It may not be fashionable to say so, but cloud computing has in many cases simply compounded existing problems without fulfilling its cost-cutting and innovation-driving promise.
Cloud computing has opened new vistas for small companies as well as for departments within larger companies. But while it has empowered business leaders to get around certain budgetary and organizational constraints, uncoordinated cloud purchases have also left a welter of new organizational and budgetary problems in their wake.
Business executives with no technology experience, but a history of frustration with conventional IT and IT organizations have been lured by slick user interfaces and promises of quick results into signing up for so-called best-of-breed cloud applications that have done little more than foster information silos and system redundancies.
Not part of digital strategy
Rather than reduce costs, most of these services are deployed without anyone bothering to retire existing systems, which continue to ring up licensing, maintenance, and labor costs. Additionally, these cloud services are operated independently of other systems; not only are they not working in concert, but they haven’t been procured as part of a comprehensive digital strategy.
And even when these business manager purchasers understand that they need modern cloud technology to help them move their organizations forward, they don’t have the tech background to fully leverage these new tools to transform their businesses.
For companies to manage their costs more efficiently while continuing to innovate and provide great customer service, they need to do more than transplant their existing business processes to the cloud. They need to use the cloud to help them accelerate their competitive differentiators.
Fortunately, there is a very simple and sensible solution, which is to put the power of the cloud back where it belongs—in the hands of the corporate CIO.
From ‘Dr. No’ to ‘Dr. No One’s in charge’
CIOs were once the road block to the adoption of new cloud services, the so-called Dr. No of the corporation. They were the preservers of the infrastructure and the guardians of corporate data. They controlled permissions and allocated rollouts of new technology on their own terms.
No wonder that sales, marketing, HR, and even finance leaders revolted, subscribing to new services they could procure on their own, manage on their own, and push to their employees with little or no IT intervention.
The result was no IT cost savings, almost no cohesion among systems, and very little actual—and desperately needed—digital transformation. Why? Because the head didn’t know what its digital hands were doing.
For example, the IT department wouldn’t decommission an existing sales management system because it didn’t know that the vice president of sales had subscribed to a separate system. With no coordinated approach, the company simply ended up supporting and paying for two systems. Moreover, the sales department didn’t have the skills, or even the overarching vision, to integrate its new cloud sales tool with the company’s configure-price-quote system or marketing automation system.
In other words, the cloud simply engendered system redundancy without developing new synergies or providing new value.
The cost savings of cloud computing weren’t realized because no real consolidation took place. And adopting multiple “best-of-breed” point solutions only added more vendors that need to be managed.
Line-of-business managers also focused only on the applications—software as a service—aspect of the cloud, whereas a lot more could be accomplished using platform as a service (PaaS) and infrastructure as a service (IaaS) to rationalize or eliminate infrastructure, and to develop software extensions that can help the company differentiate itself in the market.
Moreover, few line-of-business managers have thought about using cloud computing to change their business processes.
That’s natural. Thinking about digitization and leveraging IT suites isn’t in their usual bag of tricks. But that kind of thinking and vision is exactly what CIOs can and should be doing.
Of course, this is a different kind of CIO than the Dr. No of the past. This CIO:
Is a businessperson first, capable of having deep business conversations with heads of sales, marketing, HR, and finance;
Can manage cost reduction at a corporate level, by having a cohesive vision of the company’s new cloud-based IT roadmap rather than trying to squeeze small concessions from its vast array
Can articulate and execute on the company’s digital transformation roadmap.
Developing a business roadmap
In order to retake control of IT, CIOs must take ownership of the company’s digital strategy and execution. They must develop a roadmap for revamping the company’s business processes, and use cloud to support that vision.
Once they’ve established that vision, CIOs need to convince LOB owners to identify and hand over control of their disparate cloud implementations. That will allow CIOs to rationalize the number of applications their companies are running and, perhaps as important, reduce the number of IT vendors they manage. In many cases, companies are working with dozens of vendors, and that number can and should be reduced to single digits.
The CIO can then work with the more manageable number of vendors to ensure that the IT being used supports his or her digital strategy. This includes deciding which applications or suites of applications can run in the cloud, where it makes sense to reduce infrastructure spending in favor of IaaS contracts, and how to leverage PaaS so that companies can extend cloud applications in ways that create a competitive advantage, either by improving productivity or by improving customer service.
These are the kinds of ideas that only CIOs, with one foot in the IT world and another in the business world, can drive.
Cutting back on the number of vendors and disparate services will also allow the CIO to cut costs systematically—not simply by negotiating discounts.
Most important, modern CIOs understand that digital transformation is not about putting existing processes into the cloud. Digital transformation is reliant upon the intelligent use of cloud services to reimagine how each part of the business operates and relates to the other parts.
More than any other executive, CIOs have insights into all other departments—what makes each of them unique as well as what they have in common. This understanding can allow CIOs to standardize certain processes across the company, while providing differentiation where it makes a real difference.
Once the CIO has proved to the CEO and other executives that he/she can effectively consolidate the company’s digital assets and reduce costs holistically, it will be all but a given that the CIO should be driving the company’s digital strategy as well. Once that happens, companies can look forward to truly unlocking the transformative power of the cloud.
(Francois Lancon is Oracle’s senior vice president for Asia Pacific)