From shifting workloads to creating business value: A business-value-driven approach to cloud transformation programs

Most organizations are busy with their cloud transformation journeys, which are primarily led by their IT departments. When it comes to cloud transformation, it is not a matter of “if,” but “when” for most IT organizations as they work towards migrating workloads from their data centers to the cloud. This shift acts as the primary business-case driver for cloud migration, considering that by doing so, organizations can rationalize hardware and software costs, improve IT efficiency and operations costs, and eventually move from a capital expenditure model for IT to one based on operating expenses. In most cases the roadmap for cloud migration programs is based on technical feasibility analysis, with the primary objective being to maximize workload shift to the cloud.

Business department involvement in such programs is limited to playing a supporting role, such as selecting a target SAAS platform, ensuring the functional equivalence of migrated applications, and validating the regulatory requirements of applications on the cloud. Cloud migration programs are mostly viewed as IT transformation programs, which has resulted in the following challenges:

1.?????Prioritization of business transformation programs over cloud migration programs: Many cloud migration programs are competing with business transformation programs for funding, resources, and scheduling priority.

2.?????Lack of a business case: A pure IT approach (data center exit) may not be sufficient to provide a business case for a cloud migration program. While everyone realizes the potential benefit of cloud in the future, the lack of quantifiable business benefits is impacting funding for cloud transformation programs. This is especially challenging in the current inflationary environment, which has experienced significant increases in non-discretionary IT costs.

3.?????Failure to realize the true business value of a cloud ecosystem: An IT transformation approach that includes a data center exit as its primary objective is not designed to deliver the true business value of cloud migrations, meaning that such programs do not enable businesses to leverage the true potential of cloud technology.

To address these challenges, a paradigm shift is needed on how cloud migration programs are viewed and managed. In this article, I recommend implementing the following best practices for cloud transformation programs:

Ensure that the business department plays a leading role in any cloud transformation program

Cloud transformation should be treated more as a business transformation program than as a purely IT-focused initiative. This means having clear business-department-led governance and an established business roadmap similar to any other strategic business transformation program.

While the IT department and its leaders should play a key role, the business department and business executives need to take a leading role and work jointly with the IT department to unlock the true potential of cloud migrations.

Cloud and the underlying platform and services ecosystem can truly unlock a new dimension for businesses in areas such as differentiated customer experience, improved sales and marketing activity, new products and service segments, and more. For this reason, achieving a better understanding of how a cloud ecosystem can support a business in these areas by developing a strategy to maximize the value gained from a cloud transformation should be the priority for any program.

To accomplish this, the business department should play a driving role and work with the IT department to define a cloud-enabled business strategy and on translating these strategies to business requirements/expectations. By doing so, the joint teams can effectively select the right solution and services for the targeted architecture and define a cloud transformation roadmap that achieves the desired end state. The resulting program should be designed to deliver business value as quickly as possible and in an iterative manner.

With the continuous evolution of cloud ecosystems and changes in business and regulatory environments, an agile approach to delivery based on continuous business value and a closely aligned IT and business team is key to the success of cloud transformation programs.

Make business value creation the leading KPI for measuring the success of a cloud transformation program

The decisions related to identifying target services and applications, target architecture design, the migration roadmap, and more should take business value creation into consideration as a leading KPI. This effectively extends the migration’s focus beyond current business parameters to include the additional business value a cloud ecosystem can offer. Some examples of such KPIs include the business department’s ability to introduce new products and services, increase the speed at which it can respond to business needs by improving time to market, innovate and experiment with new ideas, improve its net promoter score, and optimize operational efficiencies with automated and straight-through processes.

By measuring these kinds of KPIs, we can quantify the value to a business on a continuous basis. Throughout the project, these KPIs will act as a navigator for the program by ensuring that the migration proceeds in the right direction and maximizes business value.

Business value creation should drive the business case

Most organizations are facing challenges with the creation of a business case for their cloud transformation programs that are only focused on shifting workloads from on-premises data centers to the cloud. While cloud ecosystems offer additional benefits, such as on-demand access to computing, storage, high scalability, low-latency reach to global customers, improved disaster recovery, and advanced data and analytics services, the cost associated with cloud services can spiral out of control without proper planning.

To ensure this doesn’t happen, organizations need a detailed business case analysis that calculates the true value they can gain by leveraging the right set of cloud features. Maximizing the business gain and overall business case is key, as opposed to just looking at the migration through the lens of minimizing IT costs.

For any organization approaching cloud transformation in an agile manner, to regularly deliver business value, it is necessary to continuously monitor and evaluate the business case. By conducting an ongoing validation of the business case, an organization can ensure that the transformation program is aligned with its stated objectives. In addition, setting up a financial operations process provides additional help with reducing waste, maximizing the value of a cloud investment.

Consider the business value of key design and architecture decisions

A cloud transformation program requires a number of architecture and design decisions, potentially defining an organization’s future capabilities. Whether an organization selects a SAAS platform, chooses to modernize an existing application on the cloud, or elects to build a new cloud-native application, any such decision has a substantial potential impact. This not only applies to current functionalities, but also the future potential of the business.

So, it is imperative that the business and IT departments work together to understand the pros and cons of design and architecture decisions as well as the associated business case while setting up their cloud for the future.

Final thoughts

When it comes to cloud transformation, a mindset change is needed. The organization should consider the immense potential that a cloud ecosystem can bring to a business and the business value it can create rather than considering it only in terms of IT modernization and cost optimization. Re-envisioning cloud transformation and expanding its perceived impact beyond IT transformation to include business transformation will give organizations a significant edge.