Cloud has Moved from “Should We Do It?” to “How Do We Do It?”

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IT investment has shifted from virtualization to private cloud as CIOs prepare to go public

A recent survey of IT budgets shows that the focus for many IT departments has moved beyond virtualization and consolidation. They’re working to hard to realize the flexibility and agility that cloud promises to bring to their organizations.

The report found that:

  • The worldwide cloud computing market is predicted to grow strongly with a 36% compound annual growth rate (CAGR) through 2016.
  • Spend is flowing away from the virtualization and consolidation that has been the focus in many IT departments for the last few years.

Image source: Forbes.com

It’s not surprising that a shift to private cloud is at the top of the list. CIOs are, by nature, risk adverse as the role still carries operational responsibilities. The current boom in private clouds probably represents a try before you buy mentality. CIOs are using private clouds as a tool to understand the operational impact of moving to the cloud.

The fact that cloud provider assessments slot in at the second position, closely followed by Infrastructure as a Service (IaaS) and Software as a Service (SaaS), shows that the private cloud boom might be a short one. CIOs are already using what they have learnt from private clouds to evaluate cloud providers and then invest in their services.

The report also found that the biggest roadblocks are organizational or – that old bug bear – security challenges, and not the technology itself.

Image source: Forbes.com

Cloud radically changes the dynamics of our IT departments. The shift to cloud means that we’ll spend less time managing IT assets, and more time managing external service providers and knitting together end-to-end processes. This change takes time as teams and individuals must adapt to new roles and responsibilities, and new ways of working.

Where are you on the cloud-adoption journey? Have you experimented with private cloud? Or have you leapt into a public cloud? And what challenges did you need to overcome on the journey?

 

[VIDEO] How External Drivers Are Shaping the IT Function and the Role of the CIO

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The capabilities CIOs need to create value in a changing world

The video below of an interview with me was recorded by CIO Magazine in conjunction with a series of events sponsored by IBM on the Tomorrow-Ready CIO.

In the video I discuss how the role of the CIO is at a point of divergence. On one hand we’re seeing the CIO marginalized in some organizations as business units bypass the IT department to procure technology directly. On the other hand some CIOs are leveraging the increasing importance of technology in business to create a new role for themselves, in which they work across the business to help drive strategy and develop an institutional understanding of the opportunities that technology is affording the business.

I see the new CIO as a key figure in building the extended enterprise in which organizations integrate partners, suppliers, and even customers into the enterprise as they realize creation of value is no longer restricted to the team within the business’s own four walls. Doing this will allow CIOs to create superior value for the business and expand their role.

Full Transcript of Video:
In looking at the future of the CIO, I tried to create a framework which looked at the external drivers, the things that are shaping technology and deciding the business world. How that changes the IT function and, in turn, how that shapes the role of the CIO, in terms of what are the capabilities, what are the enablers of the new role of the CIO, and how CIOs create value.

Some of the key capabilities of CIOs are visionary leadership and that requires being able to create a compelling, achievable, realistic vision of what the IT function of the future looks like.

Most of it requires an entrepreneurial mindset, and I think that more and more we are seeing the rise of entrepreneurship in business and at large, but it indeed this needs to be applied within business and within the IT function. Both in terms of being able to have an opportunistic mentality, to look and to seize opportunities. But also to take guidance from what the whole, what is happening in the world of start-ups today and particularly, being able to build this so called lean start-up To iterate very fast and to building and learning from what you’re doing rather than going through long development cycles.

I think there are also some fundamental capabilities in being able to not just have a strategic perspective, but also engage the board, engage the key executives, and if necessary to educate them on the impact of technology on the business, in order understand why technology is so central to an organization’s future.

CIO’s need to demonstrate that they can create superior value in order both to justify their role and also what should be an expanding role inside the organization. They need to be able to demonstrate that they can facilitate better business decisions being made. They also need to be able to be a facilitator of agility in organizations by being able to build flexible processes that the organization can be agile and respond to a changing business environment. They need to be able to also create a perspective on the organization where strategy is developed, understanding that the whole future landscape for both technology and the business around them. And one of the key ways in which CIOs create value is really being able to build what is being described as the extended enterprise. Where value’s not created just within the organization but beyond it, and the role of CIO is fundamentally to extend the reach of the organization to its customers, to its suppliers, cross its partners, cross the whole ecosystem where value is created.

I think that in many organizations that technology functions as a point of divergence where some, many cases we’ve seen the technology functions start to be marginalized, commoditized, budgets shrunk and just as perception that is creating a basic pipes that make the organization run. So there’s a real danger of the whole technology function being marginalized, endangering the very organization itself.

So this is a responsibility of the CIO to be able to demonstrate the value today and demonstrate the potential for value creation in the future. I think we’re going to see two different types of organization, where the technology function is both creating value, demonstrating that value creation and be able to support the potential of the organization, ones where the technology function becomes marginalized, to the detriment of the organization itself.

Three Rules to Survive in an Age of Tight Budgets

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We’ve done the obvious things to save money so now we need to find smarter ways to deliver solutions

Money is tight and many industries are feeling the squeeze. Budgets are being trimmed – if not outright slashed – and we need to do more with less.

We’ve done the obvious things. We’ve eliminated waste by disposing of unused licenses and assets. We’re moving fixed costs to variable costs so that services will flex with the business.

All of these tactics are backwards-looking though. They’re one-time savings resulting from trimming the fat and tightening our belts.

The challenge is not just making our existing IT solutions a little more efficient. We need to find ways to create the new solutions that the business needs without breaking the bank. We need to find a low-cost approach to enterprise IT.

IT is no longer an engineering profession

The success of many business used to rest on the on the quality of its tools. If the tools – a business’s IT systems and processes – broke then the business would fail. We spent our time engineering capital intensive, complex IT solutions that would withstand whatever the we threw at them.

Today, though, reliable solutions can be purchased as-a-service.

The success of many businesses now rests on their ability to respond to changing market conditions. Our challenge is to furnish the business with a set of tools that it can use to quickly adapt to the ever changing market.

The old capital intensive, complex, IT solutions are the legacy that is dragging many IT departments down. Legacy thinking is our albatross.

What are the new guiding principles?

But if enterprise IT is no longer an engineering challenge, then what sort of challenge is it? What are the guiding principles we should use as we craft solutions to the problems that our business has?

We don’t need to look any further than the low cost consumer industries for our inspiration.

  1. Keep the core solution simple
  2. Provide sensible options
  3. Only pay for what you use

Rule 1: Keep the core solution simple

Reduce the complexity – and thereby the cost – of the technology you use. All those fancy options take effort to implement, and this effort must be paid for. If you can keep your core requirements simple then you can use a cheaper solution, and you can (largely) avoid the expense of customization.

Most solutions on the market today are more than capable enough for many organizations. We don’t need to spend our time trying to find the “best of breed”, knowing that the best might only just be good enough.

Apple stripped back the smartphone, simplifying how we interact with it, and created a more satisfying experience in the process. Zara develop a constant stream of fashionable but simply constructed clothes and revolutionized the fashion industry.

Basecamp, from 37signals, did something similar for project management. They realized that most projects don’t need the complexity typical project management tools brought with them.

This trend toward simplification has grown beyond small teamware tools to include tools to support managing small organization. The trend is moving upstream to larger and – traditionally – more complex solutions. First project management. Next email and desktop automation. Today CRM & ERP from SaaS vendors such as Salesforce and Workday.

It might be wise to consider which solutions deliver the outcomes that your organization needs, and then change how your organization works to match the tool. Rather than trying to (re)configure the tool to support unique processes.

Rule 2: Provide sensible options

Provide a small but logical set of options so that teams can tailor solutions to their needs by selecting the options that they find the most suitable.

Avoid the “one size fits all” problem where all stakeholders are forced to use the one, monolithic, expensive solution that tries to cater for every eventuality. This results in you needing to either overcharge the smaller users – often discouraging them from using the solution in the first place – or let them ride on the coattails of the larger users.

Building one large, complex solution was right approach when creating an enterprise application was akin to launching a rocket to the moon. You only get one chance and you need to make it all the way to your destination so you better pack everything you’ll need for the journey. Saber – one of the first, if not the first, airline reservations systems – is a case in point, with the final solution including everything from back-end mainframes and applications through networks to the terminals the staff would use to access the solution.

Unbundle your products and services – just as the low-cost airlines have – and provide a small but logical set of options that the business can use to construct their own end-to-end solutions. They might have bought the flight, but do they need the meal?

These days there’s an app for that. If we need something small to add onto our CRM or ERP then we can often buy an app or module from the marketplace provided by our platform.

You’ll need to work with your customers to understand what options they need.These options will also change over time as the business and the market around it evolves.

Rule 3: Only pay for what you use

The last and possibly the most important point as it ties the other two together. You might have provided simple base solutions with a reasonable set of options, but if the price is not connected to the choices the business makes then it’s all for naught.

Encourage consumption-based models using sensible business drivers – per seat, per … – so you only pay for what you use. This is the key to the low-cost model.

Three rules to bind them

The persistently tight margins we seem to be experiencing mean that it’s time to move beyond belt tightening.

Luckily we don’t need to look far for inspiration. The low cost consumer industries can point us to three key principles that we can use to help the business optimize.

  1. Keep the core solution simple
  2. Provide sensible options
  3. Only pay for what you use/li>

If the base solution is simple then you get a  low starting price. Providing a sensible set of options allows the business to adapt the solution to meet their changing requirements. A consumption-based model can help you ensure that you’re never paying for anything that you’re not using.

What do you think? Is the current belt tightening a passing fad? Or do we need to find new and smarter ways to procure the technology that allows the business to do more with less?

 

What’s the Future of the CIO?

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CIOs have an opportunity to drive strategy and create business value, and not just reduce costs

Traditional IT departments are being dismantled piece-by-piece. Cloud services, Bring Your Own Device (BYOD), and even the drive for tighter integration with our partners, are poking holes in our IT organizations. More and more of the technology that our businesses use is purchased and controlled by someone other than the IT department.

But is this such a bad thing? As IT leaders, do we want to continue to be chief infrastructure owners and order takers?

The traditional CIO role is fading into the sunset. The businesses we work for are moving from needing to own technology to focusing on using what they can find around them.

We have an opportunity to carve out a new role for ourselves. A role where we bring together the technologies and skills our business needs to drive itself forward. The technology our business needs if it is to avoid problems and pounce on opportunities.

CIOs have the opportunity to make themselves as invaluable to their businesses as the CFO. The CIO as the in-depth professional who ensures that technology is an opportunity to exploited, rather than an albatross that drags the business down.

The demise of the Chief Infrastructure Officer

Our IT departments were built around the need for centralized control of expensive IT assets. Aside from brief episodes, such as the birth of spreadsheets and the desktop PC, most IT departments have kept a tight rein on where and how technology is used.

The success of our business depended on the quality of the tools it uses – the business processes and systems we rely on to keep the organization humming – as the business will fail if its tools fail. It’s not hard to find a business that will be significantly out of pocket if a core system fails at an inopportune moment, taking a day’s orders with it.

However, the environment our IT departments operate in has changed. We’ve used technology to solve the vast majority of the internal problems that business has, from maintaining finances through to managing supply chains and customer records.

The problems that our legacy solutions solve are now well enough understood for the solutions to be delivered as a service. Many of us are in the process of swapping our expensive on-premises solutions for more adaptable cloud-based services. This shift to cloud-based services is removing many of the traditional responsibilities of a CIO.

Technology is now central to how our organizations engage their market

The focus for enterprise technology has shifted from internal to external problems.

How do we integrate the heterogeneous and global supplier networks we need to operate in today’s global economy?

How do we support a workforce where many of the people working for our business are not employed by it? Our workforce is mobile, knitted together from baby boomers through Gen X to Gen Y, staff from suppliers and partners, through to free agents and even our customers.

How do we make sense of the many weak and confusing signals from the market, using social media as something more than a dog whistle? And how do we unlock the value in the disparate databases, spreadsheets and documents spread around our enterprise?

Which CxO will “own” technology?

We can see the shift in technology from an internal to an external focus is the tension between the CMO and CIO.

Many CMOs are on a similar journey to that which the supply chain team went through in the 80s and 90s. They’re experimenting with technology as they work to solve a poorly-defined and unstructured problem.

Our supply chain toolkit was built on the inventory management solutions installed at factories and warehouses, creating event management and planning solutions to help manage the flow of goods. Finally sales and operations planning was used to tie the end-to-end supply chain together.

Supply chain matured from a craft into a science as we broke apart the problem and then built out the toolkit needed to run an efficient supply chain.

CMOs are investing in new technology and new solutions. They’re building social media war rooms. They’re experimenting as they work to develop the toolkit they need to run an efficient and effective marketing operation. A marketing operation that must live in a world dominated by social media and omni-channel.

Best practice is currently based on disconnected solutions and tribal knowledge. Best practice, however, will mature rapidly, just as it did in supply chain.

The CMO is discovering what signals from the market to pay attention to (and which to ignore), what technology works (and what doesn’t) and how to structure their team to enable it to scale.

IT leaders have a lot to offer the CMO, just as we do to other business leaders.

CIO: Chief Inspiration / Innovation / Integration Officer

The IT department can help pollinate ideas and technology across the business, and across partners and industry. IT can make connections between needs and (potential) solutions.

We can help the business procure and manage their technology, ensuring that it is secure and reliable. And we can help them make the most of their technology purchases by integrating them into the business.

HR departments have renewed themselves by helping the business get the most from its knowledge workers; creative, problem solving people within the business. IT leadership can renew itself by helping the business get the most from its technology.

In an age when technology is woven into the very fabric of the business, companies depend on it not just to save money through automation but to also create opportunities.

Few companies would consider doing without a CFO and finance department, as finance is central to resource management. Few companies will be able to do without a CIO and IT department, as IT is central to a company’s ability to engage the market and create new opportunities.

Our business now lives or dies in its skill in using technology

Businesses used to live or die on the quality of their tools: the business processes and solutions that they invested so heavily in. Today businesses live or die on their ability to adapt: their ability to use the tools around them to solve the problem (or capitalize on the opportunity) in front of them.

The CIO is the in-depth professional who can bring together the technologies and skills that the business needs to drive itself forward, to enable it to avoid problems, and to pounce on opportunities and adapt.

IT is no longer just a cost of doing business. IT has become one of our major tools to engage customers and go to market. IT is now firmly at the centre of business, and our business will fail if we fail to use IT effectively.

What is your experience with the changing role of the CIO? Will IT spend migrate out of the IT department leaving an empty husk behind? Or can we reinvent the CIO role? And if so, what does the future CIO role look like?