5 Reasons Why CIOs Need to Incubate Cloud

cio incubationAs the analyst predictions for 2014 start to roll in, it is clear that cloud is becoming an accepted component of the enterprise IT portfolio. The implications of this trend extend far beyond technology, and will play a large role in redefining the scope and role of enterprise IT. As we discussed in a webinar with Amazon just last week, the “mainstreaming” of cloud in the enterprise is driving many CIOs to embrace new IT-as-a-Service (ITaaS) operating models.

If they haven’t done so already, many IT organizations are launching teams focused on figuring out the best way to move cloud and ITaaS from proof-of-concept to wide-scale deployment.  Many “1.0” cloud strategies developed by enterprise IT were superficial plans focused on getting business stakeholders off their backs. With version 2.0 cloud strategies IT is moving from denial to acceptance, and focusing on “how do we make it happen”.  As part of these 2.0 cloud strategies, CIOs now need to seriously address the implications of cloud on IT organization, operations, management and governance.

One of the topics we’re most adamant about with clients is the need for CIOs to create separate, incubated organizational units for their cloud or ITaaS programs.  Rather then attempt to integrate cloud into current processes and policies with existing IT resources, we encourage that CIOs launch and incubate separate, dedicated teams or organizational units. In some cases we even suggest these units be physically separated from existing IT, and incubated in different facilities.

Why?  There are five major reasons we view incubation as critical to long-term success:

  1. Vision – with a separate cloud unit, it becomes much easier for CIOs and IT executives to articulate their vision of the future. Attempting to articulate why cloud and ITaaS will be transformational is challenging when it’s being treated like any other new technology.
  2. Expectations – with a separate, independent organizational unit it becomes clear to existing IT employees what new roles, skills and capabilities are going to be required. Clarity around what the brave new world is actually going to look like removes much of the angst and uncertainty around what the impact of cloud will be. That doesn’t mean that everyone will be happy with the changes, but at least they’ll know the rules of the game.
  3. Focus – cloud and ITaaS models are paradigm shifts that require new processes, policies and “business models” for corporate IT.  Attempting to drive the change required to drive this change isn’t a part time effort. Trying to drive transformation with a part-time project team is a risky endeavor at best.
  4. Culture – many IT employees sense (often incorrectly) that cloud poses a significant career threat. Particularly for those later in their careers, trying to accelerate cloud adoption and transformation in their organization isn’t going to be high on the priority list. Incubating helps protect against the “culture eats strategy” phenomenon.
  5. Talent – scarce external and internal cloud talent is more likely to be attracted to a standalone, incubated unit than an effort that has the potential of being “lost in the shuffle”. A transformational mission will be far more compelling than the perception of driving incremental improvement.

Incubation is important not just for enterprise IT, but service providers as well. The track record for legacy enterprise IT software, hardware and services providers that have launched cloud services through existing units and lines of business is dismal. Legacy vendors gaining traction are either setting up separate operations, or acquiring cloud service providers that are allowed to run on a largely independent basis.

There’s no doubt that incubation can create short-term organizational disruption and controversy. But CIOs will find it’s worth it in the long run.

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