Insights

The CIO Without A Data Center

As IT applications float from the data center into the cloud, the CIO has to re-order priorities.

Today, the public cloud is a minor part of the IT estate of most corporates (typically 5-10%), but public and supplier-based cloud offerings, including SaaS, are maturing to the point that most classes of application are already, or will soon be, available on the public cloud. For instance:

  • Many large corporates have already adopted cloud solutions for office productivity and collaboration / communication tools, such as Microsoft Office 365
  • Cloud-based data-lakes and analytics platforms (e.g. Cloudera, Hortonworks) are  commonly adopted by many, and a natural choice for the cloud, given its typical “elastic”, consumption-based and scalable pricing model
  • Custom-built applications, with their legacy of multiple programming languages, operating systems, databases, hardware and associated skillsets, are increasingly being migrated to a micro-services based open-source stack that can then easily be deployed to one or more cloud providers to reduce risk
  • Packaged software applications, including Finance, HR, CRM, and Supply Chain, are increasingly not offered as ‘on-premise’, with major vendors such as SAP and Oracle set to discontinue on-premise licenses by the mid-2020s

One prominent example of this future is General Electric, which is in the process of migrating 9,000+ applications to the cloud by 2019, reducing its data centers from more than 30 to four. Given this new reality, and new choices of where and how applications are hosted, CIOs need to establish a new balance of priorities to maximize the benefits and reduce the risks of operating in this new world.

Although it may be a long time before any large enterprise has a “CIO without a Data Center”, since not all IT can or shall be “cloudified” in the near-term, large scale migration to the cloud will soon be inevitable for many companies.

The CIO's Re-Balanced PrioritiesAs large-scale migration to the cloud shifts responsibilities away from mundane, on-premise IT operations and day-to-day delivery challenges, the CIO’s priorities will hinge on Data and Security, their Talent and Partner Ecosystem, and delivering True Innovation.

Data and SecurityBusiness Continuity Planning is more complex in an environment where backups and recovery processes are spread across disparate providers and as more services migrate, Disaster Recovery arrangements will need to be re-thought.

In the future, even a relatively simple process like payroll may span multiple cloud providers; in the event of a failure, ensuring backups can be reconciled and managing the sequencing of recovery to “last known good” will be a significant coordination challenge.

Mass exchange of data between providers also brings about new challenges for securing data in flight and at rest. Even as cloud providers beef up security measures, new challenges will continue to arise. For example, the integration of new user profiles mirrored across multiple providers has major implications for many permission-based security arrangements and makes managing traceability harder.

Above all, while responsibility for security and data will in future be a shared responsibility with third-party infrastructure providers, IT organizations will still remain fully accountable. To prepare, CIOs should review existing service management processes (e.g. ITIL) and begin putting in place the central functionality to coordinate multiple providers and provide the control points needed to monitor operations across disparate cloud providers.

Talent and Partner EcosystemAs applications are migrated to the cloud and on-premises infrastructure is scaled back, the skills that are required within the IT organization will inevitably evolve.

Cutting-edge operations expertise will remain important but the emphasis will shift away from traditional IT operations and towards managing a web of interconnected providers. This will require a new breed of “digital architects” able to see the big picture, while acting as evangelists for new technologies. Enterprise architects, for example, will increasingly be embedded in scrum teams, co-creating with the business and acting as mentors for developers.

To prepare, CIOs should start to review what capabilities are required and begin to plan for the resulting changes to the size and shape of their organization and partner ecosystem. This may mean taking a broader view of potential partners than in the past in order to bring in new skills, tools and techniques that traditional IT service providers may lack the incentive to focus on.

As an example, a utility company recently needed to launch a new digital B2C proposition in record time to address margin pressure and structural changes in their market driven by new regulation. The organization selected a new digital sales and fulfilment platform and developed a mobile-first proposition designed to improve customer experience and increase self-service rates.

The solution was built around a core SaaS platform running on Amazon Web Services and integrated with legacy IT applications and external services, yet existing IT skills and vendors were heavily skewed towards the old ERP paradigm of waterfall methodologies and monolithic applications with fixed deployment models. This meant bypassing old providers and bringing in a new set of partners with the skills, capabilities and tools to deliver within the timeline.

True InnovationThe challenges of day-to-day operations and the drag that past decisions impose of any IT organization leaves little space to focus on delivering real innovation for the business. Large-scale cloud migration may be about to change this as an explosion in the number and maturity of supplier-based cloud offerings means new products / services can be prototyped and rolled-out much faster and at lower cost.

This model is typical of many Silicon Valley businesses that rarely build from scratch and instead rely heavily on an ecosystem of vendors to provide the building blocks used to assemble new offerings. For instance, there is little that a company like Uber does technically that hasn’t been assembled from off-the-shelf componentry, and yet the impact of the resulting business model is dramatic.

Working in this way is exponentially faster, yet requires an agile, ‘digital’ architecture based around the principles of modularity and micro-services connected through APIs. This is difficult to emulate for many large organizations, given their large number of legacy applications and databases and the many tightly-coupled connections they typically have between them.

To prepare, CIOs should look hard at the business case for transitioning to a digital architecture and assess the benefits that this will bring to the business in terms of better agility, shorter time-to-market and lower cost of change.

Board Pressure to Remain RelevantAs cloud gains the attention of senior management, the CIO has a responsibility to educate the Board on the real-world implications (good and bad) of mass adoption, as well as demonstrating a credible plan for realizing benefits.

Although it may be a long time before any large enterprise has a “CIO without a Data Center”, since not all IT can or shall be “cloudified” in the near-term, large scale migration to the cloud will soon be inevitable for many companies, a la General Electric.

To prepare, CIOs should start planning now for a re-balanced set of priorities and put in place the foundations to successfully manage this transition:

  • Develop a decision framework to guide choices on which services will move, when they will transition, and how and where they will be hosted
  • Put in place standards to govern interoperability between components / suppliers, while at the same time building central processes to tie together services and provide the control points necessary to monitor their performance, security and resilience
  • Begin developing the new skills and partnerships and putting in place the organizational changes required to manage an increasingly disparate technology landscape

CIOs who are successful in managing the transition to a world of cloud-delivered applications will be well placed to create real business innovation and deliver superior customer experiences.