Cloud & Organizational Transformation

How to identify and plan the organizational transformation needed to succeed in the cloud

Introduction

One of the first questions I receive when initiating a cloud program with my customers is the nature and extent of the organizational changes needed to be successful in the cloud. I am no longer surprised by the question, and I am always prepared to provide some initial insights to my customers; on the other hand, more often than not, the answers I provide surprise my customers. Most companies that are planning or initiating a cloud adoption or migration program do not realize the extent of the organizational transformation and changes needed to take full advantage of the cloud capabilities. Part of the challenge in answering the question is the fact that companies expect to get the single recipe from an organizational structure perspective that, if adopted, will make them successful in the cloud. Unfortunately, the best organizational structure for cloud adoption will depend on the specific needs and goals of the organization. There are some general principles that could be helpful in preparing or planning for a cloud migration, and I would like to explore these in this article.

Before I get started, of significant importance is the distinction between what is considered “cloud native organizations” vs. organizations that are planning to migrate to cloud or utilize cloud technologies for the first time. Cloud native organizations were born in the cloud and the only technologies that they utilize and know how to use in the design and launch of their products and services are cloud based. As a result, their organizational structure and in fact entire operating model is based on fully understanding the capabilities of the cloud and building the organization around those capabilities. This model for many companies could become aspirational in the long term (although might not be possible or even feasible in the short term). Let’s explore first some of the key characteristics of cloud native organizations:

The cloud native organization

?Cloud native organizations typically prioritize the following operational principles:

• Automation: Automating as much of the software development, deployment, and operation processes as possible to speed up delivery and reduce the potential for human error.
• Microservices: breaking down large, monolithic applications into smaller, independent services that can be developed, deployed, and scaled independently, making it easier to update and maintain the software.
• Containerization: packing applications and dependencies into lightweight, portable containers that can be easily deployed and run on any cloud platform.
• Continuous delivery and deployment: using automated tools and processes to continuously build, test, and deploy software updates, allowing for faster iteration and more frequent releases.

By adopting these principles and practices, cloud native organizations can take full advantage of the scalability, flexibility, and cost-effectiveness of the cloud to deliver high-quality software and services to their customers. These principles do require a different operating model compared to organizations that were born in traditional data centers. We will explore some of the implications as we understand the success factors and guiding principles recommended when migrating to cloud.

Key operational and organizational success factors

In my experience helping customers migrate to the cloud, there are some important success factors that I have seen repeated across the most successful programs:

Clear goals and objectives: it is important to have clear goals and objectives in mind when adopting cloud computing. This will help ensure that the organization’s cloud adoption is aligned with its overall business strategy and that is able to realize the benefits of the cloud. I remember three very different cloud programs that were very successful for my customers because of the absolute clarity of the goals:

• An oil and gas customer that was embracing cloud for the purpose of optimizing its IT cost structure with the mandate of exiting its data centers and migrate most of its workloads to the cloud.
• An insurance company that decided to abandon on-premises data centers when the contract for its main building location was up for renewal and the organization decided to reduce its real estate footprint by closing the data center (and utilizing the cloud).
• A public education organization that decided to modernize its applications and run them in the cloud to improve the functionality and services offered to its customers and employees.

Careful planning: Adopting cloud computing requires careful planning and coordination. It is important to develop a clear plan for migrating workloads and applications to the cloud, including a timeline, a budget, and a detailed process for migrating each workload or application. A lot has been written about the various techniques to identify the course of action for each application (the 5 Rs model) and how to prioritize the migration. In my opinion, the most important part of a cloud migration plan is the recognition that the journey to cloud is a multi-stage, longer term process and in some cases less linear and more iterative than organizations and their leaders realize.?Challenges to be considered and addressed in the short and long-term plan include:

• Infrastructure complexity: The biggest challenge in most cases is the complexity of the existing infrastructure and application landscape. I have seen many organizations struggle with the complexity of multi-tiered systems that are made-up of a combination of on-premises servers, data centers and various applications and services that are all interdependent. Migrating such a complex system (for example the claim system in an insurance company, or the main student management system in a University) requires a detailed plan and ongoing coordination to ensure that all components are properly migrated, and that the resulting system is stable and reliable.
• Application / Data portfolio: Another difficulty of migrating to the cloud is the amount of data and applications that need to be migrated. In my experience, many organizations have large amounts of data that need to be transferred to the cloud, including files, documents, images, and other digital assets. In addition, most enterprises may have a large number of applications that need to be migrated to the cloud, including custom-build applications as well as off-the-shelf software. Migrating all of this data and software to the cloud can be a time-consuming and resource-intensive process, especially if it needs to be done while the organization is still running its business.
• Migration orchestration & execution: Finally, migrating to the cloud requires careful orchestration and coordination to ensure that the migration is done smoothly and without disruption to the business. This can be difficult, especially if the organization has never undergone a migration of this scale before. In some cases, dependencies between applications and their data requires that some workloads be migrated first, hence the sequencing of the migration is an important element of the planning process. It is also important to have a clear plan in place to communicate with all relevant stakeholders about the migration process to ensure that key users or customers of the technologies in scope are not caught by surprise and most importantly to ensure that they maintain the ability to conduct their business. In addition, it may be necessary to provide training to employees to ensure that they are able to use the new cloud-based systems effectively.

Some organizational guiding principles

In my experience helping organizations migrate to the cloud, I have seen some guiding principles followed by companies that have been successful migrating to the cloud or at least adopting the cloud for some of its projects and / or IT operation’s needs. These include:

Address the cultural & organizational change: Significant cultural and organizational change is to be expected when migrating to the cloud. Even when a migration is purely technical, there are changes to be expected. Here are some steps I have seen organizations follow to address the cultural and organizational changes needed when migrating to the cloud:

• Communicate the benefits: Make sure that all stakeholders understand the benefits of migrating to the cloud, including increased efficiency, cost savings, and the ability to scale resources as needed.
• Involve stakeholders in the planning process: Involve key stakeholders in the planning process for the migration to ensure that their concerns and needs are considered.
• Provide training: Provide training early in the process to all IT employees and selected business leaders and stakeholders on the new tools and processes that will be used in the cloud. This will help them feel more comfortable with the change and better prepare to use the new systems.
• Establish a governance model: Establish a governance model for the cloud environment to ensure that it is used appropriately and securely without compromising the agility and flexibility the cloud could bring to the IT innovation cycle.
• Monitor and review progress: Regularly monitor and review the progress of the migration to the cloud to ensure that it is meeting the desired outcomes and address any issues that arise. It is ok to make mistakes and course correct. In fact, it is expected in most complex yet successful migrations.

Overall, it's important to approach the migration to the cloud as a collaborative effort, involving all relevant stakeholders and addressing both the technical and cultural aspects of the transition.

Identify an effective new operating model: when migrating to the cloud, organizational changes might not be enough to fully realize the benefits expected. In most successful cases, I have seen over time a transition to a new Operating Model for IT as an organization but in some cases for the entire business (in particular when the business’ products or services are based on technologies that are now in the cloud). Some of the operating changes in the business could include:

• New skills and knowledge: the skills and knowledge needed to be successful in the cloud are in some cases vastly different. This topic on its own is the subject of many articles and books; most successful models in my opinion are the ones that recognize the innovation and agility potential of building new services in the cloud, requiring new skills in product management, agile development, and in some cases new technologies like AI/ML as part of successful cloud projects and operations.
• New structure to launch and expand the cloud footprint: although not always needed, the implementation of a Cloud Centre of Excellence (CCOE) could be a great strategy to develop and test new processes and operating models in a controlled environment (for example for a new project or product) and then expand the model to the rest of the organization based on the learnings of the initial project (s). The center of excellence could act as a support and enabling function while implementing some needed governance mechanisms (without compromising the flexibility and agility potential).
• DevOps: perhaps the most significant operating opportunity when migrating to the cloud is the implementation and utilization of DevOps practices and processes. DevOps is a software development approach that emphasizes collaboration and communication between development and operations teams. It aims to bridge the gap between these two teams and enable them to work together more efficiently and effectively. In a DevOps environment, development and operations teams work closely together throughout the software development lifecycle (SDLC). This includes practices such as continuous integration (CI), continuous delivery (CD), and automated testing and deployment. The goal of DevOps is to enable organizations to deliver software faster and more reliably, while also improving the efficiency and effectiveness of the development and operations teams. This is achieved with automation, collaboration, and a focus on continuous improvement. DevOps is particularly well-suited for organizations that are adopting agile software development practices and looking to increase the speed and reliability of their software delivery process. It can also be beneficial for organizations that are looking to improve their ability to respond to changing business needs and customer demands. With its automation and management tools, the cloud is well suited to make a DevOps process possible, giving more control (and responsibilities) to an empowered development team.

Develop a talent strategy: although it is expected that most roles within IT are impacted when migrating to the cloud, some roles will require more transformation than others. It is also to be expected that not everyone in the IT team will react with the same level of optimism and support for the cloud program. Typical steps in developing a talent strategy could include:

• Identify the organization’s cloud goals: Clearly define your organization's goals for using the cloud, as this will help you determine the skills and expertise that you will need to achieve those goals.
• Assess current team's skills: Conduct an assessment of the current skills and expertise of your team to identify any gaps that need to be filled in order to effectively leverage the cloud.
• Determine the skills and expertise needed: Based on your cloud goals and the skills of your current team, determine the specific skills and expertise that you will need to effectively leverage the cloud. This may include technical skills such as cloud architecture and infrastructure, as well as soft skills such as project management and communication.
• Develop a plan to acquire the needed skills: Once you have identified the skills and expertise that you need, develop a plan to acquire them. This may include training and development programs, hiring new employees with the necessary skills, or partnering with external organizations to access the needed expertise.
• Evaluate and adjust the strategy as needed: Regularly evaluate the effectiveness of your talent strategy and make adjustments as needed. This may involve reassessing the skills and expertise that you need, as well as reviewing the effectiveness of your training and development programs.

Invest in key strategic and architectural roles: There are several key strategic and architectural roles that are needed for effectively leveraging the cloud. Some of these roles include:

• Cloud strategy lead: This individual is responsible for developing and implementing the organization's overall cloud strategy. They should have a deep understanding of the business goals and objectives and be able to align the use of the cloud with those goals.
• Cloud architect: A cloud architect is responsible for designing and implementing the technical infrastructure and systems needed to support the organization's use of the cloud. They should have a strong understanding of cloud technologies and be able to design scalable and highly available systems.
• Cloud security lead: This individual is responsible for ensuring the security and compliance of the organization's cloud environment. They should have expertise in cloud security best practices and be able to implement the necessary controls and processes to protect the organization's data and systems in the cloud.
• Cloud operations lead: This individual is responsible for the day-to-day management and maintenance of the organization's cloud environment. They should have expertise in cloud infrastructure and be able to troubleshoot and resolve issues as they arise.
• Cloud governance lead: This individual is responsible for establishing and enforcing policies and procedures for the use of the cloud within the organization. They should have a strong understanding of the organization's governance requirements and be able to ensure that the cloud environment is used in compliance with those requirements.

Conclusion

In conclusion, change and transformation are to be expected and are of strategic importance in the cloud for several reasons. First, the cloud is a constantly evolving environment, and organizations that can adapt and transform their operations to take advantage of new technologies and capabilities will be better positioned to succeed.

Second, the cloud enables organizations to transform their business models and operations in ways that can drive significant competitive advantage. By leveraging the scalability, flexibility, and cost-effectiveness of the cloud, organizations can better respond to changing customer needs and market conditions.

Finally, the cloud can help organizations transform their IT operations and infrastructure to be more agile, efficient, and responsive. This can enable organizations to deliver new products and services faster, while also reducing costs and improving the overall effectiveness of their IT operations.

Overall, the importance of change and transformation in the cloud cannot be understated. Organizations that can effectively embrace and leverage these changes will be well-positioned to succeed in today's fast-paced and constantly evolving business environment.