As a cloud and IT as a Service (ITaaS) transformation strategist in the IT industry for 20+ years, I’ve seen successes and failures. You might be surprised to hear this, today’s technology-focused ITaaS approaches are missing the point; they ignore the changes in the competitive environment and as a result deprive your business lines (BLs) of the pure business benefits they expect from the cloud.
What you must be aware of is, ITaaS isn’t a technology, it’s nothing else than an operational model, that is, an integrated platform of people, processes, best practices, governance structure, and technology specifically arranged to meet a specific business goals.
In order to give BLs the competitive advantages they need to grow in the digital era, you must drop the belief that cutting IT costs and accelerating applications delivery is what matters. You must reinvent the relationship with the business and offer a new IT service delivery paradigm more focused on business concerns.
The rising digital business environment forces businesses to seek new growth strategies
A topic that’s unfortunately out of IT concerns is the transformation of the competitive environment and how businesses adjust to it, it’s the major issue for BLs and CIOs should not underestimate it.
Philippe A. Abdoulaye
Shifting to the digital business environment
As illustrated, the combined effect of the proliferation of startups created by highly qualified unemployed seniors and entrepreneurs, the increasing adoption of cloud which reduces IT Total Cost of Ownership (TCO), and the Internet of Things (IoT) which substitutes traditional services with digital services aren’t only stepping up the global competition but are also changing the way businesses deal with it. Responsiveness to market opportunities is now the required competitive advantage.
The fact of the matter is, there’s a serious disconnect between business lines and IT about how ITaaS could help to meet the digital challenges. IT insists on seeing expenses reduction and accelerated application delivery as the way to go while BLs see the establishment of integrated collaborative environments involving the business and IT as the most effective way to break down organizational siloes and hierarchical barriers and meet the market responsiveness challenge. An IDG Research Services Survey: Your Journey To IT as a Service (…) involving 350+ IT and business unit directors at enterprise of 1,000 employees, sponsored by VMware and EMC confirms that fact; it reveals in page 2 that only “11% of business folks believe IT understands the business needs and wants” and in page 3 that “more effective IT and business partnerships” is the way to go.
The question is how well your ITaaS / Cloud strategy complies to that vision.
IT is missing the point, migrating to cloud doesn’t make a growth strategy
One of the reasons business lines increasingly use shadow IT is, CIOs and IT vendors ignore their concerns. While they think agile and integrated environment of people, processes, best practices, IT services and tools could help to responsively address market opportutinies, IT continues to offer the same cost reduction and accelerated application delivery value propositions.
Business growth life cycle
Let me say things straight, ITaaS as understood by cloud vendors is incomplete; as illustrated, business prosperity is part of a wider growth virtuous cycle and cloud solutions impact only the Service Development and Rollout step of it, in other words it’s focused on IT processes and contributes up to 20% of the business growth. What about the remaining 80% activities supporting the business growth?
Today’s ITaaS approaches don’t do the trick, they rely on assumptions which are erroneous from the business perspective. Business folks don’t hesitate to claim this, “the benefits generated by your IT transformations represent less than 3% of what we gain from increasing our customers’ value through basic up-selling and cross-selling techniques.”
Transforming to IT as a service doesn’t mean technology change, it’s about transforming your IT organization
Thinking that implementing sophisticated cloud infrastructures by itself will enable business growth is a mistake you must avoid; the truth is 99% of ITaaS (and cloud-related) projects are successful from a technology standpoint but are unfortunately disasters from the BL expectations. Joe McKendrick, one of the most relevant analyst of the cloud industry, in a remarkable article, Cloud Computing’s Second Act Is All Business (…) warns, “IT is one small piece of the cloud story. A much bigger story is coming from the business itself. This is also the hard part.”
In fact the business expectations are taking IT to an inflection point; IT cannot be anymore thought of in terms of technology stack, its three dimensions including the Operating Model, the Cloud Services, and the Infrastructure must be taken into account. Although they’re ignored or devoided of meaning by today’s IT practices, they’re actually the enablers of the operational agility that underlies the Lean and Agile IT Organization BLs have been calling for to succeed in the digital era.
Taking into account the IT organization’s three dimensions will take your IT to what Joe MckKendrick refers to as “The Cloud Computing’s Second Act;” it doesn’t narrow the ITaaS transformation process to changing the technology stack but extends it to the reegineering of its operating model and service catalog:
Transition from traditional IT to ITaaS Delivery Model
As illustrated, the bottom line of ITaaS transformation is to shift your IT organization from a Siloed Traditional Enterprise IT Delivery Model to a Lean and Agile ITaaS Delivery Model.
The key takeaway is, from the business perspective, reducing IT costs and accelerating applications delivery are insufficient assets, they must be supplemented with organizational capabilities that spans the organization’s entire growth life cycle and ensure the operational agility needed to responsively address market opportunities.
The next articles of the series
Stay tuned for the next articles of this series, we’ll look at the structure, processes, pratices and governance capabilities of the Complete ITaaS Delivery Model, how to implement it and at the Complete ITaaS Delivery Maturity Model.
This article was written by Philippe A. Abdoulaye from CIO and was legally licensed through the NewsCred publisher network.