectre and last year’s Kubernetes runC exploit. Large organizations such as Wells Fargo and Cerner have also discussed how they’re taking security automation even further—including by utilizing Pivotal Platform to repave and refresh entire fleets of VMs multiple times per week.

Forrester estimates this automation will save the average organization about $1.85 million over 3 years, and describes the operational improvements like this:

Prior to investing in the Pivotal Platform, customers frequently had planned instances of downtime to deploy security patches to applications in their ecosystems. In an attempt to minimize the business impact of these downtime events, employees responsible for patching were often required to complete these patches on the weekends or work off-hours to complete them. The patches also relied on extensive manual work to run correctly. . . .

 

By migrating applications to the Pivotal Platform, organizations alleviate the effort of many of their development and operations staff by automating these patches. The patching process no longer requires a full team to monitor and deploy the patches. Additionally, organizations no longer need planned instances of downtime as security updates occur behind the scenes.

Learn more

If you want to learn more about how Pivotal Platform helps users save—and earn—money while modernizing their applications and infrastructure, downloading the entire Forrester Total Economic Impact report is a great place to start. 

You can also hear directly from customers who engaged Pivotal on their cloud-native journeys and have come out better and happier on the other side. The following blog posts provide highlights from a number of talks at our recent SpringOne Platform conference, as well as embedded videos of the entire sessions:

A look at John Hancock’s journey from SOA to microservices

How RBC adopted SRE culture to help it embrace cloud-native applications

Accelerating change: How GM's IT footprint went from zero to China in a year

Why a well-built app is driving sales and brand loyalty at Sonic Drive-In

AutoZone's road to cloud-native computing and empowered developers

How Yahoo Japan serves more than 40 million users with help from Pivotal, Spring, and SRE

Discover explains why digital transformation is a marathon, not a sprint

After outsourcing failed, SoftBank sparked a software revival with Spring and Pivotal

And, of course, you can always check out the Pivotal Platform product page for more detailed information on the various components (including PAS, PKS, and Build Service), or get in touch.

About the Author

Derrick Harris

Derrick Harris is Senior Manager, Product Marketing, Pivotal.

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