The vast majority of cloud migration programs supporting IT transformation rarely end up with the promised business benefits.
These scattered initiatives, decided in the CIO’s office, are often disconnected from any basic business strategy. Who can objectively pretend that leveraging the cloud to cut IT costs and streamline IT operations is enough to help the business become an innovation champion, prevent market share erosion or stop customer churn? These are actually the challenges.
The fact of the matter is, these short-term initiatives result from a combination of weaknesses ranging from misunderstanding of industry disruption’s impacts on businesses and blurred IT strategies to deficient IT transformation approaches and guidance. They’re still based on the now outdated belief that what business units (BU) expect from IT is massive cost reduction and speedy IT operations.
What then should IT do to effectively help business units make a profit? How could IT properly do it? Those are the recurrent questions your CIO peers have been increasingly asking.
The answer is threefold: Focus on core business, operational agility and competitive innovation. Using an IT as a service (ITaaS) capability that removes the hassles of managing IT while boosting business operations allows business units to focus on what matters: revenue generation.
This article covers the foundations of ITaaS as I’ve been implementing it to help clients align to the rising digital economy’s requirements.
The common and terrible IT mistake to avoid
A mistake IT professionals (particularly IT vendors and consultants) make is to reduce digital strategy to a technology matter. Yes, you read it right: They’re wrong. The challenge isn’t technology implementation, it’s competitiveness. Here is why.
Tackling the competitive issues is the primary challenge, not implementing the technology
Recent IT innovations — including cloud computing, big data, internet of things (IoT), machine learning, continuous deployment infrastructure and more — act as disruptors to your industry. As illustrated here, they reshuffle the competitive game:
By reducing IT infrastructure investment close to zero and enabling innovative services, they create a competitive context where proliferating new tech startups eat up market shares, proliferating digital services cannibalize established products and, more importantly, customers get volatile by fleeing to competitors.
Don’t get trapped by the massive marketing hypes and propaganda out there. The actual challenge your business units face is to provide effective answers to the following competitive questions; without answers no profit is possible:
How to prevent market share erosion?
How to prevent service cannibalization?
How to prevent customer churn?
How to increase customer value?
Ask yourself this: “Is my favorite IT vendor serious when he pretends that migrating my infrastructure to the cloud will help BUs meet the competitive challenges? How would my BUs welcome that holistic approach to the business value of cloud computing?”
Today’s cloud strategies are insufficient; they miss out on BUs’ business objectives
Digital strategies as formulated by BUs show a severe disconnect with today’s infrastructure-oriented visions primarily thought to increase IT vendors sales. The following picture summarizes a generic digital strategy I captured at the recent Hamburg Aviation Conference, ThinkFuture17. I was invited to give a keynote speech on industry disruption and the steps business leaders could take to meet the challenges:
This image shows that customer loyalty is the primary revenue driver. It’s part of a virtuous circle structured around four continual steps:
Integrate customer data to facilitate customer analytics.
Analyze customer data to spot expectations and innovative service ideas.
Develop expected innovative services in agile and cross-functional contexts.
Improve customer experience through leveraging technology innovations to secure loyalty and revenue.
What this digital strategy framework unveils is this: The business units’ visions transcend infrastructure concerns; greater contributions to business issues, particularly revenue generation, are expected. Three elements enable it:
Innovation enabled not only by big data technology but also by the adoption of innovation culture. It demands a transformation of the organization’s operational model.
Business agility enabled not only by DevOps principles and continuous deployment technology but also by the elimination of organizational silos. It speeds up interactions and makes the business responsive to market opportunities.
Innovative technology made easily accessible and cheap through comprehensive managed cloud services. It helps to continuously improve customer experience.
You might be asking yourself, “Why doesn’t my favorite cloud vendor or consultant offer that integrated vision? Is there any IT capability implementing such vision? How long is the implementation? How expensive is it?”
The foundations of the managed ITaaS capability
Contrary to what the complexity of such effort may suggest, it’s possible to cost-effectively and in a record time transform your IT from cash-eater to profit-maker. The capability making it possible has a name: A managed ITaaS platform.
It’s the idea that combining managed cloud services and ITaaS principles to make the business agile and enable profit-making processes is a cheaper and faster way to generate revenue than engaging in scattered and expensive migration to infrastructure as a service (IaaS).
Three fundamental building blocks make up the managed ITaaS capability:
A managed cloud platform.
An agile value stream.
Let’s explore how these components contribute to making IT an actual profit-maker.
The immediate benefits of managed ITaaS capability
It’s time for CIOs to stop wasting time with IT transformation approaches that bring no business value. Make no mistake about it: Taking advantage of the cloud to cut storage costs, take advantage of cheap disaster recovery capability or quickly provision infrastructure will never make BUs innovation champions, keep your customer loyal or increase revenue. Things aren’t that simplistic.
Here are three reasons why your company needs a managed ITaaS capability:
100% designed to generate business profit
The business’s bottom line is to make profit through innovation, business agility and market responsiveness.
Unfortunately, today’s IT value propositions are limited to reducing infrastructure costs and speeding IT operations. Enabling money-making processes through managed cloud services to make money in a timely manner is what’s expected.
It’s the purpose of the managed ITaaS platform, here are the substantial benefits it provides:
An ITaaS platform’s managed cloud services not only eradicate IT costs but also absorb the hassles of managing IT and keep the organization focused on its core business.
An ITaaS platform’s value stream through agile practices breaks down organizational silos, increases cross-functional collaboration and accelerates the interactions across your business.
Cheap, flexible, speedy and managed IT services platform
BUs’ concerns have shifted from IT efficiency to IT’s business profitability. Let me repeat it: The issue isn’t the amount of money IT helps save or how speedy IT operations are, but how well IT can effectively contribute to profit.
The ITaaS approach to managed cloud services takes cloud implementation to the next level; it helps to meet BUs’ expectations. As illustrated, it’s a holistic computing approach that transcends IaaS issues to boost the organization’s profit-making processes:
Some of the key benefits include:
IT management hassles removed from your organization to the managed cloud service provider. It gives the IT department latitude to contribute to profit making.
IT operations get flexible and agile. It contributes through SaaS, PaaS and IaaS services to making the business agile.
Fit for purpose, secure and reliable enterprise cloud architectures provide on-demand infrastructure resources. It accelerates the IT transformation effort.
Substantial cost savings — both CAPEX and OPEX — that give latitude to invest in innovation and research and development.
Business agility and velocity
Innovation, operational agility and market responsiveness aren’t miraculously achieved by migrating infrastructure to the cloud or massively deploying automation infrastructure.
That’s a myth. They demand proactive transformation of the most strategic piece of your business: Its value stream.
The deployment of the agile value stream automatically removes organizational silos and operational dysfunctions, and it reconfigures your business into a flexible, agile and responsive work environment.
The disruptions brought about by recent technology innovations raise competitive issues that force business units to focus on the things that matter: market share, service innovation and customer loyalty.
This will never be achieved with IT strategies that primarily seek to cut technology costs and speed IT operations. It will be achieved by radically different approaches and capabilities that truly stress business concerns. That’s why ITaaS is a game-changer.
Philippe A. Abdoulaye has 25 years of experience as an IT transformation expert with a versatile background leading cloud, data center and ITSM transformation projects with consulting firms like Accenture and Cognizant. Philippe has advised the IT leaders of enterprises like Credit Suisse, American Express and Educational Testing Service (ETS) and has conducted workshops to provide insights into cloud transformation approaches for McKinsey consultants.
Philippe has been sharing his views on Linkedin and in his blog on topics around cloud computing, ITaaS and digital transformation. His articles are regularly cited by online media outlets, including Sys-Con and ZDNet.