Creating an effective business/IT-driven Cloud Strategy: perspectives on capturing value with the Cloud in Hybrid environments

Most companies are adopting Cloud. However, few companies have realized the full business impact from doing so. Impactful Cloud adoption is still in its infancy. According to an IBM IBV survey, fewer than 40% of companies are realizing the benefits from moving to Cloud. Cloud Strategies are too often focused on IT cost savings and workload migrations from on-premise to Cloud. An effective Cloud Strategy must be more business-driven and focus on how to optimally use the Cloud to drive business value. Most Cloud sources of value go far beyond IT cost efficiencies. For example, Cloud makes a big contribution to a company’s innovation, and growth, accelerating business value through new services enabled by advanced digital/data/AI capabilities offered by Cloud providers at Cloud-native speed. Benefits associated with a Cloud Strategy would include revenue uplift, improved customer experiences, business operation cost efficiencies, reduced time to market, resiliency and risk reduction, agility and scalability.

To deliver on these promises, a Cloud Strategy must be holistic. Hybrid multi-Cloud is a reality for all enterprises, and Cloud strategy must take this into account. In brownfield environments, a Cloud Strategy becomes a hybrid-environment strategy and must consider multiple elements. Most companies have in some shape or form already experimented with the Cloud, but they typically have the larger portion of their IT and data assets on premise. Some companies have decided on one or two public Cloud providers and are already dealing with a combination of public and private Clouds for Infrastructure-as-a-Service as well as for functional (aka Azure Data Factory, Cloud Foundry, IBM Cloud PaaS) or application (aka Salesforce, Workday, SAP Cloud) Platforms-as-a-Service.

Lifting-and-shifting assets from on premise to Cloud often fails to fully deliver the expected value -- especially if not associated with business imperatives and sound financials -- and in most cases only moves the needle as not fully leveraging the capabilities of both worlds Cloud and non-Cloud.

Taking a holistic approach pays. According to a recent IBM IBV study, companies that have taken a holistic approach to Cloud outperformed others with increases in revenue, profitability and efficiency.

A holistic approach means taking an end-to-end perspective (from Boardroom to metal), creating the linkage with business imperatives to drive business/IT opportunities enabled by Cloud and applying both a business and technical lens, looking at architecture, operating model, and financials, among other elements.

A company’s Cloud vision and sources of value should be informed by both an inside-out and outside-in perspective. It is necessary to look beyond traditional cost efficiency metrics to unlock the true potential of Cloud. The first steps must align Cloud objectives to business strategy(ies), review in-flight programs, build a robust business-IT-financial baseline, and leverage exemplars from across industries on use cases that create value and help realization of the company’s strategic ambition. This may involve strategic plays like new services and disruptive greenfield business platforms to support new business models (e.g., digital Cloud-native bank to serve new and existing customers), monetizing the hybrid environment and modernizing core processes.

Core to Cloud in a Hybrid environment is a next-generation Enterprise Hybrid Cloud platform. These are multi-service platforms that allow value capture across environments at faster speed, delivering new and enhanced digital products, personalized customer experiences, and AI everywhere powered by data and operational process digitalization. They go beyond Infrastructure-as-a-Service (IaaS) and include Digital, Data/AI Platform-as-a-Service (PaaS) models to accelerate delivery of new and advanced capabilities.

Platform modernization requires an end-to-end perspective to deliver on target business/IT needs, inform strategic architecture options, and decide on a target vision. Next-gen Cloud platforms are great for building new applications or lifting-and-shifting existing applications, however modernization of complex front-end user experience to back-end legacy applications may require data-driven integration, hollowing the core or gradual replacement to mitigate risks. Identifying quick wins and picking a modernization approach that allows for regular value delivery are critical.

Data and security are key considerations when identifying target business/IT needs but also when evaluating modernization options. Data distribution, movement and speed/latency need to take place in secure ways across multiple environments and applications. To fully harness exponential technologies such as AI, data segmentation and location must be clear, as well as compliant with security, regulatory, and privacy policies. Such considerations will drive strategic architecture decisions around infrastructure and networks – key potential cost drivers.

Platform direction and modernization options imply changes in operating model that must be taken into account when evaluating strategic options. Without operating model changes, the value of Cloud will not be fully realized, especially benefits like reduced time to market and new revenue models. New ways of working must be adopted leveraging DevSecOps and a product-oriented approach to release management. Managing assets and operations in a hybrid environment with both old and new technologies requires an evolved set of capabilities and processes such as an integrated monitoring plane (e.g., monitoring of resilience, security and compliance across the hybrid environment) and enhanced SOC and NOC.

Finally, a comprehensive target enterprise architecture must assemble the different elements of the puzzle, considering both business scope and IT enablers/architecture options, taking into account modernization approaches, operating model, and financial implications. This includes a review of the existing application portfolio and, based on business needs/scope, an assessment of what can be leveraged, changed, replaced and/or migrated to deliver the best business outcomes. The financial scenarios help inform the trade-off of the options and make a decision on target and intermediary states over time, as well as build the business case.

The Cloud Strategy roadmap shapes the Business Value Cloud Journey, providing an integrated roadmap that maps value drivers (e.g., value streams) to specific enablers (e.g., delivery of new digital products), foundations (e.g., next-gen Cloud platform), and new operating model. The roadmap must be actionable, enabling value realization on a periodic basis (3 months) and the flexibility to learn from data and pivot if necessary.

A holistic business-driven approach to Cloud strategy – one that is both grounded in business value and enabled by next-gen IT – guides organizations in optimizing the use of Cloud technologies and existing hybrid environments to best compete in today’s world.

Fabrice Lebegue and Tejasvi Devaru