Achieve Cloud Economics for Operations and Services

Cloud computing has reached an inflection point for enterprises — a comprehensive strategy for its use is now required. Until now, most companies had adopted cloud services in an ad hoc fashion, driven mostly by business leaders and developers looking to deliver new systems of engagement they felt could not be delivered by corporate IT — or in the time frame required. These ad hoc experiences prove that cloud solutions are now ready to be strategic resources in enterprise business technology portfolios. Only CIOs can help the business strike the right balance between the agility, efficiency, security, compliance, and integration that’s required for a successful cloud strategy.

This research introduces our Playbook approach to our cloud research, describing how to execute an enterprise cloud strategy from vision to planning to implementation through to ongoing optimization. It is the Executive Overview to our Playbook on achieving cloud economics, setting the context for 12 reports by Forrester analysts that address each major phase of the transformation.

Cloud computing in its various forms is helping many CIOs drive greater business responsiveness. Enough so that most enterprises have adopted cloud computing in some form — usually a collection of software-as-a-service offerings. But cloud solutions now offer cost optimization, security, and quality of service for the full range of enterprise requirements, not just tactical needs. Thus, it is time to make cloud strategic, rather than a disconnected set of initiatives. How? CIOs need a playbook to create, implement, and optimize an end-to-end cloud strategy. This cloud strategy must achieve three goals:

1. Establish the measurable business value of the new technology. Obviously, we believe cloud’s primary role should be to ramp up the IT organization’s business responsiveness via “systems of engagement,” which are separate from your systems of record. The business value of systems of engagement is found in revenue growth, customer retention, lifetime customer value, and similar measures — not in IT metrics.
2. Make space in your portfolio for cloud capabilities. Start by recognizing cloud computing as an additional set of IT solutions and platforms, not necessarily a replacement for your existing portfolio. Think back to the advent of web technology during the mid-90s. Enterprises had to open up their IT strategies to make space for new types of applications, talents, technologies, and vendors. Cloud is a similar change.
3. Start the organizational change management. Adoption of cloud as a strategic technology will require changes in the way a CIO’s domain operates — in every dimension. The IT organization will emphasize consultative service delivery rather than rigid controls to ensure integrity and efficiency. Notions of openness and freedom of choice will evolve. The organization’s relationships with business leaders will be more collaborative than they’ve ever been. The strategy should identify the most critical changes as top priorities and sequence broader changes over time to avoid chaos.

The dividends from your adoption of cloud computing will be to transform your organization’s business responsiveness. Cloud solutions drive a responsiveness transformation hard because they:

• Empower IT pros to deliver more solutions faster — and keep innovating.
• Standardize workloads to simplify decision-making about new investments and their implementation.
• Revise a CIO’s base of technology and skills to emphasize fast, flexible business action.
• Move CIOs to dynamic cost management to match expenditures to business priorities and results.

Forrester clients can read the full report at this link.

by John R. Rymer