Five Reasons Why Cloud Transformation is Hard

cloud transformationTransformation is not a new concept, and has been around a long time before cloud and big data.  It has always been a pretty nebulous term, but generally has referred to the fundamental reinvention or redesign of a business or function.  From an enterprise-wide perspective this typically has meant redefining everything from target markets, products and services, channels, and processes to organization structures.  A fundamental, step-change improvement in performance, whether it be growth, profitability or effectiveness is always implied in business transformation.  Technology may or may not be involved, though it’s often a convenient accelerator.  In some ways transformation is the enterprise version of a “pivot”, the radical redesign or redefinition of one or more components of the business or delivery model.

Cloud services are increasingly being used as a foundation to drive business, functional and IT transformation.  And while the concept of transformation isn’t new, there are though several factors that make cloud-enabled transformation in the enterprise uniquely challenging:

  1. Executive sponsorship and risk – any successful business or IT transformation effort requires executive sponsorship.  What’s different about cloud is the profile and nature of execution risk.  Cloud transformation often requires executives to bet their careers on cloud service providers and their ability to deliver.   In conservative enterprises where cloud is still perceived by many to be risky, insecure and not “enterprise-ready”, it’s a rare breed of executive that will make that bet.
  2. Frontline alignment – most enterprise transformation efforts historically have been top-down exercises driven by centralized strategic planning.  Cloud transformation efforts are unique in that they required both executive mandates as well as incentives for frontline employees.  Take for example application development transformation.  In the old world a standardized set of platforms, services and tools could be mandated by corporate IT, and developers would have little choice.  Today if the services incentives aren’t right, developers can still easily go rogue and take their apps to Amazon or Rackspace.  That’s why recent successful app dev transformation efforts like the one at JP Morgan Chase have relied on a combination of top-down mandate and bottom-up adoption.  This example can be extended to broader business and IT transformation efforts.  If incentives aren’t aligned with employees, they’ll often drive their own transformation efforts on their own terms.
  3. Time and tempo – cloud-enabled business transformation typically involves using agility and time-to-market acceleration as sources of competitive differentiation.  This requires not just rethinking business processes and platforms, but also core skills and capabilities.  Cloud and big data dramatically compress the time required for enterprises to observe, orient, decide and act in response to the market (or in fighter pilot speak the “OODA loop”).  The wide scale use of time and tempo as competitive advantage is a relatively new one for many enterprises, one they’re not familiar or comfortable with yet.  The concept of being first to market certainly isn’t new, but the intensity and pace it currently takes to be first is.
  4. Skills shortages – it’s a mundane topic that no one still really likes to discuss, but the lack of cloud skills is a real issue stopping organizations from doing more with cloud.  This is certainly becoming apparent to service providers, which is why you see things like Rackspace’s Open Cloud Academy and Amazon’s AWS Training and Certification.  This isn’t just an operational and support issue.  Without talent it also becomes difficult to evaluate opportunities and develop a roadmap, let alone determine how to drive a wide-scale transformation effort on cloud services.
  5. Pace of innovation – the interplay between cloud and open source is driving a pace of innovation that is difficult for even the earliest of enterprise adopters to keep pace with.  This is certainly true at the IaaS and PaaS layers, and may eventually play out in SaaS as well.  While committing to cloud as a foundation for transformation is one thing, recognizing the ongoing investments in talent and skills required to leverage cloud platforms is another.  Taken together with the skills gap mentioned above, the pace of innovation poses a significant challenging for those deciding whether to drive a wide scale transformation effort.

While it may come as a surprise the some, the critical factors for success in driving cloud transformation have little, if anything to do with technology.  People, skills and incentives are becoming the name of the game in cloud transformation.

Originally posted at CloudAve

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