The value of the cloud remains elusive as 53% of organizations using the cloud have yet to achieve expected outcomes1 and continue to experience a series of challenges adopting cloud impeding the rate of transformation and their ability to leverage advanced cloud technologies to incite innovation across the enterprise. A common theme across these challenges is how organizations are operating in cloud, a critical readiness prerequisite for cloud transformations, including the “lifting and shifting” approach, that is often overlooked.
According to the 2023 State of the cloud report conducted by Flexera2, the top 5 challenges organizations are trying to solve are high cloud cost, security risks and compliance issues, lack of cloud fluency and governance, and a transparent strategy and alignment between the business and IT, seen even across some mature client organizations.
“Business consumers” are non-existent in the lift-and-shift focused approach, leaving the business out of the cloud strategy discussion and forcing them to independently explore cloud in quest of innovation despite their cloud expertise.
IT-driven cloud migration focusing solely on lifting and shifting versus innovation has played a role in the rise of these challenges. With this tactical approach, “consumers” are non-existent and therefore, the business is often left out of the cloud strategy discussions leaving them to explore cloud independently in quest of innovation despite their cloud expertise.
With the rise of disruptive technologies enabled by cloud such as the surge in AI and customers’ demand for innovative, quick, and reliable technology solutions, cloud is a necessity for most organizations, and modernizing the operating modeling for cloud is no longer an option. Organizations that have not begun this journey will find it nearly impossible to solve existing challenges, ROI deficits and keep pace with customer demands for innovative solutions.
Organizations are beginning to acknowledge the need to adapt their operating model to build critical foundational capability, in a recent study, 56% have adopted a cloud center of excellence (CCOE)3 governance structure to guide the strategy and enable cloud adoption and growth. A good initial start but an accelerated approach will be necessary to catch up with industry peers that have already begun leveraging advanced cloud technologies to drive innovation and unlock the value of cloud across their enterprises.
Operating Model Solution
A product-centric cloud operating model will accelerate critical cloud capabilities while positioning IT to become an innovation enabler across the enterprise driving value3 that translates to financial gains. In this model, IT productizes the cloud platform aligning its products with the business strategic directives; cloud priorities shift to the “consumer” with innovation and value delivery as primary objectives.
This model is adaptable to many use cases – organizations looking to enable enterprise-level innovation via cloud, struggling to unlock the value of cloud, beginning their cloud journey and would like to future-proof their model, or wanting to adopt cloud for AI/ML solutions.
What are the key principles of the approach?
- Strategic alignment: Aligning products with strategic direction.
- Customer centricity: Catalog of products meeting consumer needs.
- Engineering mindset: Well-architected products that maximize automation to reduce toil.
- Ways of working: Key operating, mindset & behavioral (i.e., culture of collaboration and failing-fast) enablement to make the necessary shifts needed to succeed in cloud.
- Innovation: Pushing boundaries to develop creative solutions.
- Value-based delivery: Delivering bottom-line results.
What are the features and benefits of the approach?
- The business is the primary cloud consumer (i.e., application portfolio owners, product managers, developers, DevOps)
- Enterprise cloud organization provides engineering-centric capabilities that enable efficient build, delivery, and governance of cloud platforms and products for company-wide consumption.
- Enterprise cloud team offers consumption-ready, value-creating products to the cloud consumers.
- Products are built per enterprise cloud architecture best practices on digital platforms and tools that enable observability, security, automation and orchestration through the SDLC.
- Business and IT teams are equipped to work cohesively on architecting, building and operating cloud products.
- A product-centric model allows enterprise cloud organization to act as an internal hyper-scaler; enabling its consumers to innovate and deliver value to their end-users.
- Optimized cloud operating model with the proper governance, controls, and capabilities to mitigate common cloud adoption challenges from the start.
- Automation first approach enables the elimination of low-value operations and toil.
- Engineering-centric capabilities enable the development of world-class talent.
- Emphasis on FinOps capability ensures that the engineering efficiency gets translated into financial efficiency.
- Silos are crumbled as cross-functional teams co-create products to deliver value.
What capabilities are needed to adopt this approach?
To implement a product-based model to support enterprise-level innovation, capabilities across eight (8) dimensions are advisable. This framework helps build foundational to advanced operating capabilities allowing organizations the flexibility to custom design a model that will help achieve their immediate and future cloud goals.
- Cloud governance: Set the strategic direction, reduce friction across demand and supply partners, establish financial control, and enable cloud teams to meet customer needs.
Three dimensions are the center of a product-centric approach – cloud architecture, cloud platform and product engineering and cloud SRE operations.
- Cloud architecture: Establish the standards for EA, security & regulatory compliance as well as offers design advisory for cloud platform and new cloud product development to enable innovation.
- Cloud platform and product engineering: Develop and manage lifecycle of cloud platform and products/services to meet the needs of the business, drive a consistent experience and greater adoption.
- Cloud SRE operations: Takes an automation-first approach to operational excellence in cloud operations by enabling the engineering teams to eliminate toil through continuous optimizations of cloud workloads to improve the experience.
- Cloud security: Security is no longer the bottleneck to cloud transformation. This capability is anchored on a frictionless Zero Trust (yet frictionless) security governance approach that propels speed to market through intelligent and automated cloud security policies and controls and leveraging DevSecOps to co-create cloud solutions in a cross-functional team setting.
- Cloud FinOps: Optimize and monitor cloud consumption across clouds to minimize common cost challenges (i.e., ballooning cloud costs, spend transparency, etc.,).
- Cloud adoption: Promote customer centricity and increase the speed of adoption through business engagement and enabling DevOps and Agile ways of working.
- Cloud organization & talent: Enable cloud transformation by building nimble, multifunctional teams that foster agility, and align talent needs with new capabilities to reduce talent stagnation and attrition.
This future-proofed product-centric cloud operating approach positions organizations for greater cloud maturity and value realization. It reduces waste and accelerates value by 1) aligning foundational operating capabilities needed to resolve existing challenges and meet short-term objectives 2) generating value by enabling cloud consumers to innovate – one product at a time – as the organization continue to mature their capabilities.
In closing, to stay in the race, it’s not an option for organizations to accelerate the modernization of their operating model. Delayed or no change will lead to more waste accumulation and stalled innovation, widening the competitive gap compared to industry peers.
32023 State of the cloud report conducted by Flexera; Value is comprised of several measurable elements; however, cost efficiency/savings and delivery of speed of new cloud Products/services are the top two metrics. The latter is a direct feed inti innovation.