Ensuring the disruptive force of cloud brings tangible business value
There’s a change underway in the adoption of cloud for the enterprise. Until now, the primary driver for moving to the cloud has been cost reduction and efficiencies in IT. That’s all changing as cloud technologies evolve, disrupters come to the fore, and organizations are adversely affected by their lack of cloud maturity. Today, when embarking on a cloud-first strategy, the CIO argument to the board cannot be simply on the usually compelling IT cost reduction argument. Instead it increasingly needs to be built on cloud as a business enabler: a means to be more innovative, agile, to generate more revenue, create new revenue models, and introduce business advantage through insight.
Why the change? Cloud has always been IT driven, with the business case shaped by how it can improve efficiency across the IT estate and thus release spending capacity for other areas of IT. Now, however, as the march of digital truly gathers pace across the enterprise, there is far greater understanding of technology as a strategic business enabler, and the cloud’s core role within this.
Thus the CIO is having a very different conversation with the CEO and other members of the board. Spending on cloud solutions and services is being sanctioned as a strategic initiative, not purely as a technology play. So this conversation is driven by business value, and what’s needed to operate in a world where market disrupters are clawing into the business, to be responsive to the markets and competitors, and where talent retention is proving harder as the workforce becomes more demanding and selective of its employers.
The household-known innovators of this world, such as Netflix, Uber and Airbnb, have accepted the business case argument of the cloud, and just expect IT costs to be low. In essence, what they are really doing to drive value from the cloud is developing a new business model, a culture that is fast to innovate, and to respond to insight and change in the market. This needs cloud IT, but it also needs a host of other capabilities and values to derive benefit.
So why aren’t more companies making this transformation and seeing the business value of the cloud? Here are a few of the arguments we hear against it, along with our response:
- We’re not looking for the business case beyond the IT benefits – a much stronger universal benefits case needs to be brought into the boardroom.
- We fear the change – a structured transformation approach will drive that change across all aspects of the business.
- We’re concerned it might break something or are unconvinced of the need – take a phased approach to change; use framing to drive a proposition and the multi speed IT model to make it stick, then spread it out to other areas.
The key to successful cloud migration lies in a cultural change at the heart of the organization that has to be led from the very top. This is not just a case of switching infrastructure and application layer services; it’s a whole new mindset to the way of procuring and using technology. It’s about ensuring the business understands how the cloud can transform both the workplace and business outcomes. It’s an enterprise-wide realization that technology, and more specifically, the cloud is inextricably linked with business strategy enablement. If you focus solely on the IT business case, it’s an IT problem if the expected benefits fail to materialize, when in reality it’s everyone’s issue.
The CEO needs a reassuring measure, a methodology by which progress to the cloud can be driven. And that begins with a universal view of benefits from the intended outcomes. This must embrace each layer affected by the potential cloud solution: infrastructure, application service, project delivery, business unit benefits, and ultimately enterprise-level benefits.
At Capgemini we’ve built a business case framework for cloud-enabled transformation that starts with this universal benefits view. It’s a formalized methodology, the type of which is needed to base any cloud transformation business case conversation. While each CIO will have their own approach to put before the board, the steps will be similar. They include: identifying and recommending actions needed to realize the benefits; defining technology, skills, process and organizational changes; and establishing investment needs.
Beyond such a framework, everyone has to see cloud as a business enabler and understand the value it can bring in terms of speed-to-market, brand reputation, customer experience, innovation, and more. At the enterprise level, blanket adoption is unlikely to be there from day one. Instead, this cultural shift must come as a result of seeing successful tangible delivery using cloud technologies as a platform for innovation, and build out from there.