Cloud adoption during a divestiture: Did you cover key areas?

INTERIM LEADERSHIP: DIGITAL TRANSFORMATION

Is cloud adoption, or any new technology adoption possible while undergoing major changes? What would it take to do so during stressful conditions like M&A or divestiture?

The Story

“Our business is being divested by the parent company. We have to migrate our servers and applications from the parent company data centers. We are thinking of migrating directly to the cloud”, informed the Technology Leader. I was having a strategy &implementation interim leadership conversation with the client Technology Leader.

“We need your help with a cloud strategy and its implementation. Are you available?” asked the Technology Leader.

“What are the TSA (Technical Services Agreement) terms, the number of servers and applications to be migrated, and is your staff cloud experienced?” I asked. I was trying to evaluate the TSA timelines with migration scope and cloud-at-scale adoption.

“We have over 1500 servers, a mix of revenue and non-revenue generating applications, and our staff has no cloud experience”, responded the Technology Leader.

The conversation reminded me of my recently completed divestiture assignment. The parent entity was a large PE-owned Retailer that had divested its European business. The TSA terms were strict. Both the parent and the child entity had to work hard to meet them.

The client’s idea of cloud adoption was good. However, the TSA terms were too restrictive for full cloud adoption. In addition to the migration effort, the company also had to manage divestiture related changes. After evaluating all these factors, we collaboratively developed a plan that worked for them.

Cloud adoption during a divestiture

Being Digital is required for companies to succeed in today’s fast-paced disruptive environment. Cloud enables it. Cloud services allow for linking locations, satellite offices, and infrastructure through a central cloud. Such a linkage through conventional means is costly and time-consuming. A company can scale its services rapidly due to cloud elasticity. It allows the company to respond quickly to changes in customer preferences. And, Companies can rely on cloud services to support unexpected remote workforce requirements. 

Cloud access is easy. One can open an account on Amazon AWS, Microsoft Azure, or Google, and get started. Cloud adoption at scale is a different ballgame altogether. It requires meticulous planning based on business needs and several other factors. 

Meticulous planning takes on a new meaning during divestiture due to FUD (Fear, Uncertainty, and Doubt) factors. Employees on both the parent (divesting) and the child (divested) entities are stressed out. During a significant change like a divestiture, rumors fly, uncertainty rules, and people leave. Employee morale and productivity suffer. Amidst all these changes, customers need to be taken care of else the damage due to customers leaving can be long-lasting. Cloud adoption at scale without experience under such circumstances is an invitation to trouble. Any missteps during cloud implementation can be costly.

An example of meticulous planning follows. Not all the parent company applications may be relevant for the child company. The child company can drop them. Consider the cost of removing irrelevant applications after migrating them. A good plan accounts for this through application portfolio rationalization before migration.

Meticulous planning incorporates skills and experience development when the divested entity has limited or no cloud experience. With no in-house talent, full reliance on vendors can become costly. It can also lead to vendor lock-in. Replacing a vendor becomes difficult.

I remember a situation where a vendor migrating business-critical cloud applications lacked skills. The results were disastrous. Fortunately, the client had cloud-experienced staff. They rolled back the applications quickly before business interruptions could occur. Such an error can be costly without cloud experience.

Meticulous planning should also consider divestiture impact. A divested company can get busy stabilizing its operations and supporting its customers. And for good reasons. Any disruption that impacts customers can make them leave. Disruptions during cloud migration without risk mitigation plans can be costly.

Therefore, cloud adoption without any experience with the cloud is a recipe for disaster. On the other hand, developing a solid cloud strategy and its implementation can be rewarding. A company becomes nimble and can respond quickly to market changes.

Conclusion

The idea of cloud adoption or that of any technology (Blockchain, AI, or IoT) can help a divested company compete quickly, especially as a new entity. Cloud adoption is also a step towards digital transformation. It allows a company to meet customers where they are, and deliver what they need and when they need it. Introducing cloud services requires meticulous planning. Divestiture causes turbulence. Therefore, new introductions like cloud services require extra care to maintain uninterrupted business.

Upsides of successful cloud adoption are huge. It allows a company to go digital. It enables the company to meet the customer where they are. Cloud elasticity offers scalability to meet growing customer needs quickly without incurring additional server costs and delays to acquire, install, and test applications. Cloud is also center stage to IoT, AI, and Blockchain enablement.

About JP Batra, Author

JP Batra is an Interim CTO/CIO for mid-sized companies, and a functional executive leader on strategic initiatives, Blockchain, AI and IoT for large corporations. A distinguished innovator, a thought leader, and B2T strategist, Batra transform IT departments and prepares them to thrive in disruptive environments. His emerging tech and innovation-driven work are aimed at accomplishing growth, opening new markets, reducing costs, improving employee engagement, and creating new opportunities for companies. JP’s twitter handle is@jpbatra and he can be reached at [email protected]

Keywords:

#Digital #Transformation #DigitalTransformation #Emergingtech #EmergingTechnologies #Divestiture #CIO #CTO #MergersandAcquisitions #M&A #Technology #Leadership