The cloud journey today: CIMdata’s Mark Reisig explains the popularity and advantages of being in the cloud – Ep. 2 Transcript

Here’s the transcript to episode two of Cloud Talk Today. If you missed the first episode, you can listen here. The actual podcast to episode two is below (in case you want to read and listen at the same time).

Scott Salzwedel: Hello and welcome. This is Siemens Cloud Talk Today, the podcast that touches on cloud computing and digital transformation and how the cloud accelerates innovation and how the cloud is shaping the future. But it’s more than just innovation, which is why we’ve gathered here today to discuss the many advantages, surprises and successes of being in the cloud.

Welcome… I’m your host, Scott Salzwedel.

In this second episode of Cloud Talk Today, we’re going to tackle some misperceptions and truths. We’re going to talk about the cloud journey and why businesses are still reluctant to jump on board. We’ll talk about lessons learned, and of course, we’ll discuss successful transitions to the cloud and the steps you can take for your own successful transition.

Joining me today is Mark Reisig of CIMdata. Mark has over 40 years of experience in digital transformation, information technology and engineering. He is keenly aware of product lifecycle management having worked at companies such as GE, Oracle, and Kraft Heinz, among many others. No doubt, Mark will bring some wonderful insight to our conversation today.

Mark, welcome to Cloud Talk Today. It’s an honor to have you—a real privilege. Before we begin can you share your background with our listeners?

Mark Reisig: It’s great to be here. As for my background, I’m an executive consultant and the director of our sustainability and green energy practice here at CIMdata. As you mentioned, I have worked for a combination of large companies like GE, as well as software solution providers in senior management roles covering many industries: aerospace and defense, heavy industry and energy, to name a few. I started my career in CAD and transitioned to PLM in the early ’90s. My degree is in technology and management, and I’ve worked with CIMdata for several years as a client prior to joining them a little over a year ago. Today, I work with both industrial companies and software solution providers, helping them develop PLM and digital transformation strategies.

Scott: Wow, that’s quite a track record, and we’re really pleased to have you. So, first, I want to address why there’s still this reluctance to cloud adoption. I stumbled across this amazing fact in a benchmark survey by Siemens and AWS (that’s Amazon Web Services) 97 percent of the 2,833 respondents surveyed cited cloud migration or adoption as a top emerging priority for their organization. I mean, wow, that’s amazing! So, it’s hard to believe that there’s this reluctance out there when you hear those kinds of numbers. So, Mark, I have to ask you: what’s your take on that?

Mark: Clearly, companies are now more focused on digitally transforming their businesses on the cloud. In the past, our research showed PLM had been a laggard in terms of cloud adoption; companies were more willing to perform isolated migrations to the cloud, and typically in areas like CRM, HRM, MES and even ERP. Today, as the study suggests, companies are beginning to prioritize the migration to and adoption of the cloud for PLM and their enterprise infrastructure. Now, there’s an absolute realization that not operating in a modern cloud environment can impact your ability to digitally transform and operate a more efficient and agile business.

Scott: But still, we see some holdouts, and I’m sure research has some very good reasons as to why this is happening.

Mark: Yeah, Scott, very high level: there are three main obstacles to adopting a modern cloud architecture. The first is security. So, security breaches have been rampant for a while, and the risk of losing any of your intellectual property is not an option. So, trusting an outsider with your data has always been an issue—more of a perception, but clearly still a concern. The second area is on-premises applications and infrastructure. Most companies have a myriad of on-premises applications, and they can literally number into the hundreds of applications. The idea of attempting to migrate a company’s PLM technologies to the cloud implies a certain degree of risk. I’ve heard some people say it’s kind of like performing open-heart surgery on a patient while they’re running a marathon. Not a trivial undertaking. And finally, the lack of IT experience or knowledge; and this varies from company to company, of course. But, despite making improvements in this area, most have limited knowledge of the cloud, which is why they focused on very specific migrations, and often not the ones that would really transform your business. So, those are the three areas.

Scott: You mentioned security, and that’s not surprising at all. Of course, that’s going to be a huge issue. For the longest time, a business or organization thought it could do a better job protecting its IP on-premises, rather than letting some nondescript third party do it. That’s always been the mantra, but it’s changed. So, what has happened to make this huge change?

Mark: Scott, that’s true. Traditionally, companies were reluctant to trust a public cloud provider with their IP. The logic was that their data maintained behind the firewall was more secure. They give you many different reasons: some would say, well, they’ve got government regulatory restrictions, like ITAR for sensitive defense-related items, or it could be the FDA or some other regulatory concern. As an example, one fear was that the SaaS provider might push an upgrade down that could impact a process that is critical to their business. So, the prevailing thought was, hey, my data, on-prem, behind the company’s firewall, was safer than a public cloud provider like AWS. That was a perception; the reality is completely different. That’s an utterly false perception; it’s actually more secure on the public cloud with a provider like AWS. And the reason for that is that individual companies simply don’t have the resources, the proactive cybersecurity expertise, the accessibility or the ability to scale their operations that can match a cloud provider like Amazon Web Services—not even close.

Scott: Okay, so what’s happened to turn things around?

Mark: The COVID-19 pandemic uncovered many flaws in how companies were hosting PLM and other technologies supporting a remote workforce. So almost overnight two things occurred. First, there are 200 services that AWS provides with a 99.9 percent SLA uptime with global access to 190 countries that started looking way better than those with the on-premises environments who were struggling. So, the second during the health crisis, which caused many companies to actually accelerate their digital transformation initiatives, which now began including cloud adoption. And that is the way to think of it, a well-thought-out digital transformation that involves all the benefits of a modern cloud architecture. So, businesses that operate on the cloud dramatically increase their data security. AWS offers highly reliable encryption and security with multiple services. They’ve achieved third-party validations to meet security and compliance standards for thousands of regulatory requirements. AWS GovCloud meets the requirements for what’s known as FedRAMP, which meets very stringent security requirements for U.S. government agencies and their contractors that host ITAR-regulated data. So, AWS has all this and more. They also are compliant with the Code of Conduct for the EU, which demonstrates compliance with the GDPR. And that’s the commitment to protect the privacy of their EU customers. So, the bottom line is there’s simply no comparison with the level of security AWS provides compared to any company attempting to do this on-prem. And even in highly regulated industries, AWS helps mitigate the risk. So, it’s the opposite of what the perception had been for many years.

Scott: I do want to circle back with another reason cited for the reluctance for companies to jump on the cloud. And that’s the on-prem apps and infrastructure. This does seem like a legitimate concern: How can you convince a company that its legacy software and years of built-up infrastructure will remain intact if they do move their operations to the cloud? What kind of promises can you make? What do you say to a company that doesn’t really want to move all those services and operations to the cloud?

Mark: So, this is something CIMdata deals with every day. Over the years, companies automated vertical functions, areas of expertise, such as engineering, or the disciplines within engineering, or other functions like manufacturing, sourcing, operations, and so on—with on-premise software. And they usually customize the software to meet the unique needs of their own company. Along with that they develop homegrown solutions to further optimize their work. So, this is starting to get complicated. When you add mergers, acquisitions and reorganizations, you end up with an on-premises infrastructure with many error-prone, inefficient processes. So, the obvious problem here is the cost to support this steadily increases with your legacy IT infrastructure. This growing technical debt takes up a continually larger portion of the IT budget and resources, which takes away your ability to focus on transforming your business to be more competitive. But the even bigger problem is what they’re doing here. They are sub-optimizing processes, which become barriers to being able to digitally transform across these functions. They are in essence, like landmines, that swallow up your ability to change and access data that is essentially siloed from the rest of the enterprise. So, the time, cost and disruption to digitally transform and migrate to the cloud may seem overwhelming to some. But, if done correctly, it’s a drop in the bucket, along with an incredibly strong ROI. But this is all about digital transformation, which you’re going to handle much better once you move to the cloud.

Scott: When you do make that shift to the cloud, what happens? Companies/businesses—how do they reap the benefit?

Mark: Tactically speaking, we shifted to cloud. Of course, reduces the need for on-premises servers, which are time-consuming or expensive to purchase, deploy, upgrade and maintain. But the real value is the modern architecture, which digital platforms can then use to improve a business. And companies need to use what we call an “open digital innovation platform” that can incorporate a digital thread. And really, that’s a multi-dimensional digital web that spans the entire enterprise in many directions. And they can connect all aspects of product data from early-on concepts through life, including other software vendors’ data as well. So, this enables a tremendous advantage in terms of collaboration, innovation and efficiency. It will improve your cost of quality, reduce your time to market. And, in order to do this, you need to build on top of a modern cloud architecture, which ensures resiliency, the ability to adapt to market realities with speed and agility. I can’t guarantee an on-premises piece of software that isn’t cloud-enabled is a perfect fit for the cloud. But I can guarantee that doing nothing—just forgetting about it—will definitely, ultimately hurt your business.

Scott: Sure, yeah. I think we’ve made it quite clear that having your head in the sand is not the way to go for business these days.

Finally, let’s talk about the IT/OT convergence and what that means. There’s the IT staff, the small domain-size businesses. Are they even equipped to handle today’s IT challenges? So first, let’s address that IT/OT convergence.

Mark: IT, or information technology, typically manages software applications, data and communications, whereas OT, or operational technology, manages physical devices and processes like manufacturing and industrial automation. So, to break down these silos they must converge. Companies must bridge the gap between siloed information systems and operational systems. In doing so, they’ll foster greater collaboration, resulting in a more efficient business. Now, on small- and medium-sized businesses they are not equipped to handle IT challenges the way IT challenges have traditionally been handled. A large company will typically have somewhere between ten to 20 percent of the company’s resources in IT and often find themselves overburdened. A small- and medium-sized business has all the same IT challenges that larger companies deal with, but they need to operate with a much leaner IT. And let’s say they use five percent or less of all of the company’s resources in IT. So, what’s interesting now is the cloud has enabled smaller companies to cost effectively use the same technologies, with the same cybersecurity, same accessibility and scalability, enabling them to be just as competitive without a large IT department. And I have firsthand experience with small companies, ranging in size from 20 to 250, that transitioned very smoothly through the pandemic without missing a beat because their entire infrastructure had already been cloud-enabled.

Scott: Wow, great stuff. But, I’d like to follow through with what we mentioned: the IT department. What’s going on with today’s IT departments?

Mark: The challenge is many companies are not that cloud knowledgeable. A company that can manage their data, their processes, their applications, and their infrastructure better enables greater efficiencies. They’re more collaborative. They’re able to make more informed decisions because the right people get the right data in a timely fashion. So from an IT perspective, the CIO is always trying to get the most talented people to deliver the most modern architecture. From a Wall Street Journal article, cloud postings between 2017 and 2020 grew by 90 percent. And then you had the pandemic, and virtually every company was scrambling to increase the talent in this area, and it’s still going on. So, some of the problems they typically run into are understanding the basics, like system performance and availability, service level agreements and proactive cybersecurity. Deployment options and their associated costs in the past were sometimes seen as confusing as well. Another challenge is that some applications are not cloud-enabled. So, just moving some applications to the cloud and not others is not necessarily digitally transforming your company. You need to understand how one move to the cloud impacts other applications and other functions. One of the other common concerns we’ve seen is data lock-in with a SaaS provider. That’s not a concern with Siemens, but in the past, with some vendors, it was a real issue. As with any new technology shift, the more expertise that is built up within an IT group regarding the cloud, the easier it’ll be to navigate these types of issues.

Scott: I’d like to switch directions here and talk about the companies or businesses that have made the move to the cloud, but for whatever reason, their efforts fell short. Now Mark what accounts for some of the shortcomings?

Mark: Well Scott, the main thing that hampers cloud initiatives is the same thing that impedes digital transformations, which is underestimating the complexity. As I’ve said, moving an application to the cloud doesn’t solve that much. The real problem that companies face is that we have people and data that cut across many different disciplines and functions, using many applications. Typically somewhat siloed applications are typically operating in a somewhat unreliable, error-prone, semi-manual process. Some of the applications can easily migrate to the cloud, while others may not be cloud-enabled. So you just can’t snap your fingers and everything magically works in the cloud. Now, I’m glossing over the planning part, which I think we’ll come back to. But, in terms of technology, what you need is an open, flexible architecture and a way to build connections. This takes a broad range of open PLM technologies and open cloud services. So, what we’re talking about is dealing with a system of systems that makes up the greater product ecosystem that can interoperate with many other enterprise applications, such as CRM or ERP, and so on. And this must be able to continually evolve with a great deal of cloud services.

Scott: I think what we’re getting at here is the importance of entering into a partnership with a reputable cloud provider.

Mark: Yes, Scott, exactly. Because we’re talking about driving digital transformation into the future, where no two organizations will have the same needs or face the same opportunities or disruptions at the same time. So, it’s not only important to base this on an open digital platform like Siemens has Xcelerator, but to do so with a cloud provider like AWS, with all of its services, accessibility, scalability, support and proactive cybersecurity. We’re not just moving applications from on-premise servers to be hosted on the cloud, we are future-proofing the infrastructure of an organization so it’s resilient. So, any future employees, suppliers, partners, and customers can collaborate securely from anywhere in the world, at any time.

Scott: Ah, anywhere in the world at any time. How true, and that resiliency—that’s so very important as well. Lots of good points.

You mentioned Siemens, so it’s no secret that Siemens is at the forefront of so many innovative software and digital services. For us, it’s all about the digital transformation. The Siemens Xcelerator digital business platform is really a powerful way for companies to get up and running in the cloud. And, of course, as you mentioned Siemens Xcelerator it has all the SaaS solutions, which are key to the digital transformation.

Mark: Not only does Siemens provide Teamcenter X, a SaaS cloud solution on AWS, which can be quickly deployed, but the real key is also that you have an open, broad digital platform, which you have with Siemens Xcelerator. As part of that, having low-code capabilities with Mendix enables customers to build connections to other third-party applications, which is extremely powerful. So, having a digital platform that’s open, flexible and connects people and data across processes that span the extended enterprise and can work with other vendors’ data is key to digitally transforming that. And your partnership with AWS, providing robust cloud capabilities from two industry leaders that companies can trust.

Scott: Yeah, the Siemens AWS collaboration has been going strong for almost ten years, and I think a lot of folks don’t realize that. So Mark for our listeners who want to transition to the cloud, or commit to Software as a Service, what are the steps? What’s critical to success these days?

Mark: First, I think it’s important to think of this in terms of digital transformation. With that, of course, there’s strategic planning in terms of deployment and it can be phased and accomplished in an iterative, agile approach. I think it’s easy for most people to remember: people, processes, and technology, and I would add data. To be successful, you’ll be addressing each. So, it’s very important to get buy-in across an organization. That’s critical. All stakeholders—and I can’t tell you how many times I’ve worked with clients and the original members charged with transforming the business were largely from one function—you’re not going to win importing data or focusing on the needs in one group. It’s very easy to optimize one area and ignore the whole. We want to avoid that. The whole should be greater than the sum of its parts. What we’re looking for, as we move to the cloud and as we digitally transform, is to foster collaboration. That should be diverse. You’re looking for small, but valuable wins that create momentum. And then you’ll see that people are willing to change because they like playing on a winning team. And that transforms and yields better results. Those successful outcomes yield more successful outcomes. So, I would say anyone listening, don’t be afraid to try things, pivot, fail fast and move on. But it’s an ongoing thing. And what you really need to do is focus on obstacles and processes that will result in the most value. If you don’t, you can find your transformation will slowly grind to a halt. So, you should be creating roadmaps, which is an easy way to identify serious obstacles and convey the status to everyone involved, and every company should have roadmaps or multi-year roadmaps that they keep updated. So, a company that can move faster, changes faster and it’s a company that will drive better business outcomes. If you have to wait on your IT department for a server, an upgrade, a patch—whatever it is—that’s a waste of time. This is where SaaS, still enables flexibility, which Teamcenter X as an example does, is a really good thing. You want new capabilities in the hands of your people in a more collaborative environment, faster. So digitally transforming on an open digital platform, connecting across the extended enterprise, from concept through life, on a solid foundation like AWS, is a good thing.

Scott: I would just like to take a moment to highlight the Siemens AWS partnership. We touched on it already. This is an intense and highly successful collaboration with Siemens and AWS. So, we’ve been working together to optimize some of Siemens’ legendary software offerings, like Teamcenter, you mentioned. So, there’s Teamcenter X, and another great SaaS is the Simcenter STAR-CCM+. We’re seeing lots of success with that. At this point, listeners, if you’re curious about Siemens SaaS solutions, you can go to AWS Marketplace. Just Google “Siemens AWS Marketplace,” and you’ll see all the Siemens SaaS solutions. It’s a constantly growing list. I think right now, the last check was, we had like 31 SaaS offerings, so it’s worth checking out.

Mark: CIMdata is impressed with the collaboration and partnership of Siemens and AWS. We believe the adoption of PLM on the cloud will continue to grow and be a major focus for companies of all sizes. Having the SaaS Teamcenter X offering, along with Mendix and other offerings, and all the applications you have on the AWS Marketplace is really exciting. We certainly encourage companies looking to migrate their PLM operations to the cloud to consider Siemens’ SaaS solutions, powered by AWS and the Siemens Xcelerator digital business platform.

Scott: Well, Mark, it looks like our time is quickly running out. Thank you for a wonderful conversation. And are there any parting shots?

Mark: Thanks for having me on, Scott. I just encourage anyone in a company that still has a high percentage of on-premises applications to consider how well they are collaborating and connecting across their company and their supply chain. It’s been my experience that clinging to siloed, on-premises environments creates more error-prone, sub-optimized processes and restricts data sharing and collaboration. This holds back your ability to innovate, leaving your company more prone to disruption with an inability to respond and adapt to unforeseen business changes. Also, the shift to a more distributed and remote work environment, at some level, is here to stay. We simply are becoming a much more connected world, and that demands rapid and secure access to an organization’s data, processes and applications. This is fundamental to being able to digitally transform your business. Those that adopt PLM on the cloud can enable this transformation. They take advantage of the speed and ease of remote access, reduce their costs, scale faster, deploy faster and take advantage of a more modern and secure infrastructure, resulting in a more resilient and agile business. And it’s more rewarding and fun to collaborate and work in environments like this. So that’s all I’ve got. Thanks again, Scott.

Scott: Mark, thank you. It’s been an honor to have you on the episode here today. At the top of the show, I mentioned we’re planning future episodes of Cloud Talk Today. If you enjoyed this episode and would like to listen to upcoming episodes, please subscribe to Cloud Talk Today on Apple iTunes, Spotify, or wherever you get your favorite podcast. You can also check out the links in this podcast description.

My name is Scott Salzwedel, and this has been Siemens Cloud Talk Today. I hope you enjoyed the show, and that you’ll join me again for our next podcast. Until then, keep your head in the cloud and your feet on the ground.