Is it more cost effective to use cloud environments (public or private) to deliver current IT capabilities? This approach to cloud transformation, which is typical, focuses on improving the cost position of the status quo, without due consideration of upside potential. But the real question should be: How can the IT team enable evolutionary steps to test and use all capabilities offered through cloud computing?
The transformative power of cloud computing lies in the speed and agility it offers, along with the availability of sophisticated capabilities like natural-language processing, artificial intelligence, and subsets such as image recognition and machine learning. Taken together, these attributes and tools (in most cases, more easily accessible in public-cloud environments) open a wide range of new business opportunities over the next three to five years.
If IT is given the go-ahead to align the cloud to support top-line business objectives, the potential for business transformation is significantly increased
If IT is given the go-ahead to align the cloud to support top-line business objectives, the potential for business transformation is significantly increased. A digital bank in Australia, for example, has devised a streamlined method for SMBs to apply for mortgages and quickly receive a yes or no answer—which both cuts costs and drives revenues. More importantly, the IT strategy is aligned with the business strategy to address new customer segments and reduce churn in high-value segments.
There are two routes to such IT-business alignment. The bottom-up route is to form small business-and-IT teams to focus on both cost and future upside in customer experience and product offers. Undertake small-scale pilots that enhance the top line, which will realign IT and business to focus on strategy.
The top-down route is via the CEO / executive leadership team, which can motivate IT and business leaders to think about long-term business upside. This will help to focus the cloud journey on transformative technology and new revenue opportunities rather than cost and short-term delivery questions (see “Shift the Perspective on Cloud: From Cost to Business Goals”).
In either case, the CEO must link IT transformation to shareholder value and promote the cloud as a way to disrupt competitors and enhance innovation capability. One of the many keys to success is a workforce-transformation program to grow internal cloud and software skills, rather than relying on external contractors. The CEO has to create the right governance, while ceding ownership and execution to IT.
Shift The Perspective On Cloud: From Cost To Business Goals
For business success, it is essential that business and IT leaders together develop the future business model. How can you create a platform that can expand in the future? How can you execute today while building tools to enable faster execution in the future, three to five years out? How can the IT environment be modularized to combine legacy and new as well as private and public cloud capabilities? How can you develop solutions that address both IT costs and drive new revenues with future capabilities? Connect the how—technical upgrades—to the what—long-term business outcomes.