What motivated Ericsson’s big push into the cloud

When Mats Hultin, pictured, took over as group CIO at Ericsson four years ago, the company decided to review its large outsourcing contract. At the same time, the cloud team, led by cloud service VP Johan Sporre Lennberg, stressed for modernization and a clear cloud strategy going forward. 

“We chose to combine the selection of new partners and a transition to the cloud, and put a lot of effort into how a modern collaboration structure should look,” says Hultin. “We understood we needed a cloud partner that was responsible for system integration and infrastructure, and where our role would be to hold the ecosystem together.”

The sourcing process was long and thorough in order to find out what the model would look like and what requirements would be placed on various partners, and all the major system integrators had to be involved.

“This way we got inspiration and were able to shape our final model, so it was a co-creation,” he says.

More than 10 potential partners were involved but in the end, the choice fell on global shared services company HCL as the major partner. And when it was time to get the collaboration in place and start the big cloud migration, the Covid-19 pandemic hit, which ramped up the urgency.

“It quickly went from ‘how do we do this’ to ‘how quickly can we do this,’ says Lennberg.

The strategy behind the cloud move was largely based on increasing demands to be able to identify and consume new technology more quickly. It simply wasn’t sustainable to work with lead times of six and 12 months, as the IT department did for a long time. Speed became paramount in terms of getting access to new technology, generating revenue, and implementing infrastructure.

Pre-work required

In parallel with the entire sourcing process, other work was done to prepare the way for cloud, centering around risk, and robust information management and regulatory compliance.

“What you have to do is go much deeper into your information management and classification,” says Hultin.

The entire process was also continuously monitored by a review team looking at the commercial and legal aspects, and a new operating model was required.

“We introduced agile working methods and agile production, so it was in place when we started working with our service providers,” says Lennberg. “It was part of the cultural journey that laid the foundation. If it’s not done, the organization isn’t ready for new ways of working, policies, and processes.”

Ambitious targets

An 80% goal was also set as to how much of the central applications would go in the cloud.

“We set this goal so everyone would have the right mindset, and that we’d challenge established processes and culture,” says Lennberg.

The target was set high but it was deemed within reach.

“We knew quite well what the potential looked like,” he adds. “We verified the assumption about how much we could move by testing 10 suppliers, where we tested the technical feasibility of moving to the cloud, and how much the business was able to move and manage. Then we saw that 80% was realistic.”

Above and beyond

Two years after the initial move, over 90% of all applications are now in the public cloud. Around 30% of all applications are new and approximately 20% have been discontinued.

“The 10% that remains on prem is because of legal requirements or technical debt,” says Lennberg.

Using all three major cloud providers—Microsoft, AWS and Google—the IT department at Ericsson consumes approximately half, and the other half outside the business, and an important issue has been to manage costs when it’s so easy to get access to capacity and tools. The financial processes in particular are among the most difficult to implement and have required a major cultural change.

“In the past, the responsibility for cost control lay with the infrastructure teams and now it lies with operations, and it requires a lot of management,” says Hultin. “There are also measures such as limiting budgets that can be used.”

Migrating the business system

A large part of the migration has been about getting the business system from SAP to the cloud—a journey that took approximately six months.

“Our SAP environment is one of the largest and most complex in the world, so it was a huge move,” says Lennberg.

In order to succeed, the planning was done in close collaboration with all partners.

“Working proactively with specialists has been a success factor,” says Hultin. “And we knew that SAP works well in the AWS cloud.”

The core system itself was moved over a single weekend, with upward of 300 people working in shifts, and the rigorous planning worked.

“The following Tuesday, someone from finance said, ‘When you move next weekend, I want you to call every hour so I know if there’ll be any problems,’ and we had to explain that the move had already been made,” says Lennberg.

The importance of speed

Hultin believes that migrating as quickly as Ericsson did is a model of success.

“We haven’t allowed any amount of tinkering with alternative infrastructure strategies,” he says. “Everything can be done much faster than you think. We set up a tough schedule and worked rather forcefully, but when you get over 50% in the cloud, you get a change in the entire IT organization. I think if you drag it out it becomes a more painful process.”

Hultin also thinks it’s not enough to look only at costs.

“There was an element of cutting costs when we started, but we looked more at the whole,” he says, adding that the business in the cloud is much more cohesive now, with IT and the business in sync in a new way.

Something that specifically saves costs is getting access to infrastructure and tools.

“When new technology comes along, such as AI, we can use it immediately,” says Hultin. “We can leverage our cloud providers’ investments of many billions instead of developing for a few million ourselves. It’s hard to compete there.”