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AWS CEO Andy Jassy Drills Down On Cloud Adoption And Amazon’s Culture

‘The senior leadership team has to have conviction that you’re going to make a move to the cloud because inertia is a very powerful thing, and it’s easy to block in the middle,’ the Amazon Web Services CEO says in a wide-ranging technology leadership talk.

The top reason why companies and governments are moving to the cloud is the speed and agility with which they can change customer experiences, and security has become one of the top selling points for choosing No. 1 Amazon Web Services, according to Amazon Web Services CEO Andy Jassy.

In a wide-ranging technology leadership talk at CERAWeek 2019, Jassy talked about the cloud’s value proposition and the challenges it presents for some companies, and the new technologies most piquing his interest.

He also spoke to Amazon’s culture, the importance of hiring “builders,” speed to market and having senior leaders who are open to big ideas and tolerate failure in the roughly half-hour conversation at the annual energy conference in Houston hosted by IHS Markit.

And Jassy filled in the audience about Amazon’s prohibition on PowerPoint presentations.

Jassy On The Value Proposition Of Cloud

AWS is a $30 billion revenue-run-rate business that’s growing about 45 percent year over year in the midst of a “titanic shift” to the cloud, Jassy said.

Cost is almost always the “conversation starter” when it comes to companies moving to the cloud. Not having to lay out capital up front for servers and data centers, and instead paying for cloud as a variable expense as they consume it, is very attractive, he said.

“The variable expense is lower than what virtually every company can do on its own because we have such large scale that we pass on to customers in the form of lower prices,” Jassy said. “We’ve lowered our prices on 70 different occasions in the last 10 years—largely in the absence of any competitive pressure to do so—just because the DNA inside Amazon is we relentlessly work to take out costs to give those back to customers so they can do more.

“In the cloud, you just provision what you need,” Jassy said. “If it turns out you need more, you seamlessly provision up in minutes, and if it turns out you need less, you give it back to us and stop paying for it.”

But the No. 1 reason enterprises and governments are moving to the cloud is the agility and speed with which they can change their customer experiences, according to Jassy.

“If you look at most companies’ on-premise infrastructure, to get a server typically takes 10 to 12 weeks,” he said. “If you actually find something that you like and want to roll out, it takes longer, and then you have to build all of this surrounding infrastructure software like compute and storage and database and analytics and machine learning. In the cloud, you can provision thousands of servers within minutes, and then we have 165 services that you can put together and use in whatever combination so want. You get from an idea to implementation in several orders of magnitude faster.”

Jassy On Different Industries’ Speeds To The Cloud

Every imaginable vertical business segment is moving significantly to the cloud, according to Jassy.

“The three industries that I would say were most conservative moving were financial services, health care and oil and gas,” Jassy said. “We have this very strong view that we’ve had for a while, which I think you’re seeing borne out in the market, that in the fullness of time—and I don’t know if that’s 10 years from now or 20 years from now—relatively few companies will own data centers, and those that do will have much smaller footprints. All of that is moving to the cloud, and really the question now is … just when and how fast and in what order.”

Jassy On Challenges Encountered By Companies Moving To The Cloud

There always are some technical challenges when shifting business functions from on-premises to a different medium such as the cloud, but the reality is most of enterprises’ biggest challenges are cultural and leadership- and process-oriented rather than technical, according to Jassy.

“The senior leadership team has to have conviction that you’re going to make a move to the cloud because inertia is a very powerful thing, and it’s easy to block in the middle,” Jassy said. “Coupled with that, you need to set an aggressive top-down goal that forces the organization to move faster organically than it otherwise would.”

General Electric’s chief information officer, for example, decided to move 50 of the company’s applications to AWS in 30 days, according to Jassy.

“She got her technical leaders together, and she said for 45 minutes, they all told her how dumb it was and how it was impossible,” Jassy said. “She listened to them and said, ‘I hear you all, but we’re going to do it, so let’s giddy-up.’ They got to about 40 applications in 30 days, but in the process they learned their security model, their compliance model and they figured out how to architect and operate in the cloud. They had a lot of success and momentum, and now they’re in the process of moving 9,000 applications to AWS.”

Companies sometimes will get paralyzed if they can’t figure out how to move every last application, Jassy said. When AWS goes through a deep portfolio analysis with companies, it characterizes which applications are easiest to hardest to move, and which ones need to be rearchitected.

“Lots of your applications are pretty easy to move,” Jassy said. “And it turns out getting those early workloads in the cloud informs how the hardest workloads that you’re going to move last will be moved as well.”

Training also is key to companies successfully moving to the cloud.

“The companies that really succeed are the ones that train significant numbers of people,” Jassy said. “We train hundreds of thousands of people a year just for that reason because once you get that firm base and experience, it becomes much easier.”

Jassy On Cloud Security

Security is the top priority for Amazon, according to Jassy, and it will drop everything if it thinks something needs shoring up.

AWS has been in the market for just about 13 years, and in the first eight or so, security was the biggest “blocker” for enterprises and governments moving to the cloud, he said.

“There wasn’t a specific problem or gap, it was just the nervousness of a different model,” he said. “But I would say in the last four to five years, security probably has become one of the top few selling points of people moving to AWS and the cloud.”

That comes down to the numbers of people Amazon has focused on the cloud and capabilities it gives to customers to protect themselves, Amazon’s compliance, certification and security practices, the way AWS is architected, and the way it gives unusually fine-grained access control that allow companies to do things that are much harder on-premises, he said.

“Most people come away feeling like their security posture improves when they’re in AWS versus when they’re on-premises,” Jassy said. “If you’re a CIO, you have all these servers that you’ve distributed over many years —you don’t know where they all are. You don’t know what things are running under people’s desks.”

“In the cloud, you can make a single API call and know where every single one of those servers are, who’s checked them out and what access control they have, and the ability to change it and put more guardrails in place,” he said.

Jassy On What New Technologies Excite Him

Machine learning and artificial intelligence, the Internet of Things and edge computing, and robotics and drones are among the new technologies that capture Jassy’s imagination and will be game-changers to business, he said.

“Most applications in five to 10 years will be infused in some way with machine learning and artificial intelligence,” Jassy said. “Companies will work at different layers of a stack. You’ll have expert machine- learning practitioners that will build models for you on the frameworks. You’ll have everyday developers and data scientists that use this abstraction which we have that’s called SageMaker, which is really a managed service to build, train, tune and deploy machine-learning models. We have a lot of customers who will be able to do what they typically think of as AI services that closely mimic human cognition—so text to speech, speech to text, translation across a lot of languages, natural language processing—so you don’t have to read and figure out what’s in every piece of corpus text. You can kind of get meaning from something in a machine-learning fashion—the ability to recognize video and what’s in it, images and what’s in it.

“A second technology that we’re pretty excited about is what people call IoT, the Internet of Things or edge computing,” Jassy said. “When we think about 10 years from now and when we think about hybrid, we don’t think the on-premises part is going to be in data centers. We think the on-premises part will be billions of these devices that sit at the edge—in our houses, in our offices, in factories and oil fields and agricultural fields and planes and ships, and automobiles—everywhere. These devices have relatively little CPU and relatively little disc, and so the cloud becomes disproportionately important in implementing all of those devices.”

Jassy pointed to John Deere, which he said has a few hundred thousand telematically enabled tractors collecting planting information in real time, sending it to the AWS cloud, doing analytics and then sending the information back down to planters to take action. And to monitor its liquified natural gas facilities, Woodside Energy has set up AWS’ IoT capabilities on all sensors, enabling them to detect well in advance when foaming is happening so it doesn’t have unplanned downtime, Jassy said.

“The amount of capabilities of what you can do at the edge—not just collecting the data and analyzing it in the cloud, and then taking action back on the device itself, but also building machine-learning models in the cloud and pushing the predictions and inferences over to the edge—you’re going to see that as a real game-changer,” he said.

There will be a number of activities done today by humans that in the future will be done by robots and drones, Jassy said.

“We’re starting to see a lot of oil and gas companies who are starting to build drones,” Jassy said, noting AWS’ RoboMaker robotics service. “They’re starting to build these drones that go up into the rigs and evaluate whether there’s safety issues or whether there’s a leak or whether the gates have rust—all kinds of things that are dangerous and arduous for human beings to do that you’re going to have robots do. And then we’ll use the human beings on more value-added activities where their safety and their intellect are better utilized.”

Jassy On Joining Amazon

In the spring of 1997, Jassy was attending Harvard Business School and just returned on a red-eye flight from the West Coast and a final-round interview with business and financial software company Intuit. He was back in Boston for three hours and driving with a friend to New York to see a concert.

Jassy listened to an answering machine message, and it was Amazon, which had an 8 a.m. interview cancellation for an open job.

“I didn’t really know anything about Amazon, but I thought it sounded interesting and, why not, I was there,” Jassy said.

Jassy On Amazon’s Culture And The Importance of Speed, ‘Builders’

Jassy joined Amazon a little less than two years after it was founded.

“Amazon was always a place that if you were a builder, you were going to love it,” he said. “When we really thing about our culture at Amazon—we talk about it internally all the time—we’re trying to build a place that builders can build.

“There was this maniacal view that everything you did started with the customer,” Jassy said, “and all your strategies and tactics worked backwards from there. That was really palpable inside the company. I remember there were lots of moments we were all running around like our heads were cut off. We all had jobs that were way too big for us, and we just realized there was this land rush going on, and people were starting to get used to buying online.

“We had this incredible opportunity,” Jassy said. “And one of the things we felt then—and I feel even more strongly about today, maybe 10 times more strongly than I even did in 1997—is that speed disproportionately matters to companies in every size and every stage.”

But, Jassy said, “You can’t have speed at the expense of security and operational performance or safety— that’s a disaster. But the reality is, if you’re in any business where you think speed doesn’t matter, I think you’re kidding yourself. The world is a competitive place. It changes a lot, and that’s what I saw a lot at Amazon.

“There are a few things that we do to try to move quickly—the first is who you hire,” Jassy said. “And we disproportionately index on who we hire on builders. We think of builders as people who are inventors— people who look at customer experiences and try to be honest about what is not right about those and seek to reinvent those; people who realize that launching something is the starting line, not the finish line. At a lot of companies, you get these people who … love to get to launch and then lose interest. Nothing any of us builds catches lightning in a bottle on day one. There’s a lot of iterating and listening to customers.”

In the early days of Amazon, product managers were in one group, engineers in another and the operations folks were in their own group, which led to a lot of “finger-pointing” at each other when projects were late or inadequate, according to Jassy.

Now those employees are together in autonomous groups that are given AWS building blocks and “own their own destiny,” Jassy said, a move that allows Amazon to move more quickly in all of its businesses.

“You don’t get that weird effect where engineers would build something and throw it over the wall to ops, and the ops guys would say, ‘These guys built something that doesn’t work,’” Jassy said. “When you’re carrying the pager, and you get the page at 2:30 in the morning, you have a way of building software a little differently.”

Jassy On Being Open To Big Ideas And Failure

As most companies get larger, they also tend to get more conservative and have senior leaders walking into meetings on new ideas looking for ways to say no, according to Jassy.

“Not because they’re ill-intended, but just it’s a lot to manage, and you get a little bit more conservative,” he said. “The opposite is true with Amazon. As senior leaders, we’ll all tell you that our favorite meetings— and the ones we look most forward to—are the ones on altogether new ideas. We don’t say ‘yes’ to everything, but if you watch the behavior of leaders in those meetings, we are trying to figure out ways to problem-solve to get to yes.

“If you’re going to invent a lot, and if you’re going to move fast a lot like we do, you have to be comfortable with failure,” Jassy said. “It’s a real dichotomy at Amazon because we hire these very achievement-oriented, Type A people who hate to fail. And yet if you’re inventing and pushing the envelope, you are going to fail sometimes.”

Jassy pointed to Amazon’s failed 2014 release of its Fire smartphone as “very culturally reaffirming.”

“Our phone was not a success, in case you didn’t know that,” he said. “But the way we view all of our initiatives inside of Amazon is we think about outputs, and we think about inputs. The ultimate output for a public company is your share price, and other outputs are things like free cash flow and operating. But you can’t manage the outputs. The only way you can drive the outputs is to be focused on the inputs. Ninety-nine percent of the goals that we care about are the inputs. And in the case of the phone, there were a lot of good inputs. We hired a great team who built really difficult technology and did a lot of invention, and delivered it on time. It turned out we had the value proposition wrong for the phone.

“But if you don’t have a way to reward the people who takes risks on new initiatives when they did a good job on the inputs and have a good landing spot for them, then you won’t get good people who will work on new initiatives,” Jassy said. “They’ll only work on things that are the sure bets.”

Jassy On Why Amazon Doesn’t Allow PowerPoint Presentations

Amazon outlawed PowerPoint presentations for internal meetings in 2002 because they disproportionately reward charismatic presenters and penalize those who aren’t, Jassy said.

“Oftentimes, people really don’t understand the content, but they get swayed by the person presenting,” he said. “And then the PowerPoint presentations are very easy on the presenters and hard on the people listening, because the slides are really skin-deep. You can’t really understand any depth and the ideas, so you constantly have to be asking questions and interrupting. It just takes too long to get through it, and we found it took us many meetings, and it was a really disjointed way to get through information.”

Amazon instead uses “narratives” that can be a maximum of six pages long, excluding the appendix.

“The thing that’s great about narratives, and I think has really been a key part of our success and our ability to move quickly, is that if you write a narrative that is skin-deep, it is painfully obvious,” Jassy said. “A good narrative gets a room full of people who aren’t close to the topic up to speed really quickly on the background and the context, and the three or four issues that really need to be figured out. So … we get right at the heart of those issues, and we have intelligent conversations, because people have some background. We tend to get through issues in a lot more detail, a lot more crisply, knowing what we’re going to do and faster.”

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