Reuters
- Hans Wald, chief technology officer for 120-year-old company Thomas, put his company's entire IT operations on Amazon's cloud back in 2013, when the cloud market was young.
- Six years later, in 2019, he had the ultimate moment of vindication. When Oracle handed him a surprise $1 million bill, the cloud meant that he was able to walk away from the database giant's fees.
- Thomas also dropped VMware, another expensive software vendor, by moving to the cloud.
- The cloud hasn't just saved the company money by allowing Thomas to ditch legacy software. It has also made it easier for Thomas to launch new digital and big data products, Wald says.
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Cloud computing promises to save companies a lot of money compared to running IT operations the old-fashioned way of buying software and hardware and running data centers.
Hans Wald, chief technology officer for 120-year-old company Thomas, can attest to that.
Thomas is best known for ThomasNet, North America's biggest catalogue of industrial parts and equipment. A hundred years ago, before the digital age, Thomas famously produced giant print catalogs. But its operations have long since been moved online, leading it to new digital businesses like publishing, online advertising, and even making marketing software for industrial companies.
Thomas is exactly the kind of company that pundits imagine when they talk about the wonders of so-called digital transformation. It's a company that was born before the internet, grew into a digital empire and acquired a hodgepodge of legacy servers, software, and systems along the way.
Thomas
Thomas Chief Technology Officer Hans Wald
"Thomas has been around since 1898. we just had our 120nd anniversary," Wald said. "That's a long time to accrue legacy technology. We have just about every technology stack you can think of."Upgrading that IT menagerie to the latest greatest tech is what digital transformation is all about.
Wald actually saw the promise of cloud computing way back in 2013 - a time when Google and Microsoft were still attempting to be taken seriously as competitor to the leading Amazon Web Services.
He decided then to use Amazon Web Services as a way to "lift and shift" - which is to say, entirely move Thomas's existing technology into the cloud. In so doing, the company would save money by unplugging the company's two big data centers. Within a year he had achieved that goal.
But it was just a few months ago, in 2019, that he had a satisfying, vindicating moment that many IT professionals dream of.
That's when his legacy database vendor, Oracle, tried to hand him a huge, surprise $1 million bill and Wald got to say: No, thank you.
Power to the users
To understand just how big a deal that is, it's helpful to understand how the old-school way of buying IT took the power from the customer and gave it to the software vendors - and how cloud computing changes that dynamic.
When customers buy IT software from a company like Oracle or Microsoft, they don't actually own it. They license it for a specific period of time, typically three years, and are then allowed to use it for a specified number of users on a specific configuration of computer server.
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The software vendor may actually then conduct audits on their customer to make sure that they're using the software in compliance with those technical requirements. If the vendor finds the customer is breaking any of their complex licensing rules, they may levy a fine in line with the terms of the licensing agreement. Much like an IRS audit, this process is tense and unwelcome by most.And then, when the three-year contract is up, the whole thing starts over again with a new license agreement.
But shifting to whole new software vendor is often so expensive, time-instensive and difficult, particularly for software that the business relies on, that most IT departments choose to pay the software vendor's bills and fees and stick with the status quo.
'Pushed us over the edge'
Which takes us to 2019, when Thomas had to renew its license with Oracle for its database software.
"We were faced with having to upgrade Oracle and purchase a set of new licenses last year. The price put in front of us was over $1 million," Wald said. The worse part was that the hefty price tag didn't gain them anything particularly new and useful, he said. They were basically just being allowed to keep using their database "unchanged, what we had, and that was kind of what pushed us over the edge," Wald said.
But Wald had a secret superpower during this negotiation with Oracle: Amazon Web Services.
Since Thomas was already a customer of Amazon's cloud, he knew that the company offered a version of the same Oracle database, but delivered from the cloud. In other words, Thomas could simply pay Amazon for access to the Oracle database, and - because it's a cloud service - get billed by Amazon only for as much as the software was used. Thomas wouldn't need a new licensing agreement with Oracle at all.
This version of the Oracle database, as offered on AWS, was smaller and less fancy than what the company had been using - specifically, it was the standard version, rather than the higher-end enterprise version. Oracle doesn't allow Amazon to sell its biggest and best version.
But Wald says that a quick analysis confirmed that Thomas wouldn't give up any features they really needed by downgrading to that less fancy version.
But wait, there's less
A lot of companies would find it scary to walk away from a critical piece of software that the company had been relying on for years.
But over its years of usingAmazon's cloud, Wald's team had experimented with many of Amazon's own databases. AWS offers several products that compete with Oracle, including its direct competitor Amazon Aurora and its big data service called Redshift. Thomas gradually increased its usage of those AWS-made databases, Wald says, until it only really had one Oracle database left.
AWS CEO Andy Jassy (left) with VMware CEO Pat Gelsinger
"We do have a significant footprint using Aurora," Wald says. "We probably use all of the different database engines that AWS provides."His team has even "migrated" some of its Oracle databases to Aurora, which he says has helped it get a lot of the same functionality without the headache of worrying about licensing.
"That's the value that you get there. You don't have to worry about buying a license or deciding up front," he says.
And once the decision was made not to sign a new license for its Oracle databases, it felt like a good moment to abandon the rest of the Oracle software that Thomas had long been using, too.
Abandoning Oracle
And once Thomas refused to sign another license for that last Oracle database, Wald and team decided to ditch the last bit of other Oracle software the company had been using for years, too. Thomas is in the process of yanking out Oracle's financial software, eBusiness Suite, and moving to a cloud competitor, Sage Intacct.
Thomas will continue running its final Oracle database via the service it gets from Amazon, but Wald says that there are no plans "to increase our Oracle usage" in the future.
Oracle isn't the only expensive legacy vendor he banished with the cloud, either.
When he moved to AWS, he was able to drop VMware, too. VMware's flagship software helps companies manage their computer servers. But once Thomas was fully in the cloud, Wald had no computer servers to manage.
Today, Amazon and VMware have a partnership to help companies move their IT infrastructure into the cloud, without having to do much by way of rewriting or rethinking their setup. It's a way to keep companies using VMware's flagship products in the cloud.
But Thomas's journey indicates that once companies are in the cloud, they may chose to slowly alter their applications and licenses so they won't always need it.
Hello, Microsoft and Google
Back in 2013, when Thomas was choosing a cloud, there really wasn't another industrial-strength option to choose from except AWS.
Reuters
But in 2020, times have changed and so Thomas is also using Microsoft's cloud, Azure.Microsoft's cloud was "a pretty compelling case" for some of the company's older applications, written with a Microsoft technology known as .NET.
Lately, he's also been kicking the tires at Google's cloud, too, known for its specialty in AI and machine learning.
These days, a growing number of tools help applications work reliability even if bits and pieces of those apps are sprawled across multiple clouds, he says.
"I like the idea of having the best tool for the job," says Wald. "I would say we're definitely at 80-85% of everything we do is on AWS. We have that remaining component that's mostly on Azure. And going forward we'll choose as we need."
He indicates that he won't wind up trapped by a cloud vendor the same way companies of yesteryear were trapped by a old-school software.
New businesses
Because the cloud allows Thomas to treat IT as a smorgasbord, sampling this and that, paying only for what it uses, the company has found an unexpected benefit to being all-in on the cloud: faster new product development.
It's easy to experiment with product development when there's no major IT cost associated with exploring new ideas.
"You just spin something up, and whether it works out or not, you can shut them down," Wald says.
The downside is that he had to develop new IT cost controls to ensure his teams aren't spinning up new cloud services all over the place that aren't really needed and running up big bills.
But ultimately the flexibility of being all-in on the cloud has allowed Thomas to find new products such as the Thomas Index Report, a publication, blog and quarterly report that showcases trends in the industrial markets.
"We have a tremendous amount of data, digital exhaust from the activity of the platform - which is the buyers and sellers in the industrial marketplace - and our ability to capture trends," Wald says. "We believe ultimately that can be predictive of commercial behavior. We're working really hard on that and that's really enabled by that level of [cloud] data technologies."