Compliance

So far, the scaling advantages of CNAs in Adidas can be attributed to cost and performance.

However, for a global company like Adidas, national data protection legislation can become a barrier to scale internationally. This constitutes a challenge for global scaling of CNAs, as A2 states:

“How you make the data secure or how you deploy the services is super simple with cloud-native. The problem is if you made it “too” cloud-native, if you are too much into a cloud provider, you can have a hard time moving something [cloud] natively developed to run elsewhere” (A2, 07:11-07:40).

80 The problem with storing and processing of personal data in a distributed system became evident with “Runtastic”, a subsidiary of Adidas based in Austria. Runtastic is a mobile fitness application that tracks personal progress and provides professional training services. Runtastic thus stores user data. When Adidas wanted to enter non-EU markets with Runtastic, they faced a challenge:

“For our own company Runtastic, it was working very well in Europe, and now they [Adidas] wanted to expand to China. So the server in Linz, Austria works pretty well for people in in Europe, but legally it doesn't work at all in China or Russia” (A3, [22:29-22:49]).

A2 refers to the same example of Runtastic, yet more specific on the personal data issues of scaling the application to China and Russia:

“We had a big issue which were coming from China and Russia, where there are laws that states that data cannot leave the country. So we have to enter the data in for example Russia, but then the data needs to stay in Russia” (A2, 25:05-25:25).

In a global context, requirements that personal data must stay in the country on origin conflicts with the distributed nature of CNAs, where data is sent between servers in different locations.

However, a solution with Kubernetes was possible:

“[...] we developed a concept which allowed us to deploy any CNA with a hyper-scaler [large cloud provider] on-premise, by using a Kubernetes installation. Thereby we cloned it [the data] and connected only Russian traffic to it. And we also made sure that most of new application we do still runs on this installation type” (A3, 23:54-24:15).

Therefore, both the problem and solution of scaling Runtastic globally was cloud-native. For Adidas, the workaround of scaling CNAs globally was thus to set up an on-premise server that sends the cloned data back to Adidas. However, with the expansion of Runtastic, a central learning around the scaling of CNAs was experienced. As national data legislation can become a barrier to leverage the scaling benefits of CNA, Adidas is able to make technical solutions to legal challenges without increasing the complexity of the application.

4.9. Speed of Digital Business Strategy at Adidas 4.9.1. Agility

The desire to respond to changes more quickly, i.e. increase agility, was a central driver for Adidas’

transformation towards CNAs. However, before showcasing how increased agility is achieved in

81 Adidas, A1 stresses that organizational agility is not something that is merely “nice to have”. An ability to quickly react to changing demands is essential for the future success of the company, even survival:

“The times that we live in now, the fluctuation in business requirements changes a lot.

If you are not able to adapt fast to those changes, you are not in business much longer.

Therefore, if we don't have [the] systems that allow us to react fast to those changes, we are going to die. So this a main driver for us [Adidas]” (A1, 07:27-08:04).

A requirement to respond to changes more quickly inevitably brings additional requirements to Adidas’ IT environment. Not only does the IT capabilities in Adidas need to be competitive, they further need to be able to adjustable if required. In this relation, A1 express the rationale in moving away from a monolithic application landscape:

“Basically [...] we want to have the ability to transform IT and adapt to business changes much faster, which is difficult when you are dealing with big monoliths. Every change takes a lot of time. So going to a microservice based architecture will allow us to react to changes much faster” (A1, 06:19-07:14).

The flexibility of microservices reflects a digital response to the desire of increasing organizational agility, which monolithic application was a fundamental hindrance to. Moreover, in Adidas’ digital transformation, automation of processes plays a central role in speeding up software development, as A2 states:

“Speed isn't just quickly defining a feature and put it in production. Another way [to increase speed] is to automate. Everything you do that is cloud-native comes with an automatic access to APIs. You can put things into code. It's more adaptable and less interruptive to the existing process. It is tailored to speed” (A2, 05:48-06:24).

Software development consists of a broad range of sub-processes such as testing, configuring, deploying, etc. Fortunately, CNAs bring the possibility for Adidas to automate sub-processes of software development, for example with APIs. The automation of the set-up of software test environments illustrates how CNAs automate sub-processes in software development:

“Imagine you have a standard system. It will take a lot of time to learn the system and read the process documentation, and even after doing so, you still cannot test software because you don't have a production environment ready. In cloud-native, you have the big benefit that you [can] automatically wrap up a cluster and try for yourself very quickly” (A3, 15:47-16.12).

82 Under a monolithic, testing of software is limited to the system in which it is being developed. This stands in contrast to a cloud-native practice, where a software engineer does not need to be an expert on the underlying system, as the test environment is set up automatically.

Another way CNAs contribute to Adidas’ ability to more quickly react to changing demands is related to the integration of real-time data. A1 describes how the process of sending product data from factories to the Adidas headquarters was a manual task before the process was transformed to CNAs. Previously, whenever a change happened to a product, e.g. price changes in materials, new product images, etc., the sales employees in Adidas had to manually update the presentation slides related to the updated product. As Adidas sells thousands of products and many of these experience updates on a weekly basis, the manual updating of sales material added up to a significant number of working hours per week. Moreover, sales employees were often left uncertain about the accuracy of the product data during client presentations (A1, 29:06). The solution to improve this sub-optimal process is based on CNAs:

“We created a tool for them [in sales] that eliminate the need to [manually] make those updates. We basically provided a product where they can create their presentations in a web application. Everything that is put in those presentations is connected in real-time to our systems. So it ensures that data is accurate at all real-times. This applies to everything that they can put in those presentations” (A1, 30:15-31:07).

The time-saving benefits and simple setup of the real-time data tool based on CNAs are further described by A1:

“This is a very good example on how you can save not just time, but actually also ensuring accurate data all the time. And this comes with just a web application, a few microservices and a connection to some APIs to collect events in real time. So now Adidas avoids the redundancy of having to keep track of every change. Everything is automated” (A1, 32:17-33:04).

In summary, CNAs play a central role in increasing digital agility in Adidas. This is reflected in two ways from the interviews. Firstly, automation tools from CNAs help to speed up the sub-processes in software development, as it e.g. relieves developers from the time-consuming task of understanding a system’s process documentation. This also quickens the process of software testing. Secondly, the microservice-based architecture in Adidas allows for more accurate data relating to Adidas’ products as the previously manual task of updating data is now provided in

real-83 time. Both capabilities are made possible from cloud-native and works to make Adidas faster to respond to changes.