Three Reasons Why Cloud Computing Will Boost Businesses Competitiveness

In Cloud Computing: Advanced Business and IT Strategies to Extract Tangible Value blogger andauthor Philippe Abdoulaye describes how the cloud is changing the competitive environment; it is giving all businesses access to IT and is consequently taking the global economy to an era where the downgrade of IT from competitive differentiator to “must have” asset is catapulting innovation as the must have competitive advantage. This unprecedented fact in the IT realm requires a profound transformation of businesses to help them shift their concerns from IT from IT cost savings to innovation.

 

philippesbookAbdoulaye points out a paradox in the way today’s IT leaders approach cloud computing – they stubbornly refuse to see cloud migration as a business transformation; they are still mired in old thinking and are increasingly investing in cloud vendor solution implementations ignoring the people, process and organizational factors thinking the sole infrastructure implementation will magically result in value and competitive advantages.

While cloud solution vendors and the major consulting brands are selling the erroneous idea that cloud infrastructure by itself generates value, stressing the fact that IT is an enabler and value is primarily a matter of process, organization and people performance, Abdoulaye offers two revolutionary tools: The Cloud-Oriented Value Chain and the integrated Cloud Computing Transition Methodology (iCCTM).
The Cloud-Oriented Value Chain represents cloud computing as a two-part service delivery model with on one side the organization’s Operating Model and on the other the Virtual Computing Capability.
The Operating Model is seen as the set of people, processes, organizational configurations and governance capability specifically arranged to enable the cloud benefits and allow businesses acquire substantial competitive advantages such as innovation, focus on core competency, and agility while the Virtual Computing Capability represents the cloud infrastructure and associated SaaS, PaaS and IaaS services.

The integrated Cloud Computing Transition Methodology (iCCTM), is a complete cloud transformation framework that leverages Agile Mechanisms to guide and support the end-to-end business transformation from the Cloud Strategy and Cloud Services Catalog Definition to the Transformation of Traditional IT Infrastructure intoSaaS, PaaS, and IaaS services.

The message of “Cloud Computing: Advanced Business and IT Strategies to Extract Tangible Value” is, getting rid of the old way of thinking or changing the way we do IT does not mean making something new out of something old; it concretely means considering business operating models as the central piece of the business competitiveness.

This best selling work and the other article of the author worth the reading; theysubstantiates the message conveyed by visionaries such as Erik Brynjolfsson (The second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies) and Jeremy Rifkin (The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism): It is Urgent for CIOs to Get Rid of the Old Way of Thinking IT Contribution to Business Value.

Philippe Abdoulaye is the author of several high value posts. He is a former Accenture IT Strategy and Transformation Subject Matter Expert. He has advised IT leaders of companies as prestigious as McKinsey & Company, Credit Suisse, American Express and Bristol-Myers.

Read Cloud Computing: Advance Business and IT Strategies Now.

Other Philippe Abdoulaye’s works include:

Why Implementing Cloud as an IT Service Delivery Model Will Result in Tangible Value

There is a lot of promises around the cloud, cost savings, agility, accelerated delivery, and rapid resources provisioning are the most cited. Are we sure businesses that shifted to cloud are actually enjoying all these benefits? The numerous marketing hypes surrounding cloud pretend they do; the reality is more mixed.
The bottom line of 99% of today’s cloud migration initiatives is to implement vendor solutions and not cloud computing. The fact of the matter is, cloud computing is primarily a service delivery model and not a technology solution. The National Institute of Standards and Technology (NIST) substantiates that fact; it sees it as “Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.” In fact, one can say that the NIST sees cloud computing as a service delivery model composed of four elements including:

  1. Shared pool of computing resources
  2. Cloud service categories including SaaS, PaaS and IaaS
  3. Processes – service delivery and resource provisioning – supporting the management of IT services
  4. People – the human factor – who take advantage of the processes to use, run and maintain the cloud services

Cloud Computing is Primarily a Two-Part Service Delivery Model Composed of an IT Operating Model and a Virtual Infrastructure, the IT Operating Model is as Important as the Infrastructure.

I agree with the NIST; the vast majority of cloud solution vendors and consulting firms focus their effort on implementing the “shared resource pool” part of it and as such they’re not implementing cloud computing. Most of the cloud capabilities I delivered, designed and recommended to clients are two-part service delivery models like the one below developed based on Amazon Web Services (AWS) for a leading firm in the consumer services industry:


The figure highlights the two part of the cloud service delivery model: the IT Operating Model on the left and the Virtual Computing Capability (VCC) on the right. The operating model represents the people, process, structure, governance, and work flows the company’s mobilize to take advantage of the cloud benefits. On the other hand, the VCC is the combination of computing resources e.g., networks, servers, storage, applications and services leveraged by vendor solutions to implement the concepts underlying the cloud benefits including agility, cost savings, accelerated delivery and rapid IT resources provisioning.

By focusing their effort on the sole VCC, consulting firms and cloud solution vendors are not only implementing a small part of it, but more importantly, by ignoring the IT operating model they deprive businesses of the promises of cloud: substantial savings, agility, accelerated delivery, and rapid provisioning of resources.

Pretending that Implementing the Cloud Infrastructure Will Magically Result in Agility, Cost Savings, Accelerated Delivery and Rapid Resource Provisioning is False. Things aren’t that Simplistic.

Implementing the VCC does not guarantee the benefits of cloud, it’s only a step toward the benefits of cloud. Let’s take three concrete examples to illustrate my point.

Gaining Agility is Primarily a Matter of Adjusting the IT Operating Model to the Cloud’s Service Delivery Paradigm

Agility for instance, one of the new buzzwords, it is the extent to which your people, processes, structures and governance flexibility simplify the work flows within your organization so that accelerated delivery and rapid provisioning of resources are achieved. Pretending that it will automatically result from implementing the cloud infrastructure is a mockery. It is false. Agility is achieved through actions formally taken by IT leadership to clarify the role and responsibilities within your IT value chain, optimize the processes and work flows within your IT value chain, get best practices in the areas of IT Service Management and Sourcing Relationships and alike adopted. Making your IT agile is about adjusting your IT Operating Model to the cloud’s service delivery paradigm.

Accelerated Delivery and Rapid Resources Provisioning Does Not Automatically Result from Implementing Infrastructure, it is also Primarily a Matter of Adjusting your IT Operating Model to the Cloud’s Service Delivery Model

The second and third examples are Accelerated Delivery and Rapid Provisioning, “the cloud accelerates application delivery and have positive impacts on businesses’ time-to-market” one can read and hear all over the place. This assumption comes from the fact that the On Demand Self Service feature of the cloud whereby software developers can provision immediately the virtual resources e.g., servers, storage and networking they need to develop, test, and deploy applications eliminates the time wasted on interacting with providers to make sure hardware and software are shipped and delivered in time frames compatible with the project imperatives. On demand self service is a significant breakthrough, it is even a revolution in the realm of IT. However, pretending that on demand self service by itself will accelerate applications delivery and resource provisioning is lying through omission.
All serious experts in operational performance particularly those in change management will disagree with the notion that implementing infrastructure will miraculously result in on demand self service mechanisms and accelerate applications delivery. Rather, they will stress the fact that IT leadership must take formal actions to establish agile approaches e.g., DevOps and Ruby on Rails as enterprise practices supporting the end-to-end applications delivery process. More importantly, they won’t fail to remind that establishing new practices is primarily about changing many aspects of the IT Operating Model, overcoming all sorts of resistance and get those agile practices unconditionally adopted at the scale of the IT department, if not at the scale of the entire business. This is Never Achieved in a Snap of Fingers.

The IT Operating Model is the Foundation of Cloud Computing Benefits. Without Transforming it None of the Promised Savings, Agility, Accelerated Delivery and Resource Provisioning Should be Expected.

What I’m trying to show is, the cloud benefits will result primarily from the transformation of your IT operating model and certainly not from discrete implementations of IaaS infrastructures and SaaS applications. The IT operating model refers to the set the combination of added-value people, processes, organizational configurations, governance mechanisms and work flows your IT department will leverage to use, run, and maintain your organization’s cloud services.
Those selling clients that erroneous idea are probably lying through omission or through ignorance. The reality is, extracting tangible value from the cloud is a double effort that starts with the implementation of the infrastructure and ends with the transformation of the organization’s operating model.

If you agree with the notion that adjusting the IT Operating Model to the cloud service delivery paradigm, I ask you to judge for yourself how absurd, troubling and even misleading are today’s cloud migration approaches.

Sharing Value to Making Our Businesses and Lives Successful

The ideas, concepts, and recommendations in this posts built upon my observation of the IT industry, lessons learned from varied consulting works and cloud migration projects including public and private cloud based on technology as varied as Amazon Web Services (AWS) and VMware vCloud Director.

I highly encourage you to read Cloud Computing: Advanced Business and IT Strategies (to know more), the notions addressed in this post are detailed and illustrated through a complete and detailed real-life case study involving a major and global wireless operator