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Is Your Organization Ready for the Cloud?

By Faisal Hoque

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It’s nearly impossible to pick up a technology magazine or sit through a strategy meeting without encountering a reference to what some consider the next and greatest wave in enterprise computing – the cloud.

Cloud is a fitting term for something so shrouded in mystery and hard to grasp. We’re not helped by the plethora of buzzwords that seem to accompany this concept: grid, utility, service oriented architecture (SOA), service management, software as a service (SaaS), platform as a service )PaaS), and so on.

It’s easy to get lost in the wonders of the technology and the lofty promises of the new age it will usher in, but we must stay anchored: this is ultimately a matter of business, not technology. And, as such, its usefulness must be assessed in the context of the enterprise as a whole. New ways of thinking are required. Investment decisions and the measurement of success will not be about individual technologies, or projects, or even the IT department itself, because the cloud is about the whole organization.

Cloud computing can be thought of as processing and storage done “elsewhere”; meaning, typically, physically removed from the user and, typically, off-site. The user does not need to think at all about the hardware; that is selected and made available by the company that maintains the cloud. In some cases, a user won’t need to think about specific applications they will just specify the functionality they need. In still other cases, a business side customer will employ the functionality without a technology department acting as an intermediary; the strategic and tactical guidance now performed by internal technology departments will reside in the cloud.

Efficiency and agility

While efficiency and cost savings are a legitimate motive for pursuing cloud computing, and will be the initial one for most companies, some see clouds as enablers of innovation and agility. If hardware and software are instantly available and always up to date, and if reliability and privacy are guaranteed, then a firm can focus all of its energy on new business models, experimenting on the fly, and learning from new approaches to finding and satisfying customers. And factoring in the computing resources needed for a new initiative will be a matter of when to push the button.

It is best to not get too wrapped up in parsing the various terms associated with the cloud. Utility computing, for example, refers to the pay-per-use or metered approach that Amazon.com uses in it's EC2 cloud offering. Electric power is often used as an analogy: you plug in your appliance and don’t really care how the electricity is created or who is doing it.

Grid computing refers to the linking of thousands of computers to which pieces of a gigantic problem, often scientific in nature today, are distributed. The grid offers processing power and storage unavailable in a typical single organization.

In practice, organizations will move to the cloud incrementally, shifting portions of their computing needs to it over time. Smaller companies will see immediate payoff in moving completely over to the cloud. Larger companies must wrestle with proprietary systems that are strategically critical and extremely complex and unique business processes that have been built up over time and can’t be easily handed off.

Work will change

What we cannot avoid -- and it is much more difficult than buying servers and software seats -- is the changing nature of work itself. Leading companies are moving toward the convergence of their management of business and technology. This simply means that decision-makers are conversant in each and act on each to advance a corporate strategy. For them, technology is no longer a mysterious activity hidden away in a black box.

The computing tools in the cloud will be represented to the end customer virtually, in non-technical ways, so that he or she can use them without excessive specialty training. At the same time, the customer will be ever more knowledgeable about the potential of the tools and ever more adept at manipulating them.

Entering the cloud

Deciding to move to the cloud and using it wisely will require the creation of a strategic enterprise architecture (SEA). An SEA is a story of what the organization is trying to accomplish and how. It includes both the business purpose and the enabling technology, i.e., a business architecture and a technology architecture mapped to it. At the highest level the SEA is expressed in non-technical language anyone in the organization can understand. An SEA lays out all of the business processes, end to end, incorporating external partners and customers.

Most organizations have various documents describing what they do, from the thick notebooks of long-range plans gathering dust on shelves, to various mission statements. An SEA makes sense of those islands of information. It should clearly show where contradictions in purpose and redundancies in execution lie.

At its most granular level, the SEA becomes technical: it specifies the various information technologies in use. In leading organizations, these are now expressed as a service oriented architecture (SOA), i.e., software is maintained as modules that can be combined to create applications as needed; sometimes by business users. An SOA can reside within the organization or in the cloud. An SOA is not a necessity to work in the cloud, but it adds tremendous flexibility as the organization senses and responds to changes in its environment.

Other management capabilities are important, particularly organizational and change management. An SEA should indicate whether existing organizational structures are helping or hindering the overall strategy. This includes entire divisions but also working groups and reporting relationships. It should lead to questions such as: Do we have the right people in the right places? Do they have the training they need? Are their incentives encouraging them to do what we need them to do?

Measuring the financial value

These capabilities, and 15 others, are taken from the Business Technology Management Framework, a management standard advanced by the BTM Institute, a sister organization to BTM Corp. According to this management framework, a maturity model is designed to assess the progress of organizations in adopting these capabilities. It specifies five levels of maturity, which can be determined using an assessment tool.

This then would be the first measurement of an enterprise’s readiness to move to the cloud: assessing the enterprise’s management readiness in such areas as strategy and planning, technology investments, and managing partnerships. Cloud computing is not an incremental variant of classic outsourcing. It is more fundamental, and the organization must be made ready. If it is not, if it blindly pursues the cloud without the clarity of an SEA and with the organization arrayed as it has always been, then it can expect less than pleasing results.

A company could move all or some of its computing to a cloud and simply compare the costs of cloud versus in-house, but that would be missing the larger potential. The organization might very well be simply trading one source of computing for another in support of redundant or inefficient business processes. If it takes the time to create an SEA, however (and this should include both current and desired state scenarios) it can optimize the entire business, not just its technology.

An SEA and maturity in these other capabilities can help the enterprise answer such questions as:

At some point the enterprise will need to answer the big questions: Is the company, as a whole, better off? Is it finding and retaining good customers? Is it delivering new, innovative products to them? Is it adjusting on the fly to changes in customer demand, marketplace realities, new technologies, and competitor moves? Beyond that, what are changes in management and technology doing for the bottom line?

Taking the holistic measure of an enterprise’s performance is a rather straightforward process. This measurement can be combined with interim assessments on the efficiency of individual business processes currently and in a projected best state, and the costs of internal versus external computing. In no case should such measures be made in isolation from their impact on customers and the firm’s overall purpose and strategy.

Now is the time to wrestle with these issues. Purveyors of the cloud from traditional big-picture providers to relative newcomers are ramping up their capabilities, looking for benefits in joint ventures, and trying to understand the value proposition for future customers. Traditional suppliers of pay-per-seat, one-niche software applications are also anxiously wondering how they fit in.

Some “big thinkers” are prophesying the end of IT departments as we know them. It is more likely, however, that IT departments will continue but in a new, more strategic role. The CIO will become truly the "Chief Information Officer" as opposed to the Chief Information Technology Officer signifying a shift in focus from the technology to its ultimate purpose.

Faisal Hoque is an internationally known entrepreneur and author, and the founder and CEO of BTM Corporation. His previous books include Sustained Innovation and Winning The 3-Legged Race. BTM innovates business models and enhances financial performance by converging business and technology with its products and intellectual property.