People who study technology value creation ceaselessly argue which tech term of art is least illuminating and most irksome. Is it digital transformation (the phrase that has launched a thousand consultancies and as many failed strategies)? Is it cloud computing? Is it the ridiculously overhyped and inexplicably under-explained 5G? Or is it the recently coined metaverse?
My point here isn’t to poke fun at today’s buzziest tech terms, but to point out that the language, ensuing conversations, and general knowledge base about the most important migration in the history of humanity (i.e., the path to digital mastery) are universally perceived as being less than satisfactory.
It is time for CIOs to recapture the narrative and talk truth to power regarding the hard road between where we are today and where we want to be. It is time to root out digital ignorance wherever it may reside in the enterprise.
A collection of tactics does not a strategy make
Digital transformation, cloud computing, 5G, metaverse… these are not strategies. A strategy has at least these three components: an endpoint, a plan or set of tactics designed to reach that endpoint, and a timetable.
A strategy for achieving digital mastery is not present in the vast majority of organizations in the world today. Michael Schrage, visiting scholar at the MIT Sloan Initiative on the Digital Economy and author of The Innovator’s Hypothesis: How Cheap Experiments Are Worth More Than Good Ideas, speaking at the MITSMR Connections session on February 9, 2022, lamented, “I don’t think we have strategies. I think we have a set of tactics. We have aggregated them and call it a strategy.”
The fact is, digital strategy at many organizations resembles a Roomba—a limited-perspective device bumping into micro-tasks as it aimlessly wanders its environment. Strategy begins with knowledge.
Heads in the clouds
Cloud computing offers an excellent example of widespread and rarely acknowledged digital ignorance—starting with the basic fact that “cloud” is not a new thing. In A Prehistory of the Cloud, Tung-Hui Hu, an associate English professor at the University of Michigan, suggests that the concept of cloud first appeared in a 1922 design for predicting weather using a grid of computers (i.e., human mathematicians) connected via telegraph.
In addition to not being new, the cloud, efficiently defined by Hu as “a system of networks that pools computing power,” is not a done deal. While cloud may appear to be old news to casual observers, research done at Goldman Sachs shows that less than a quarter of large enterprise workflows are in the cloud so far.
While just about all executives have heard of cloud computing, very few understand the strategic possibilities and operational realities associated with the concept. Simply put, there is a lot of wrong thinking about cloud computing.
For starters, the cloud requires sophisticated financial management. Larry Scott, a six-year Amazon Web Services veteran working as an area leader on the Americas team, is convinced that managing the IT finance associated with various cloud configurations requires a fundamental rethink of behaviors and techniques.
Vince Kellen, CIO for the University of California San Diego agrees that properly managing cloud computing falls outside the skill sets of traditional IT professionals. He blames history for such ignorance: “In the past we were SKU buyers in IT. We bought boxes.” Kellen says he and his world-class team “did our own analysis and found that there is at least 30-45% over-spend on the cloud for most corporations.” Given that ~$1.3 trillion dollars is currently being spent on cloud with annual growth rates estimated in the 25-30% range, it’s safe to say there is massive value in optimizing cloud spending.
Another massive cloud misconception exists around IT risk and security. “The cloud does not eliminate risk,” explains Vincent A Campitelli II who has managed IT risk programs at McKesson, Wachovia Bank and Goldman Sachs and is currently retained as a consultant to the Office of the President of the Cloud Security Alliance (CSA). In 2019 Capital One Financial Corp. had > 100 million customer records stolen that were stored in the cloud. Moving workflows to the cloud IS NOT a disaster recovery/business continuity plan. And today’s cloud usage is frequently fragmented across multiple cloud platforms, leading to misconfigurations, which in turn lead to cloud breaches.
Your 3-point action plan:
- De-tech technology strategies. Remember, technology is not the end point; technology changes what is achievable. Articulate new business goals/outcomes that reflect the expanded-by-emergent-technology possibility frontier.
- Take cloud finances in hand. Begin the journey to building/accessing sophisticated cloud financial management capabilities. According to Amazon’s Scott this journey should not take longer than six months.
- Communicate up. Make explicit what executives know and need to know about the foundational technologies of the future.