JEDI already changing the market

In many ways, it doesn’t matter if the Defense Department ever gets the $10 billion JEDI cloud infrastructure contract underway because the impact of that controversial, single-award contract is already being felt.

“Whether JEDI is successful or not as a program, it has forced a debate on the broad scale movement to the cloud,” said Mark Testoni, CEO of SAP National Security Services. “We’ve seen more activity around the cloud in the last two years since this has been talked about than before.”

The federal government, particularly defense and intelligence agencies, are embracing commercial technologies and cloud is the biggest example of that embrace. Testoni has seen it in SAP NS2, a subsidiary of the Germany-based software conglomerate.

Five years ago, NS2’s cloud business was nascent. The company was trying to build a human capital cloud and get it FedRRAMP certified.

“We had a couple people dedicated to it,” Testoni said. “Now it has become our primary delivery platform, even though we still have services.”

The parent company SAP is moving all of its products and offerings to the cloud, so Testoni is living through that shift first-hand and sees it as a positive change.

“Look at the core ERP (enterprise resource planning) business,” he said. “In the old days, the customer would decide to do something and spend weeks and months and even years acquiring data center capacity. In parallel we’d be working on requirements.”

But with the shift to a cloud platform, Testoni said “we aren’t waiting around for that stuff."

Part of NS2’s strategy is to move customers to the cloud and once there, begin using more modern platforms and eliminate custom code.

“The nature of the integration tools today are one of the biggest changes,” he said. “The tools and the cloud combined allow us to migrate and move forward a lot faster.”

NS2 has invested in the cloud through three acquisitions since 2016: Technology Management Associates, Apex Expert Solutions and Volume Analytics. “All three are part of a migration to create cloud offerings,” Testoni said.

NS2 also has a venture fund to invest in small companies. One of those investments was in CounterTack, which provides endpoint security.

The shift to the cloud has created what Testoni calls a “creative tension” in the market. JEDI has been a big catalyst for that tension.

“But there has to be tension for there to be progress,” he said. More traditional government contractors and government customers need to more rapidly embrace commercial technologies.

“Players either need to adapt or be less relevant,” he said.

But Testoni is not predicting the demise of traditional systems integrators. First, the procurement system is designed to spend money through integrators. Secondly, the legacy knowledge of the systems and their architectures reside with those integrators, he said.

“But the tension is good and JEDI has forced that debate,” Testoni said.

The shift to the cloud also is laying the ground work for what he sees as the next big disruptor on the horizon -- 5G.

“We are not talking just speed, but how we look at business problems,” he said.

The rise of the internet was a march to centralize everything. “But if you are going to operate robotics at the edge, can you really have everything come back to the mothership?” he said.

5G will enable real computing on the edge, Testoni said, which will power self-driving cars in the commercial world and autonomous weapons systems for the military, for example.

“You aren’t going to manage that from central bodies,” he said.

He compared it to the rise of smartphones a decade and half ago. Think about the Blackberry of 2004, compared to the capabilities of a smartphone today.

“I think we are going to have the same thing, maybe even more,” he said. “All the greatness that the internet has brought will only be accelerated.”

And that is why the shift to the cloud is so important.

“To do great things at the edge, you need consolidated data in the middle,” Testoni said.