The CIO is dead. Long live the Master Operational Strategist

Over the last nine months I have worked with clients, spoken at conferences and chaired events – all around the core theme of ‘The Cloud’. Significantly, I have to repair the damage being done by the industry marketing fraternity through their over-promotion of the Cloud: this is breeding a raw client scepticism. But that done, I have the opportunity to articulate an approach to the Cloud that has real potential for positive business impact.

A cautious scepticism is justified. The new commercial possibilities of the Cloud are demonstrably genuine. But for both enterprise and government the degree of transformation required to access these commercial possibilities acts as a significant barrier: and vested interests in the supplier community are in no hurry to rework their business models if the immediate price of so doing is a restless investor community!

The key technological development that underpins the Cloud is certainly for real. Virtualisation is enabling the transformation of the manufacture of technology-enabled services. We are in a new era of Services Factories – highly automated, lights out, with highly competitive economics. At the same time virtualisation is underwriting the increasingly practical implementation of Service Oriented Architectures (SOA) that enable the evolution of the contemporary (loosely-coupled) Services Stack from the legacy (tightly-coupled) Technical Stack. SOAs open the door to direct sourcing from the Services Factories.

Furthermore, Moore’s Law is at work here – the continuing exponential reduction in the underlying cost of data processing. This continually reduces the cost to deliver value. And for information technology the value delivery equation is rooted in the well recognised framework of ‘People, Process and Technology’ (PPT).

Courtesy of the virtualisation revolution, all three elements of the PPT framework are now in major interactive flux. Virtualisation (Technology) enables the automation of Process, so Skype and Google Apps are launched as highly competitive market services and in turn enable a transformation both in how people can work (back to Process) and in the (People) costs of the operations required to support them – fewer People required in the back office, more People can be moved to the market front line where newly tailored online client services (back to Technology and Process) enable a deeper real time knowledge of how client requirements are developing (back to Process) enabling a proactive sales response (back to People) and so on. In agile firms, the PPT script is nowadays rewritten, and then re-written again.

In a recent column I commented on a presentation by Jamie Erbes, VP and CTO, HP Software and Solutions, at the 2nd Cloud Computing Forum in London. At the core of Erbes’ thinking was the transformation of the IT industry from the business of IT Services to the business of Business Services. She and I agree that the Cloud is about the emergence of a virtual market in directly sourceable technology-enabled Business Services.

She repositions the role of the CIO as a service broker for the enterprise, focused on the sourcing, integration and management of the technology-enabled business services that the enterprise requires to operate. She recognises a parallel transformational challenge, leading the enterprise to escape the restraints of its legacy inheritances, so as to have an IT infrastructure tightly oriented to underwriting its supply and business value chains.

So here is the contemporary CIO as Master Operational Strategist responsible for optimising People, Process and Technology to maximum benefit in a new sourcing world. No longer the CIO leading the ICT team, but the MOS leading the PPT team!

Consider a manufacturing business operationally reliant on core legacy systems run with on-premise datacentre capacity and an ICT team to match. The MOS will plot a transformational journey starting with choice of a partner skilled in remote infrastructure management to manage the modernisation of datacentre operations before it migrates that data into the Cloud in a secure fashion.

At the same time the MOS will plot a parallel transformational journey to dis-integrate the core legacy systems, migrating where relevant to externally sourced (likely Cloud) business services such as finance, supply chain and logistics.

Both strategic moves will radically rework the firm’s PPT profile to gain all the benefits of sharply reduced operating costs, improved operational flexibility and lower capex requirements.

Most vitally, the MOS will create a transformational agenda for human resources to form a team whose talent, skills and experience align closely with the burgeoning PPT world.

Because it is the People dimension of the PPT transformation that is key to the delivery of sustained new business value – even in the era of the Cloud.

Richard Sykes was vice president of IT at ICI in the 1990s and is now a consultant