Most software companies eschew services as low margin. Not Pivotal. Instead it's using consulting services to change how companies think and code.
Can we be real for a minute? As big as cloud computing is (and it's really, really big), most organizations are so stuck with their servers that the mere thought of how to get from their on-premises data center to the cloud is terrifying. But it needn't be such.
At least, that's what Pivotal's strategy seems to be. While the company behind the open source CloudFoundry project makes hundreds of millions of dollars selling software to companies ready to make the move to more modern application infrastructure, arguably the more interesting part of its business is Pivotal Labs, which works directly with enterprises to help them see how to change.
Cloud, after all, is about cultural transformation even more than software.
A growing market
Not that there isn't a lot of cash in that cloudy software. There is. By Gartner's estimate, the overall cloud market will top $186 billion in 2018, up 21.4% from 2017's $153.5 billion. That's a lot of money.
Pivotal is grabbing its share of that pile by helping its customers both save and make more money. As a Pivotal-commissioned Forrester study has highlighted, Cloud Foundry developers gain 50% more coding hours per week than those not using the platform. How? Because the "automation and self-service features of Pivotal Cloud Foundry decrease manual and mundane deployment tasks. Wait times for environment setup and code to be prompted to production are also significantly reduced."
SEE: Cloud migration decision tool (Tech Pro Research)
Sounds good, right? That efficiency gain can lead to more product releases, with release schedules dropping from taking months to happening in a week...or daily. This efficiency, in turn, also leads to significant productivity boosts worth $31 million over three years, by Forrester's estimate. Time saved, meanwhile, is worth $6 million.
Happy now? Of course. But the trick is getting to this cloudy wonderland. Software by itself won't do that.
Growing the market
Sure, Pivotal competitors also have consulting arms with services designed to help enterprises become productive with their software, but I don't think anyone else has gone to the extents that Pivotal has.
Pivotal, for example, invites potential customers to visit its location and see modern application development in practice. It's a way for customers to see what a cloud-savvy enterprise looks like in practice, and get a sense of what's possible for them.
For those unable to make the trip, Pivotal brings the lab to them. In this process, Pivotal pairs the customers' developers with its own experts, who work side-by-side building a product. Together they practice extreme programming, user-centered design, and lean engineering practices.
The whole thing is focused on enabling cultural transformation. As Antonio Melo, practice director at Humana, has said, Pivotal helped Humana "foster a culture of organizational product experts, designers, and engineers working together, face to face."
Of course Pivotal Labs' consulting services won't be as margin-rich as Pivotal's software is. That's ok. The idea is to enable companies to get the most from that software. So, for example, in the company's app transformation practice, Pivotal will work side-by-side with the customer to break down monolithic apps into microservices, setting up the pipelines.
In short, Pivotal Labs is a lower-margin but high-value "gift" that should keep on giving as Pivotal enables enterprises to embrace the cloud in ways that they simply were previously incapable of doing. More companies should be doing this.
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