You are wasting your money to the cloud

Digital super through

…because you are probably doing the Public Cloud in a wrong way

Transformation to the cloud. Which is more important, the destination or the journey?

In our digitalized world, where even the most outrageous hypes are quickly realized as everyday commodities and everyone is raving about the future, the journey itself seems barely relevant.

I think that underestimating the journey is the worst mistake we can make. It is easy to talk about the benefits of new technologies on the cloud, while referring to organizations that have successfully made the transformation. In reality, they have had a rocky journey and usually succeeded only partly on their set business goals.

Public cloud services have long been in the spotlight and liberal use has been made of the terms IaaS, PaaS and SaaS, depending on the business requirements and technological capabilities of the organization in question. We can talk about two different levels of utilization. The first level is so-called “lift and shift”, whereby a traditional IT infrastructure has made the transition to a cloud infrastructure model. This involves little need for change, but very little cost-effectiveness and additional business values are achieved. Success is usually measured using a maturity model with a variety of miscellaneous, technology-related indicators.

In most cases, this is followed by another level – a genuine transformation to the cloud involving the creation of new business applications, data structures, integrations and changes in business processes. Efficiency, scalability and completely new business scaling capabilities are thereby achieved. This is referred to as adaptation, whose metrics tend to be more business-oriented and quantitative than maturity indicators.

Few experts or organizations have genuine capabilities and even fewer have wide experience of their own in planning all of the changes needed to make optimized and innovative use of public cloud services. However, without such changes the benefits remain small. It is also easy to be blinded by the market hype and the concentration of expertise on a particular solution. Poorly executed projects can even lead to negative final results, without attaining any of the promised objectives.

Are you a master of the public cloud or just a digital flop? 

In the CIO 2018 workshop, I claimed that the journey towards exploiting the public cloud in Finland and Nordic markets are distorted by market forces and certain megavendors with a strong local presence. This point of view is based on my interpretation on several studies according to which 85% of global use of the public cloud occurs at application level (IDC 2018, Rightscale 2017), when the corresponding figure for Finland is around 50% (BizTech 2017). This view is supported by a new term publicized by Gartner this year, “Digital Super Through”, which refers to the digital flop of the years 2019 to 2020. 

The underlying cause of the digital flop lies in the perception that exploitation of the public cloud does not produce the promised and desired results in terms of growing a business. IT management scales, but businesses do not. 

Why does the application level (or SaaS at the public cloud) matter? Because the outsourcing of IT infrastructure, as such, to the public cloud only provides scalability for corporate IT management, but does not scale the business model in question. This, which is also known as ‘reactive service development’, is the simplest form of public cloud service utilization. We are still taking our first steps into the public cloud.

Operational excellence can only be achieved by refining the use of the public cloud infrastructure to the ‘nth’ degree through automation, architectural expertise, an IT service management system (ITSM) and with the right partners. This means taking IaaS optimization and utilization to extremes, but the same could have been achieved in a private cloud or even in one’s own IT infrastructure. The company’s service culture is very IT-oriented.

The counterpart of operational excellence is business innovation. A company’s orientation, business and IT management cooperation work smoothly, but either the business model, processes or partners are not quite ready for using the public cloud in business development or the management of core IT functions. 

When the required expertise is in place and an adequate level of process automation has been achieved, the paradigm shift can be made from commercial innovation to the proactive generation of business value. IT management’s role lies in innovating and facilitating new data-based business opportunities. Only this level represents the sustainable digital transition of the future and a genuine model for benefiting from the public cloud.

Reality is often driven by compromises. Even if 50% of companies have an “all-in” strategy for benefiting from the public cloud within the next couple of years, in practice only around 40% of business data will be processed through the cloud. So it is worth letting those inflexible legacy systems wind down to end of their lifecycles, to focus on building applications in the public cloud from the cleanest possible slate. 

Do not, therefore, seek a better end result based on your original goal, but set wholly new goals for benefitting from the public cloud and your data. Allow, enable and encourage innovation. Appointing or recruiting a cloud architect is often the first step. 

When you use cloud services, your number of partners is bound to increase. So create a partner strategy, take care to choose the right strategic partners, and try to create a Service Integration and Management (SIAM) model. The role of IT management should become that of a broker for partners and services, where businesses and end users only see the data and service layer.

To benefit from the public cloud, you will need a completely different management model. Explore the Bi-Modal management model and remember that a agile (Mode-2) management model is needed in order to manage the public cloud. You will not succeed with traditional models.

While 85% of the respondents in our workshop had only reached the reactive level of benefiting from the public cloud, their transition into the cloud was already underway. Achieving business scalability requires a transformation in management models and processes, which is always an executive decision and has at least some impact on every process and beneficiary of processes within an organization.

Bringing the enterprise to the public cloud, or the public cloud to an enterprise?

As I have said before so often, the technology part is easy, but change and leadership of all kinds are difficult. To move from beating about the bush to gaining a significant business edge, public cloud processes should be brought into companies, not the other way around.

Processes can be broadly divided between four different target groups: management, the organization, architecture, partners and IT management.

Change management is the key to managing a public cloud. The first step is to prioritize actions. This can be done in a very traditional manner by creating a vision, strategy and roadmap. Next come developing and managing competencies, alongside budgeting and new responsibilities (particularly cloud architects). If IT management is not yet BiModal, it must be established immediately. Use of the public cloud must be based on an agile (Mode 2) organizational model and very few organizations can cope without any kind of traditional (Mode 1) organizational model whatever.  Finally, documentation, contract templates and IT management principles must be developed in a public cloud-required manner. IT management consists of service catalogs, response times, data security, contract management, service risk management, and various auditing and maintenance tasks.

All organizational process updates are based on roles and sponsors. No new strategy can function unless it is clear and has the strong support of executive management. Such change also requires the training and orientation of the entire staff in the operating models of the business environment. Although the public cloud sets new demands on staff, it also creates freedoms and the possibility to introduce new types of standards for the efficiency of the work environment. Built-in services become similar to self-service, frequently recurring tasks are automated, and IT management serves as a broker of services rather than a provider.  As always, communication is the key issue during organizational change. The importance and clarity of internal communication can never be overemphasized. 

Recommendations on the architecture are similar to general advice on best practices. In every case, the cornerstone is the enterprise architecture, and a cloud map serves as part of this. An architecture model can be used to evaluate the information service portfolio, integration requirements and technology choices. Technology choices involve deciding whether you prefer cloud independency or want to focus on vendor-locked, optimized services. The implementation of the enterprise architecture is supported by a cloud architect responsible for driving cultural change in collaboration with communications, alongside his or her architectural work.

Partner management has a certain, specific feature. When benefiting from the public cloud, the number of partners will rise, regardless of the organization’s intentions. 

Special attention must be paid to the choice of partners, since changing partner will be very difficult. Many organizations have introduced a Partner Management Service (SIAM), where one of the primary partners is responsible for ensuring that the policies and processes of the other partners are a good fit with the end-customer. The choice of partner must be based on the classification and prioritization of workloads. Once the workloads have been categorized (security, latency, scalability, location, cost structures, lifecycle and own competences etc), the partner providing the most suitable services can be selected on their basis.

In most cases, IT management is already prepared for change, but it is worth mentioning a few key issues here. A frequent complaint concerns the inflexibility of legacy systems in the public cloud. If this is the case, such systems should be left unchanged until the end of their life cycle, while a replacement system is specifically designed for the public cloud. IT management can use the public cloud at infrastructure (IaaS) level, but only applications and platforms (SaaS, PAAs) should be offered to enterprises and end users. Public cloud services are often better than than in-house ones, but it is worth paying attention to the verification and recovery of information in particular. Here too, speed and easiness are the key benefits. You should therefore invest properly in various test environments and agile development. Tests, pilots and trials of the minimum viable product (MVP) are inexpensive and easy to implement. However, to understand all this, you will need a team whose expertise is focused on public cloud solutions and partners. You will not succeed without an open mind and sufficient competencies.

I have tried to explain what the public cloud is, why its use has run into some difficulties, especially in Finland, and how the issue should be managed as a whole. I hope that I have provided food for thought, and challenged and guided you towards development in new directions.

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