The silver lining: Why businesses should invest in cloud transformation

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Cloud computing is nearing its second decade of existence. Since 2000, the industry and technology landscape has matured greatly, with organizations evolving from using cloud experimentally to cloud being a platform for innovation and running entire businesses.

However, despite the growth in acceptance, enterprise cloud adoption and the rate at which enterprises actively run workloads on cloud is still low. A 2017 survey by 451 Research indicated that only 45 percent of workloads are deployed to some type of cloud. Even this may be optimistic. A more recent McKinsey survey estimated that the median cloud adoption rate for enterprises may be around 19 percent.

Gathering cloud adoption business inputs

One of the most important considerations enterprises face is the sustained business benefits or measurable value that cloud provides against the investments required. This is not only a question from those just starting their cloud journey, but also those transforming their entire enterprise using cloud, moving from “cloud 1.0” to “cloud 2.0”.

A common tactic to simplify decision making around cloud adoption and quickly increase usage is focusing on activities such as workload migration or application modernization to help transition applications from an established platform to one that is cloud-based. These are technical initiatives that focus on the nature of the application itself, the type of cloud environment it runs in, and the overall plan to modernize applications or migrate whole workloads to the cloud. While this is important and necessary, this perspective is only part of the equation. Organizational financial and cultural inputs must also successfully guide decisions around achieving long-term successful and business-value-based cloud transformation objectives.

For instance, there is a perception that all applications or workloads will have long-term transformational impact and cost benefit when moved to cloud. However, this may not always be the case. Fortunately, there is a silver lining in the cloud discussion: these insights can be derived and definitively validated using The Cloud Adoption and Transformation Framework.

Understanding the business value of cloud adoption and transformation

Initiatives such as workload migration or application modernization help facilitate the move to cloud, but these initiatives alone do not create the holistic perspective required to achieve value from cloud transformation. What’s missing is the more complete context summarized in the picture below.

As part of moving to cloud, enterprises seek to transition from their current state to a future state that includes the actualization of new cloud-based capabilities and practices. Considerations for the current state include talent and skills, the nature of services currently consumed or delivered, hardware, software, and communications services.

To bridge the gap between the current state and the desired future state, enterprises typically employ application transformation techniques. A more holistic view extends this application-focused view with additional inputs as depicted above.

Future-state capabilities can be organized by dimension (architecture and technology, culture and organization, security and compliance, methodology, and so on). Cloud adoption accelerators may include reskilling, automation and reimagining parts of an organization design, such as the introduction of concepts, or including a center of competency to nurture, deploy and scale new ways of working.

These cloud adoption accelerators become the levers for driving the rate and pace of cloud transformation, the key elements in which enterprises should invest for the desired business outcomes in the timeframe planned. An enterprise may choose to alter the pace at which change will take place. For example, a lower adoption rate of 40 percent takes a more cautious approach that extends the time required for key milestones to be attained, in exchange for lower risk. A rate of 80 percent may decrease the time needed to realize key milestones, but may require greater investment to support required changes.

Defining KPIs and measuring success

Key performance indicators (KPIs) measure effectiveness and can help an enterprise continuously calibrate the cloud decisions made to assure alignment to interim milestones, and, importantly, strategic intent. This may include a minimum set of operational metrics supporting business and technical objectives and aligned to the expectations for cloud and for sustained transformation goals. These metrics can guide the implementation of a business-value-driven case since they serve as milestones in the transformation journey.

Example categories and KPIs include:

• Platform and service performance, including service availability percentage, responsiveness rate and service capacity rate.
• Customer fulfillment and provisioning, including lead time to fulfill and provision, plus demand backlog size.
• Service quality, including deploy success percentage, failure rate percentage and incident rate.

These metrics are important to continue to keep focus on what is important to the business supported by information technology. Here are some useful references on total cost and value of cloud ownership and what-if-analysis given the various considerations.

The move to cloud may be challenging. There are no silver bullets given the complexity of these systems. However, there is a systematic method to help you navigate through these decisions. This is the silver lining. It is the integrated set of decisions that need to be made together that assures long-term success even in the face of complexity.

To start or expand this essential conversation, you can schedule a complimentary cloud adoption briefing to discuss how your organization can use cloud adoption transformation to get on track to think, transform and thrive, ultimately realizing significant business outcomes with cloud.