The case for cloud computing adoption sounds compelling. But how should companies make the move? What are the most important steps to get there? What should their cloud strategy and cloud roadmap look like?
Step 1: Adopt a progressive mindset
The first step in a cloud computing strategy and roadmap is for your company—both management and employees — to adopt an open progressive mindset regarding application of new technologies to gain business benefits. The move to cloud computing also involves changing mindsets, cultural patterns, process patterns, and colleagues’ hearts so that they willingly adapt to new approaches and technologies.
Spearheading disruptive change in the organization will be the most difficult part of the journey.
“Use of the cloud in our industry is an exception rather than the norm. I think a lot of companies in more traditional, mature industries like ours are missing out on a lot of opportunities to take advantage of what the cloud has to offer. I would encourage these companies to be open-minded and progressive and look at alternatives to traditional, client-server, on-premise systems.” – CEO, manufacturing company
Understanding the cloud’s power and potential is certainly important; but getting mentally ready to take the plunge can be a stumbling block. The underlying reasons — perceived or real — are many:
- Fear of the unknown
- Fear of loss of control
- Fear of job loss
- Risk aversion
- Lack of tolerance for change
Machiavelli said this about change more than 500 years ago:
“There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things.”
A company’s top management should drive change in order to ultimately generate value for customers and shareholders. Transforming a company’s business using cloud solutions is not just about technology adoption and implementation. It also involves broader business and operational changes in several areas including governance, budgeting, contracting, regulatory compliance, polices, people, and processes.
Therefore, management needs to educate and convincingly explain to everyone in the company who will be impacted by the change what the company is doing and why the new approaches bring value to the company. Success in getting to the cloud depends on adapting to change.
Step 2: Watch, learn and experiment
Embracing any new technology involves learning. Sand Hill’s 2010 “Leaders in the Cloud” research study found that companies typically conduct experiments to see how the cloud really works and how it fits or doesn’t fit into the requirements of the business. Through this process, companies became familiar with constraints, issues, and benefits of the technology.
Many surveyed executives described this testing phase as similar to that of adopting outsourcing services: experiment with nonstrategic projects to acclimate the company to a new way of doing business, evaluate selected vendors, and assess business benefits. As their companies experienced the benefits and understood the technology, their outsourcing initiatives matured successfully and gained a significant share of projects.
Step 3: Demonstrate quick wins
Many of the companies participating in the Sand Hill survey set up innovation sandboxes (a.k.a. Skunk Works projects) where their project teams were allowed to work with the new technology within the context of a specific business initiative.
Here are some examples of such small, experimental projects that the companies in our study are executing in the cloud:
- Initiate development projects where small teams work on specific business-driven projects on a public Infrastructure-as-a-Service (IaaS) cloud such as Amazon. Examples of these projects include a short-term marketing campaign, IT resources for offshore developers, and a new website for photo sharing.
- Develop a small tactical application on a Platform-as-a-Service (PaaS) cloud such as Force.com or Windows Azure. Because the platform was so easy to use and did not require any programming knowledge, one CIO of a manufacturing company developed a simple HR application in less than a week. He said this would have taken several months for a professional technical developer using traditional platforms.
- Acquire a Software-as-a-Service (SaaS) application for a non-mission-critical business process. An executive in a media company rolled out a cloud-based e-mail system to hundreds of users in less than a month. Based on high user satisfaction with this new e-mail system, the company decided to roll out the e-mail system to all of its users.
When the companies successfully completed these projects in much shorter time and with less effort than it would have normally taken, they then pushed the results up the value chain and funded new pilot projects. The Sand Hill study found that many companies used the cloud to solve specific and tactical problems and, for the most part, achieved successful results.
At the next stage of getting to the cloud, however, companies need to develop a business-case-driven cloud strategy that is fine-tuned by findings and value gained from the tactical projects. The emphasis needs to shift at this stage from too much “how” to more of “what” and “why.” Otherwise, short-term, tactical projects will dominate the transition to a cloud-based IT reality, which won’t necessarily generate global business value or, even worse, will end up with vendors driving the company’s agenda.
Step 4: Develop a business case
Companies should consider the following fundamental business drivers when building a case for cloud computing:
- Business agility:Identify how to apply cloud applications and platforms to the business, enabling better and faster competitiveness.
- Operational excellence: Investigate how cloud solutions can lead to improved availability, reliability, and lower total cost of ownership (TCO), facilitating investing the savings back into the business.
“I have never established a cloud computing strategy or issued a mandate that everything needs to go off premise or move to some type of hosted model. The driver behind it is a business need.” – CIO, healthcare company
Like any other emerging technology, the fundamental decision to embrace cloud computing comes down to figuring out how the investment in the cloud will yield positive returns to the business at an acceptable risk level. If the company uses a public cloud for solving specific business problems, it also becomes an outsourcing decision—one where the company also looks for value in solutions that are less expensive, safer, and better than what it can create by itself.
In the past few years, public cloud solutions have improved, becoming more robust and also more compelling in quality, stability, and overall cost-to-benefit ratio.
Many commodity services (e-mail, backup, archival, collaboration, etc.) including standard business processes (customer relationship management [CRM], expense management, accounting, and HR management) are now available as public cloud services. For each business problem a company seeks to solve, it needs to look at a cloud solution and compare it with alternative solutions from both return on investment (ROI) and TCO perspectives.
These are the first four of eight steps involved in successfully transitioning to the cloud.
Kamesh Pemmaraju heads cloud computing research for Sand Hill Group. Follow him on Twitter @kpemmaraju.