Digital Transformation in Business and Rise of Cloud Native

Digital transformation is a digital solution to a business or organization's problems. In order for successful digital transformation, changes in technology, business model and corporate culture should be linked to each other. To do this, technology should be more flexible, scalable, and agile to accommodate change. What makes this possible is a cloud approach.

From this point of view, the cloud can be seen as basic infrastructure for many companies to succeed in their digital transformation. Many companies that are starting to understand the correlation between digital transformation and cloud have recently begun convert their systems to cloud. There are three main strategies for migrating business system to cloud. The first is re-hosting, which simply migrates an existing system to cloud. The second is re-platforming which means refactoring at the platform level. And the third is a re-writing method in which the application itself is newly designed, built, and transferred to suit the cloud.

In order to successfully achieve digital transformation, the third method of re-writing method, among these three methods should be adopted. We call this third approach cloud-native, and it will provide the technological flexibility and acceptance necessary for enterprises to carry out their business strategy of digital transformation. Let's take a closer look at the concept of cloud native.

The Concept and Characteristics of Cloud Native

“Cloud Native” is a term that distinguishes applications and systems created considering cloud environment from the beginning from systems or applications created according to the existing infrastructure paradigm. Being created in consideration of cloud environment from the beginning means maximizing advantages of the cloud, so cloud-native is also a generic term for approaches or technologies for this purpose.

The characteristics of cloud native can be considered from various perspectives, but let's categorize them into two, technical and business characteristics. The technical characteristics of cloud native are, first, that it can be created well only when various elements and technologies are combined compared to the existing method. Even when companies recognize advantages of cloud native, the benefit makes them consider adopting this approach. Skills from multiple domains, such as container technology, modern architectures such as MSA, DevOps, and Agile methodologies, should be well orchestrated. For this, specialized personnel with technology internalized are required. Second, flexibility and scalability. It is a story about how quickly you can respond to the external environment, technology, and rapid changes in customers. Applications should be designed, built, and operated through an architecture such as MSA that enables this. The third feature is use of automated tools. A system created through a cloud-native approach increases the number of nodes and complexity compared to existing systems. In order to operate these systems well, design construction considering the operational elements based on automated tools should be carried out together. Google is considering this concept as a concept of Service Reliability Engineering (SRE). This is a business characteristic of cloud native.

First is cost optimization. Operating traditionally built, especially complex and large systems in the cloud can be more costly for businesses than they think. In order to optimize costs by maximizing advantages of the cloud, it is necessary to optimize the resources used through cloud-native design and to be able to use approaches such as partial scale-out. The second feature is time to market. In order to release the service or application desired by the company at desired time, a system that can be worked with agility based on a very flexible system and a development environment and culture are required. What makes this possible is a cloud-native approach. The third is acceptance of change. Software and systems released through cloud native can more quickly adapt to customer and environmental changes.

Key Elements for Cloud Native

In order for cloud native to be well implemented, various technical elements should be well orchestrated. The key elements that should be well orchestrated are described in

Container technology enables to secure IT portability and flexibility. Ensuring that the infrastructure is idempotent provides a stable environment and enabling safe deployment and rollback. Container technology has also contributed greatly to enabling infrastructure paradigms such as Immutable Infrastructure and code as an infrastructure. In addition, container orchestration technology is required to operate many containers, and Kubernetes is currently used as a de facto standard in this area. With Micro Service Architecture, you can design and build scalable, flexible, and scalable applications.

Combining cloud infrastructure and MSA can quickly respond to technical and functional changes and provide an infrastructure capable of partial scale-out or fault isolation. Through the DevOps system, various stakeholders in the process of building and operating the system can shorten the lead time of software release by applying quality and security elements in all processes with a common goal. Through an advanced CI/CD system, the process is automated and visualized to ensure quality and enable safe distribution and rollback.

Agile methodologies also enable more agile software development work around identified tasks and, in the process, ensure software quality from the customer's perspective through collaboration with customers. And what is most important and difficult is the ability to internalize, systematize, connect, and combine each element so that all elements harmonize well, although it is important to do well in each of these key elements. shows a approach of building cloud native for better connecting these key elements.

The Importance of Cloud Native in Corporate Business Strategy

The business environment should respond to very rapid changes. Currently, the global economy, culture, and technological environment are interacting in one sphere of influence and creating rapid changes, and customer changes are also changing every moment at an unpredictable speed and change. In order for a company's business model to create value in response to this environment, it should have a foundation capable of responding quickly to these internal and external changes. It is the cloud-native approach that provides this foundation. Traditional methods can accommodate small changes but cannot accommodate larger technological and functional changes, so companies have been periodically implementing next-generation projects. And the faster the internal and external changes are, the shorter the cycle for the next generation of companies has become, and in the end, it is difficult to withstand 3 to 5 years of using a system that has been invested with a lot of money. To give the answer to this problem is a cloud-native approach.

A system designed and built through a cloud-native approach can accommodate not only small changes but also large technical/functional changes, and depending on the company's strategy, a company can have a system that does not require the next generation to always respond to new changes. The competitiveness of companies that have a system that can respond sensitively to these latest trends and those that do not will create a growing gap over time. In this regard, cloud-native is already emerging as a necessity rather than an option in corporate business strategies.

Importance in the Financial Business

Previously, the financial industry conducted business through an advanced business model in a relatively unchanging environment, but in accordance with the changes of new megatrends, the financial industry needs to respond quickly to changes and respond sensitively to trends. Currently, the financial industry is seeking various changes to respond sensitively to the new environment and customer needs in line with the paradigm of the 4th Industrial Revolution. Trends in this innovation are expanding: Customized financial services, advancement of credit evaluation system, expansion of contact-free financial transactions, simplification and diversification of payment and settlement methods, competition to build financial platforms with new approaches such as fintech in earnest. I think that whether a company can quickly adapt to this new financial industry paradigm and provide services that fit the trend will probably be an important factor in becoming a leader in the financial industry in the future. Even in the financial industry, the topic of digital transformation to solve existing problems digitally is still important, and efforts to respond to rapid changes in customers and the environment are becoming the most important source of competitiveness. In particular, the financial industry is an industry with a very large investment in next-generation systems. Considering these characteristics, I think it is not realistic in terms of ROI to continuously respond to rapid changes in customers and environments in the financial industry with next-generation projects. And the solution in the financial industry that can solve these problems and economically and effectively build and renew systems and platforms that are sensitive to key competitive factors and trends is also cloud-native.