CIOs & Cloud Centric IT Organization Refresh Strategies

As enterprises concentrate on growth, they remain vigilant about costs and operational efficiencies – coming out of recession, even in times of high growth and radiant optimism. Such a model of growth provides IT with a lot of fresh opportunities to adapt and innovate . More than ever, this new model of growth mandates IT to raise its strategic importance to the business rather than just be content to focus on delivery of generic business plans. In many ways the tenor of change is set in with such changing context – With the continuing tight budgets, the CIO’s are now getting forced to” think and act different” – one of the critical ways that can be tried is to follow the time tested model of being creative in discarding the past while taking a bold and fresh approach in creating a new future of IT within enterprises.

The classic way of looking into conceptualizing a new IT organization and its contribution to the enterprise starts by thinking aloud typically by asking the question “What If?” Now in the radar of every CIO and IT organization, Cloud happens to be mostly at the top where some expect more than half of new workloads to naturally move to the cloud besides the expectation that a majority of applications and infrastructure inside the enterprises would move to the cloud over the next few years. That forces the hand of enterprises in ensuring quick think through of the future possibilities for IT in terms of alternate models and the cloud.

Let’s face the facts : CIO’s of large organizations have to manage the burden of the past in terms of legacy systems, data and the processes set in there. They come with huge costs in terms of maintenance and in many cases impose restrictions on flexibility and extensibility. More importantly, in many cases, these systems come in the way of contributing to business agility in an increasingly dynamic world of business across industries,

The cloud model is increasingly being adopted by companies looking to lower cost and improve scalability and enhance flexibility. Many different models of cloud adoption abound varied by size, maturity, expectations, nature of the industry etc. But all agree on one need – cloud services need to be well integrated with existing legacy systems. Some are choosing a hybrid approach between online and on-premise services as a low-risk way to test the benefits. To work, these cloud services need to be well integrated with existing legacy systems.

Possibilities include selectively letting go of the past and unlocking resources and in realigning priorities and setting new directions towards creating more space for innovation and greater business value. Some CIO’s see this as an opportunity to look beyond delivery models towards getting strategic advantage to business through sophisticated information and insights. Cloud centric technologies are a big driver in enabling IT to take center stage in support of innovation, business growth and delivered value.

For enterprises and the CIO, this journey is replete with possibilities, challenges where the upside swing could be alluringly high but the downside fall could be steep if not carefully strategized and executed on those strategies well enough. After all, we are living in an era where technology edge is almost equivalent to business edge and this warrants a new approach to business technology architecture and strategy. That’s when Saugatech came with the interview with Mike Wilens, on Fidelity’s cloud journey , I got real interested.

In a very detailed discussion Mike covers a series of topics and brings out the fact that while people talk a lot about lock-in, reliability, and security in the cloud , these are manageable with good engineering and good planning and it’s not really all that scary – cloud is indeed doable and can be a key enabler for business innovation and enterprise agility. The key here is that the cloud is indeed revolutionary in how we think about application delivery and infrastructure.

In discussions published as part of cloud leadership strategies, Mike outlines the approach to the cloud, the execution plan and alignment to business needs. Covering all aspects of cloud journey within Fidelity, there are lots of important insights coming out of actual experience. Starting with foundational issues, such as standards, cost avoidance and experimenting with new capabilities in the Cloud, the discussion then extends to centralization versus decentralization. Inside Fidelity, the cloud model is slowly altering the degree of decentralization with a view to lower costs but not compromise on ability to innovate around business needs. The key insight here is dealing with reducing risk and cost while not inhibiting innovation that can lead to top line growth.
Moving onto the more interesting aspects of cloud and business the discussions revolve around business innovation, governance frameworks and balancing opportunity and risk. In areas like collaboration and social computing tools, the logic behind determination of what can be used internally and taking into account the regulatory standards, the usage of such tools externally requires very carefully considered solutions. Wilens points out that the standards that are evolving to help public clouds power down the economies of scale are now becoming available for private clouds as well.

Cloud can be a big platform for testing out /piloting new ideas and can be scaled out and scaled up – at any point in time this pilot footprint on cloud should be actively pursued. For example, he believes that migration to mobile devices and the related implications for the presentation layers of any technology infrastructure will be implemented within the cloud based technologies, private or public. Similarly co-opting the startup partners to try out new operational/innovative models and make them scale up on the cloud infuses new dynamics in developing partnerships and new offerings. Fidelity has found that private Cloud portals can deliver to its clients access to financial information, while still maintaining the on-premise, legacy, mainframe record keeping systems. Here comes the reinforcement, that hybrid solutions leveraging the data of on-premise systems will soon become the norm.

The best practices talked about ranges from adopting de-facto cloud standards, for example cloud infrastructure could be coalescing around the LAMP stack. Some other notable insights include:
- Creating shared services with a common platform, look and feel
- Use of cloud as testing environment
- Portioning of clouds – confidential /mission critical data where to keep -on-premise or outside
- What volumes of new workloads to be pushed onto the cloud – particularly in long standing industries like financial services where lot of data tend to be in old but reliable platforms

Operating at both ends of the stacks with a robust risk management plan and governance makes cloud an indispensable framework for IT, Innovation and Business Agility. I recommend reading this for demonstrating that with a good strategy and well laid out execution on such strategy, even in a fast moving but highly regulated industry with a lot of legacy system in place, clouds can be successfully and progressively deployed with demonstrable results in providing flexibility and making business agile.

Cloud Adoption : Cadence & Transparency

One of the challenges for enterprises in adopting new technology is the effect of unintended consequences – no am not talking ofserendipity here but of excess or extended usage in ways totally unintended. I was in a corporate discussion recently where someone was mentioning within his enterprise business has empowered the users the most,in ways where IT could have never done. I probed a little further to find that he was referring to . user self-provisioned applications and even user self-provisioned migrations to new operating systems such as Windows 7, made possible by a client hypervisor. This very thought that users could successfully self provision Windows 7 migration would send shivers down the spine of corporate IT – what about security , compliance issues. What about configuration and app compatibility issues- whose responsibility would things like these become, screamed an IT guy –my job there was to just to listen. This conversation set me thinking a lot (thought this was an open issue when self provisioning apps became a reality).

In the early days of SaaS implementation (not long ago –say 5- years back), I found that several departments wanting to cut throught the perceived inefficiency of internal IT, would opt for departmental SaaS applications ( either surreptitiously or in a brazen manner irritating corporate IT) – Their argument was that they are just paying for a service and they havenot moved any IT assets internally and so don’t see the need for involving internalIT.I know ofsales guys in those days talking amongst themselves how their strategy of carefully avoiding IT and going directly tobusiness helped them win deals! The practice ( of under the radar SaaS investments)hit roadblocks when the need to extend and integrate those departmental apps arose and in some cases CFO began to see how to align those departmental apps with the compliance frameworks ( corporate IT role becomes important therein).

Today I see this trend repeating itself in cloud services adoption. s for cloud computing services, business users tired of waiting for IT to provision a new application or service are tapping cloud providers and bypassing IT along the way, much as they have for many Software as a Service applications over the past few years. And some cloud providers are having a field day. They are not calling on the IT department, but rather going to department heads to pitch their wares. Technologies in some way allow these first level indiscretions, so to say. Powerful virtualization techniques allow IT to be disaggregated in a way to pass control from the vendor lockdown model to the IT department, but more practice centric approach would do enterprises more good. Vendor pitches today promise an Amazon like iTunes like facilities to configure solutions and businesses –mostly long tired from IT inertia tend to jump at these – atleast in the early stages of cloud adoption. Some IT departments are not exactly thrilled with this prospect of user control -- or the cloud, for that matter. Business in many cases tend to think of this differently. Not only is this entry made easy, some in the business side of things begin to think that this is a journey where power gets transferred to the users and this satiates their instant gratification or genuine needs depending on which camp you listen to.


As I see it, as business begin to invest moreand more in cloud computing,amongst a few things that get underinvested in attention and efforts is the central role of IT chargeback. The metering solutions are very critical in cloud solutions assessment –in the contest of one s own business, the ability to measure when you are using resources, at what level, and for how long, becomes very important IT cost allocation becomes a different ballgame in adopting cloud for specific business purposes. Now businesses are asking for the same “IT as a Service” approach that they get in the consumer world from their IT organizations as well. Today, corporate IT precisely use this as a weapon of defence and veer business to look at willingly pay more to set up and run the internal / hybrid clouds than the public cloud price in order to get the security and manageability of an internal cloud service – at least for now. See now cloud is now slowly modulating itself to act and behave in a varied form,
In any cloud journey - irrespective of the nature of the cloud, it becomes very important to layout in advance as an agreement between business and IT in terms of how to measure, monitor and charge for cloud services- clearly what you see in brochures and slide decks do not convey the actual cost of embracing clouds-its not just do-it-yourself stuff – in so far as larger and medium business are concerned. The nature of business that such IT supports can also influence in many ways the type of chargeback that needs to be put in place. For example, for those wanting to use IT to close the loop – transaction-analytics-decision- transaction, the mechanisms can be quite different. Many tend to ignore taking these carefully taken steps before embracing clouds, only to find them hitting hard to get this fixed. It would be more prudent to look into such issues beforehand and have them laid out comprehensively.

Traditional chargebacks divides budget by number ofunits served – the inequity there is quite unknown.With cloud, the problem gets more complex – like in an energy grid,the rate and time of consumption can tend to vary the charge rates.
In heavily virtualized environments ( Read-most corporate IT today), both metering and system failure possibilities need to be interlinked – many virtual clusters crash when overuse so one way to prevent overuse is to charge heavily for oveuse - so one can see the level of complexity and sophistication needed to design a right process and solution. An ideal scenario envisages setting up a service catalog with all pricing published in advance for business users to know the full details and help them take right decisions to evaluate, track, and audit their internal cloud expenses.

Having a good process that captures accurate usage details, precanned, predefined, monitoring and billing processes , a good dispute monitoring mechanisms all are part of what enterprises need to demand as they begin to embrace cloud. Bringing more transparency to IT costs is a cherished but that involves preparation, well laid out IT plans and a mature IT and Business Organizations to effect this. Its very important for IT to demand these even if business does not care for at the start of the program – as again many times the service level expectations can potentially bring about many changes in the choices that can be exerted be it storage, access, collaboration etc. Making these changes at the start of a cloud project can be far less expensive than making them retroactively. Now this one is for chargeback – extend this for security, compliance, integration, analytics etc.. the choices and issues are enormous- this where consulting firms bring in a lot of value, Based on global experience, best practices, success stories, processes and assessment on supply side- how different technology players and features pan out – their future roadmaps etc , good consulting firms can help institute good cloud governance mechanisms. Enterprises wanting to jump headlong without adequate foresight and planning , will end up having to endure lot of pain and too often they may turn to be very costly fix later or on an ongoing basis.
Bottom line – getting good planning, governance mechanisms are key ingredients in creating a successful cloud program.

IT Savvy Means Getting An Edge From IT

As IT's importance grows inside organizations, with more competition and concerns about ROI and BVIT, pressures on resourcing, offshoring strategies and heightened sense of expectations from IT by business, all enterprises undergo such changes and an appropriate framework with a three year rolling plan perspective for IT strategy and planning is absolutely essential for any medium sized to large sized IT user organizations.

Just read this nice interview in the WSJ of MIT’s Peter Weill on IT Savvy, his (excellent) recent book, co-authored with Jeanne Ross. A nice interview –in essence this covers the main ideas of the book, standardization for innovation, IT as strategic asset vs. liability, creating digital platforms, and the importance of connecting projects. A couple of excerpts:

BUSINESS INSIGHT:Your newest book is about IT-savvy companies. How do you define IT savvy?
DR. WEILL: IT-savvy companies make information technology a strategic asset. The opposite of a strategic asset, of course, is a strategic liability. And there are many companies who feel their IT is a strategic liability. In those companies, the IT landscape is siloed, expensive and slow to change, and managers can't get the data they want.
IT-savvy companies are just the opposite. They use their technology not only to reduce costs today by standardizing and digitizing their core processes, but the information they summarize from that gives them ideas about where to innovate in the future. A third element is that IT-savvy companies use their digital platform to collaborate with other companies in their ecosystem of customers and suppliers.
So, IT-savvy companies are not just about savvy IT departments. It's about the whole company thinking digitally.
BUSINESS INSIGHT: You've done some research that suggests IT-savvy companies are more profitable than others. Tell me a bit about that.
DR. WEILL: The IT-savvy companies are 21% more profitable than non-IT-savvy companies. And the profitability shows up in two ways. One is that IT-savvy companies have identified the best way to run their core day-to-day processes. Think about UPS or Southwest Airlines or Amazon: They run those core processes flawlessly, 24 hours a day.
The second thing is that IT-savvy companies are faster to market with new products and services that are add-ons, because their innovations are so much easier to integrate than in a company with siloed technology architecture, where you have to glue together everything and test it and make sure that it all works. We call that the agility paradox—the companies that have more standardized and digitized business processes are faster to market and get more revenue from new products.
Those are the two sources of their greater profitability: lower costs for running existing business processes, and faster innovation.
DR. WEILL: The real secret to IT-savvy companies is that each project links together—like Lego blocks—to create a reusable platform. IT-savvy companies think reuse first. When they have a new idea, the first question they ask is: Can we use existing data, applications and infrastructure to get that idea to market fast? When we look at the impact of reusing processes and applications, we see measurable benefits in the top and bottom lines.

The book also covers defining your operating model, revamping your IT funding model, allocating decision rights and accountability, driving value from IT and leading an IT Savvy firm.

This is a book highly regarded by the cognoscenti and it starts by asking what does being IT savvy mean and answers as the ability to use IT to consistently improve firm performance. The book encapsulates very powerful observations and statements that matter:

- You have to stop thinking about IT as a set of solutions and start thinking about integration and standardization. Because IT does integration and standardization well.

- IT Savvy firms have 20% higher margins than their competitors.

- An operating model is a pre-requisite before committing sound investments in IT

- IT funding is important, as systems become the firm's legacy that influence, constrain or dictate how business processes are performed. IT funding decision are long term strategic decision that implement the operating model

IT Savvy is based on three main ideas with some commentary from the reviewer.

1- Fix what is broken about IT, which concentrates on having a clear vision on how IT will support business operations and a well-understood funding model. In most places, IT is delegated and benignly neglected in the enterprise with disastrous consequences of underperformance/poor leverage.

2- Build a digitized platform to standardize and automate the processes that are not going to change so focus shifts on the elements that do change. The platform idea is a powerful one and can drive significant margin, operational and strategic advantage.

3- Exploit the platform for growth by focusing on leading organization changes that drive value from the platform. With a platform built for scale, leverage efficiencies that scale can deliver. Ironically many enterprises fail to do one of these two!

Don’t miss the IT Savvy assessment methodology and over all a very important book to be must read.