Thursday, August 1, 2013

CIO on the Cloud: How to Keep Balanced

 IT is a custodian to orchestrate cloud-based solutions to streamline business process and optimize enterprise capabilities.

Cloud Computing is growing at about three times the rate of traditional, on-premises software. From vision to reality, CIOs appreciate the flexibility that cloud solutions provide for companies large or small. Cloud also brings the various perspectives upon IT: is cloud the end of IT, or every end is a new beginning? How to run the next generation of IT smoothly, CIO at the cloud: how to keep balanced?

                     1.    Centralized vs. Decentralized IT 

The challenge for the future CIO is to pursue the opportunity and competitive advantage but also manage risk effectively by leveraging cloud solutions, there's a whole slew of new challenges for which an onsite team will be necessary. Not the least of which is application integration and security across the myriad cloud services. Cloud is the future and the present, the vision and reality.

  • Centralized IT vs. Decentralized Organization: What's the best organizational structure to run an effective IT or the digital organization under the cloud? As the border of functional silos is blurred and creating meaningful differentiation requires capabilities that are almost always cross-functional. The same concerns can be lifted for other functions as well. But a centralized IT will have the advantage in purchasing power when negotiating with vendors, practicing governance discipline and sharing best practices with speed. The speed of change is creating a solutions environment that is more specialized and complex, thus more expensive to successfully manage. 
  • Balanced Structure to run a nimble IT: Should we finally put an end to the costly centralization/decentralization cycle and maintain a balance between the two extremes, to manage centralized IT organization with effectiveness and efficiency; but also leverage the flexibility via decentralized talent management and enterprise social collaboration; to gain purchasing power by managing vendor relationship holistically. "Complexity is conserved." The process of moving from managing systems to managing contracts and interactions around systems retains all the complexity of system interaction and adds additional complexity 
  • CIO and his/her group want to be seen as an enabler: That is largely possible through the deep knowledge of all company processes and the support that is provided by IT for any of those processes. This support goes far beyond the "keeping lights up" and often contains even process improvements, deliveries of a cheaper and faster business solution via leveraging the latest trend like the cloud. To do that, you need a group with a vast knowledge and with highly focused IT professionals in the field of technology and process. This group is often called IT.  

2.    Innovation vs. Governance 

Innovation and governance seem to be the opposite concept, but CIO and his/her organization is at the right position to the balance of them; as IT needs to be both innovation agent and governance champion as well. With the agility, faster provisioning and elasticity provided by the cloud, the business in digital era can now experiment innovative product or service at reasonable cost and much shorter life cycle, the large enterprise can become more instant on and agile by taking advantage of the cloud.

  • Innovation drives new product development. If technology trend like cloud can be used to shorten that cycle, one would think that a corporation would be in better position to compete with business's innovation engine, spend more resource upon how to cultivate the set of unique business capability to gain a competitive advantage for business.  IT provides important structure and framework to streamline processes and enable innovation. Think transparent,  flat, and collaborative. Creative companies have set up processes for drawing ideas out of business units, often using cloud-based, online platforms to encourage corporate-wide, crowd-sourced innovation idea generation 
  • Integration Perspective: As long as there is a desire to integrate process and information across the organization and the applications, there will need to be an IT organization comfortable with talking to all those cloud providers. As IT moves more applications to the cloud, there'll need to be more IT involvement, not less, because the efficiencies of the cloud allow to bring in more applications, but those applications then need to interface with each other and with legacy applications. And while you can buy technical expertise for the cloud applications, you cannot buy internal process knowledge.  
  • Future of IT needs to play an even more critical role in cloud/IT/business governance and overall GRC practices. An organization always needs someone to understand the technical options available to help the business put together the required solution. Also, someone has to provide oversight for security, confidentiality of data, contracts, and all the other governance items including risk; and have a holistic view of maximizing the value of the various relationships, therefore, CIOs and IT still play critical role in governing, not for stifling innovation, but for ensuring its success. And, business as a whole is superior to the sum of pieces, at the age of cloud, the other important task for IT & EA working closely are to update upon governance model: The value of functions is undeniable; no company could do without them. But the business and organizational models that govern functions need updating, retooling business culture and improve business coherence and agility. 

3.    Consultation vs. Authority 

So the cloud doesn't eliminate the need for internal IT as there is still innovation, solutions to be created, processes to be developed, access to be secured, systems to be integrated, information to be processed and vendors to be managed. But Cloud allows business to bypass IT to order SAAS service if IT always say no to them or lack of competitive and alternative solutions, and then, shadow IT is popped up.

  • Simplistically IT can fall back to the long-established practice of being more consultative than authoritarian. Taking a fresh vantage for IT and assuming the business leaders are the specialists in their functional area, IT can still provide significant value through lending their expertise to the process of acquiring new services but not leading it. 
  • Chargeback, show back, charge forward mechanism: Take a holistic view as an IT manager, assess the options available and assess the costs, benefits, and risks of each and make the decision appropriate to that application. Cloud transforms from CapEx to OpEx, cloud services providers exemplify a financial agility that results from leasing infrastructure rather than purchasing. They use equipment leasing instead of purchase to truly exemplify what has become known as the “utility” model. Not only do they charge for their services on a pay as you go basis, they pay for infrastructure that way as well. And some IT organizations also apply the charge/show back or charge forward mechanism to their business users. 
More and more enterprise CIOs are weaving cloud into their IT/corporate strategy, and IT is custodian to orchestrate cloud-based solutions to streamline business process and optimize enterprise capabilities. The challenge for CIO in the cloud is to strike the right balance, IT should play even more crucial roles such as service broker, value-creator, innovation engine and governance champion, the future of IT will be decided by the future of IT leadership and talent IT professionals with the adaptability to the changes.


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