Three-Step to Craft a Good Cloud Strategy

IT investment links directly to business outcomes. The challenge for CIOs will be to respond to this revenue-oriented demand while addressing the cost-cutting pressure that will remain

Today's business strategy is about business growth, cost effectiveness and risk management.     IT strategy is a critical component of business strategy at the age of digitization, and Cloud, now becomes significant consideration in IT strategy, therefore, it’s a strategic imperative for business to craft the effective cloud strategy and benefit business growth for the long term.

Through Good Strategy, Bad Strategy, we learned the three essential elements of strategy: A good strategy has an essential logical structure that being called the kernel, The kernel of a strategy contains three elements 1) A diagnosis of the situation 2) The choice of an overall guiding policy 3) The design of coherent action

We may follow the principles to make a good Cloud strategy kernel:

1.    Diagnose IT Challenges, Explore Cloud Opportunities

IT Challenges: Now many organizations spent 70%+of their resources on legacy infrastructure maintenance & operational projects, worrying about upgrades to hardware and software, IT has the reputation as cost center to play the role as firefighter or controller

Cloud Opportunities:

A: CIO's roles should more focus on the strategic side of IT rather than putting out operational fire, and this is where the biggest driver for cloud based services in the business environment.

B: What business problems does Cloud solve that can't be solved by more traditional forms of application and service delivery at a fraction of the cost (and perhaps risk)? As a business why would we choose cloud over some other service delivery technology

C: Does Cloud provide the right opportunities to get out of the non-value adding IT business as soon as possible and only a very few on-premises applications will be kept in the legacy format.

2.    Align Three Cloud Value Propositions to Leverage Choices with Guiding Policies

You need to understand your business, its needs and its operating constraints, before you make any decisions about moving things into the cloud. The potential value proposition via Cloud may include: IT integrate and orchestrate application & service via faster delivery and easy provisioning, with the new characteristics such as elasticity and transparency. Security and privacy are still the biggest concerns for Cloud, and private, hybrid cloud may well open the new chapter for IT to leverage the choice of cloud services and plan the journey.

A: Value Proposition

Cloud technology is a natural extension of commoditizing IT and that advances in network infrastructure...making internet access cheaper & faster directly facilitated offloading computing (hardware, software/services) to the cloud. From business perspective, we may ask:

·         How does Cloud profoundly change enterprise IT?

·         Can cloud deliver genuine benefits for our business?

·         What is the value proposition from a business perspective?

·         What are the business drivers that will lead to an investment in a cloud-based solution?

·         How do we sell the value proposition to the executive group when at the end of the day they really don't care how their applications are hosted or delivered?

·         In the long term: Is a cloud solution just going to end up costing our company more money because it has cost implications for legacy integration, disaster recovery, data management, security and network bandwidth?

B: Profit proposition

IT investment links directly to business outcomes. The challenge for CIOs will be to respond to this revenue-oriented demand while addressing the cost-cutting pressure that will remain. Based on those, the value proposition will guide the adoption plan for cloud ; the profit proposition will do detail cost benefit analysis for the specific situations/scenarios of the organization on use of SaaS, PaaS or IaaS. It must align with the overall goal and priorities. First determine why each service is necessary to your business, and ask:

• How much revenue does it generate?
• How often do your customers use it?
• What "bottom line" outcomes is it going to deliver for our business?
• What sort of costs over-and-above the purchase of the cloud capability are we going to incur in order to embrace cloud?
• Will we see a return on the total cost (direct and indirect) of cloud?
• Does it offer a service-level agreement (SLA) that goes beyond standard uptime promises guarantees response time levels (speed)?
• What part of the cloud will bring the best ROI to the organization?

C: People proposition

Cloud allows staff work anytime from anywhere to access necessary information to make faster decision, increase staff satisfaction, achieve better business continuity capability. The purpose of business is to create a customer, also engage employees, the management may need evaluate people proposition of Cloud by asking:

·         Does Cloud strategy allow us to serve our end customers better, faster?

·         Will our employees improve productivity via taking advantage of cloud base solutions?

·         Can Cloud help business achieve better business continuity capability?

·         Will Cloud truly promote DIY-Do It Yourself or BYOD-Bring Your Own Device culture, then essentially increase staff satisfaction?

·         Will Cloud help shape the future of business: borderless, timeless, wireless, agile & instant on?

3. From Strategy to Execution: Move into Cloud with Confidence  

1). ROI Analysis: Cloud based solutions should be included when evaluating new applications and infrastructure needs and of course a proper ROI analysis that takes into account all aspects of the TCO for the solution.

2). Make Choices: You need a strategy or business position around adoption of the cloud that is based on need and operating constraints. Which is the best model? Do you go fully SAAS or do you limit yourself  to IaaS or PaaS. Do you go public cloud, private cloud or a hybrid model?

3) Cost Calculation: You need to make sure you look at the full cost of implementing your cloud strategy, not just look at the cost of the cloud service itself but also all of those secondary costs that the vendors don't talk to you about

4) Bottom Line Benefit: Based on your chosen strategy, you need to confirm that implementation of your cloud strategy will ultimately deliver a bottom line benefit for your organization

5) Re-architecting home-grown apps to be truly cloud-based, and shifting to on-demand SaaS applications to replace on-premises packaged applications, integrating three elements of applications --getting access to resources, the development process and operating applications. IT operations will need to be restructured and automated to support cloud computing

6). Vendor Evaluation: You need to make sure that the service of a particular cloud provider will adequately meet the needs of your organization, that you fully understand the implications of going into the cloud, and you manage any risks around that, reach a comfort level with the Cloud Provider's commitment to availability and security

7). Cloud Architecture: The biggest part of the cloud architecture is in the use of the term to include both type (e.g. IaaS, PaaS, SaaS) and location (public, private, hybrid). It is incredibly important to expand your own answers to take all possible permutations into consideration because, if you don't, you are undoubtedly limiting yourself in terms of how you understand both the benefits and limitations of cloud computing as a component of IT strategy.

8). Three Gifts of Strategy: Adoption of cloud sourcing, with three gifts a) Mobile strategy, b) Cloud strategy & c) Social strategy. These allowed business to have level to innovate & create new revenues . These three strategies effect all other departments, and organization a whole.

9) Re-Imagine IT Finance: IT organization that must be rebuilt for cloud computing is finance. The opaque, inflexible and highly lumpy forms of IT cost allocations will no longer be effective in an environment where alternative providers publish price lists on the Web. CIO & CFO may need work collaboratively to have the new mindset about OpEx vs. CapEx & IT finance.

 10) Enterprise Governance Discipline: Cloud environment converge IT governance and business governance as a holistic management discipline,  to overcome the "shadow IT" obstacle (the business dep. order their own cloud base solution, bypassing IT., etc), enterprise data, process, application, asset need be well managed beyond business’s own firewall and physical boundary, security, governance, risk control and compliance effort need be well integrated into an end to end solution.

Sure, Cloud is a journey, the verb, than a non, cloud strategy as part of business strategy, need be well translated and executed via leveraging business priority and governance, beyond cost, the goal is to focus more on IT capability & capacity via integration & orchestration, and put emphasis on innovation and strategic application investment.

Posted in: CIO Debate,Cloud Computing,GRC,IT Finance