500,000 – 700,000 new startup businesses are launched in the UKevery year. In the US, startups created over 2 million jobsin 2015 – the number by now is likely to be almost twice that. In addition, last year saw a global M&A deal value of USD3.2 trillion – many of these M&A deals happen because a larger company wants to buy what a startup does well. In fact, according to the BBC, Apple has acquired about 100 companies over the last six years, which equates to one purchase every three to four weeks.
However, problems arise when companies believe buying a startup means they are now the same. When it comes to going Cloud Native, in particular, enterprises need to shift their approach.
Why you can’t buy ‘Cloud Native’
International law firm Foley & Lardner LLP says“The art of M&A includes integrating cultures.” By this it means that corporations with their strict processes and structure, and startups with their strong value-led cultures must find a common ground in order for an M & A to succeed. The thing is, when it comes to a non-Cloud Native corporation buying a Cloud Native startup there is no “common ground”. You simply cannot purchase Cloud Native.
Problems often arise when companies do not fully understand what Cloud Native really means. To start – it’s not “the cloud”. Cloud Native is a complete architecture – a philosophical approach for building applications that take full advantage of cloud computing. In most cases it requires complete structural, organizational and cultural change, in addition to the adoption of Cloud tech.
How to become Cloud Native
86% Businesses say cloud adoption is top priority. It’s easy to understand when research by Public First and Amazon Web Servicesstated “businesses that use more than three Cloud tools are twice as likely to be growing than businesses that use none.” However, a studyfrom Cloud Native Computing Foundation (CNCF) found the biggest hurdle embracing saw is the ‘cultural changes within the development team’. It’s for this reason that if corporations truly want to become Cloud Native – even after they’ve understood what the term really means – the first step should not be to hand over control of that transformation to the acquired Cloud Native company, or to their DevOps team. The first step is a full internal company culture review.
Identifying your current culture means you can identify the building blocks you must follow in order to reach your end goal of being Cloud Native. From here you can identify which cloud services are right for your company. Becoming Cloud Native does not mean you must use the full suite of cloud technologies, but simply the ones that are beneficial to your business objectives and goals. For this reason, understanding and prioritizing design before jumping into full-on implementation and deployment is imperative for a successful Cloud Native migration.
How to identify where you are on your Cloud Native Transformation
There are nine main stages that can be used to measure a company’s progress towards becoming Cloud Native. These include whether your culture is predictive, iterative or collaborative – the last one sits under Cloud Native; whether your product or service is data-driven; whether you have a DevOps / SRE team; and whether you’re incorporating cloud technologies such as Kubernetes, Containerization and Microservices.
The interesting revelation for many is that they may already be Cloud Native in some areas – for corporations these areas likely sit within the Cloud Native startups they acquire – but they could use a combination of Waterfall or Agile processes in other areas. Whilst a startup may have introduced Kubernetes to the service or product, if you do not meet all of the other requirements – such as delivering continuously and ensuring application maintenance that is self-healing – you are simply using cloud technologies, not evolving to be Cloud Native.
M&A activity is not set to slow anytime soon – it’s how companies and economies grow. It’s understandable why large corporations would buy Cloud Native companies at pace with the world’s rapid migration to the cloud. However, it’s worth noting that, whilst startups may be Cloud Native, if corporations truly want to combine cultures, technologies and processes, they’ll need to reevaluate what’s under their own hoods first.
