Back to Digital blog

Reinventing at Amazon: From the front lines of AWS re:Invent conference

By Martin Gillibrand, Tom Quinn, Chris Smith, and Paul Welling

Amazon is a household name to businesses and consumers alike. While its impact on the retail market is well documented, the impact of Amazon Web Services (AWS), a cloud computing platform that has an array of services used by developers everywhere from start-ups to some of the world’s largest corporations, is still playing out.

For this reason, a few of us from the Digital Labs team landed in Las Vegas to attend the annual AWS re:Invent conference. We got to see, firsthand, some of the biggest developments in cloud of 2018, as well as get some insights into how the world of digital “builders” (in other words, developers and engineers) may evolve in 2019. Here are a few of our takeaways from the event.

A quick reminder: AWS growth is big

The scale and energy of this year’s conference was palpable. In fact, one keynote audience member noted that it felt like watching Steve Jobs on stage, unveiling previously unheard-of technology that was available straightaway, not only to big companies but also to the builders themselves. People were clamoring to understand new features, and growing affinity networks within their companies and across organizations centered on AWS.

AWS’s standalone sales have grown an eye-popping 43 percent since last year, and that level of growth is likely to continue One big reason? AWS is reducing the cost of cloud storage, coming down from $4 to $5 per terabyte per month to $1. One insurance company using AWS has successfully migrated all of its information to the cloud—they don’t have a single internal data center left.

Globally, the United States seems to be leading enterprise-level adoption of the cloud. But AWS CEO Andy Jassy noted, “I think we’re just in the early stages of enterprise and public-sector adoption in the US; outside the US, I would say we are 12–36 months behind. So there are a lot of mainstream enterprises that are just now starting to plan their approach to the cloud.”

The adoption gap between the United States and rest of world is staggering, but one of the overlooked implications is its impact on the relationship between enterprise IT and their service partners. Both are trying to adapt to and anticipate future digital trends and needs underpinned by the cloud.

Focused on big companies

A big area of focus for AWS was offering new services aimed at large companies. Keynote speakers rattled off new offerings—Outpost (on-site cloud), Managed Blockchain (decentralized support for Ethereum and HyperLedger), FSx for Windows File Server (fully managed Windows file system on Windows native servers), and more that specifically address pain points in large companies. That includes replacing “tape” backups—yes, tape, that stuff you can rewind and fast-forward—with digitization and cloud migration, often a low priority for management teams, given the resource requirements and the often significant length of time before they see a payback .

It may not be the sexiest area for developers to get involved in, but their support is critical to providing greater agility in information management as enterprises shift toward complete systems in the cloud.

New products and what they mean

  • Blockchain in the mainstream: Amazon announced the release of the Quantum Ledger Database (QLDB), an encrypted, transactional ledger, which was a clear signal about how important blockchain has become. For organizations that seek a centralized, encrypted repository of information, such as the banking and insurance sectors in financial services, which must process a large number of transactions, QLDB fills two previously unmet needs in one offering. Many organizations are using blockchain for just a single feature, a “smart” ledger—an accurate, real-time stream of things that have happened. QLDB, however, is looking to simplify the process by providing a centralized repository of information and encrypting the data as it’s streamed to servers, making it unnecessary for each organization to build its own system or encrypt and sign each event. The blockchain space is already crowded, so time will tell if demand is there, but given QLDB’s announced partnership with well-established Ethereum, AWS is looking to make up ground quickly.
  • Personalization for all: AWS has opened up Personalize, the real-time personalization and recommendation engine we have all experienced on Amazon, to the public. The clearest use case for Personalize is for other retailers who want not only to increase shopper engagement, but also to be able to adopt this machine-learning (ML) technology without recruiting new ML specialists.
  • Time flex responsiveness: Taking a lesson from Amazon’s own warehouses and shelf-stocking practices, AWS announced DynamoDB On-Demand, which companies can use to predict purchase flows in order to manage physical inventory, or really for anything that operates in a time series. Time series flexibility has always been a thorn in the side of database managers. Having tools—including the new Forecast—that allow organizations to make predictions based on historic data solves for that pain point without needing to hire machine-learning experts.
  • Democratizing artificial intelligence (AI) and machine learning: AWS is building out layers of tooling and translating them into ML and AI programs to enable the broader developer community and data scientists to leverage what would normally require a significant amount of specialized education. The intent is to allow general programmers to tailor these tools to their needs, in effect democratizing AI and ML for deployment across a broader set of customer use cases and applications. On a more fun note: the new AWS DeepRacer—AI-controlled mini cars for mastering ML—has its own racing league. So keep an eye out for us on the track.

Power to the builders

The way Amazon is rolling out products to developers underscored an important point: that AWS values the technical/developer community around it. Immediately after a new product was announced in a morning keynote, developer onboarding sessions were announced for that same afternoon. In fact, AWS refers to its community of users not as developers or engineers but as “builders,” really giving the sense of a product-led organization.

And to that end, AWS explicitly expanded certain functions to target this builder community. For example, it added features to Lambda, its serverless computing service, such as support for Ruby, support for custom run times, “Lambda Layers”—the enablement of common code to be shared between functions, and more.

Overall, AWS is well aware of the importance of enterprises, but through these efforts and more, it is demonstrating that these individual builders are in fact also critical stakeholders and that it needs to give them what they need, in order to ultimately succeed with enterprises as well.

One comment stood out for us. A retailer whose CIO spoke as an AWS Partner about the future of his industry, said, “If today you’re building yourself a two-, three-, or even a five-year architecture plan, then you’re doing it wrong. In two years what you’ve implemented will be so out of date then, it’s a waste of time now. Build things so that they can change. Build technology that has agility and a team that has an ability to react.”

Martin Gillibrand is an expert associate partner in McKinsey’s London office, where Tom Quinn is an expert associate partner, Chris Smith is a partner, and Paul Welling is an expert associate partner.

The authors would like to thank Peri Kadaster and Steve Van Kuiken for their contributions to this article. For more information about Digital Labs reach out to digital_labs@mckinsey.com.