As adoption of the Cloud computing market continues to evolve and mature, it is affecting every aspect of an organization that may be considering or actively pursuing this strategy. In examining the rationale for a company’s move to Cloud computing, we were struck by the similarities in value drivers between a transition to the Cloud and the Enterprise Resource Planning (ERP) transformations of the 1990s: service, flexibility, and cost.
Yet, many ERP implementations struggled due to an under-investment of time, money, and resources. The focus was on the technology, not necessarily holistic business process re-engineering and certainly not the people side of the transformation. Fast forward to today’s techno-hype called Cloud computing. What is it that makes Cloud computing, different and perhaps more challenging?
Cloud computing is much more about the way technology is managed and delivered than it is about the technology itself. When viewed solely as an IT project or technical solution, the culture of the company will often determine the outcome.
The Cloud requires a shift in thought and behavior regarding how an organization conducts its daily business, installs processes, builds supporting technology, and manages people. If the Cloud strategy is not well thought out, or if the C-suite isn’t aligned, Cloud computing can disrupt solid business models, good operating principles, and competitive strategies.
The Cloud could change a company’s culture or corporate personality. This could be especially evident in those corporate environments that continue to exist in silo-driven organizational models. Much like the due diligence that is required with an ERP implementation or transition to an offshore development model, an examination of the operating culture of the organization is critical.
Take the trip
The Cloud offers a great path forward, and while the technology may be ready to go, many times people are not – which makes change management very important. Traditionally, resource constraints have left little time or energy for a vigorous amount of communication and training across a broad enough group of employees. The bar has been raised considerably over the past couple of years regarding usability, functionality, and access.
Social computing, which allows for collaboration and a shift of behavioral patterns of users and the communities in which they work, is becoming the new normal. Workers are demanding transparency, instant information at their fingertips, easy apps, and more autonomy and mobility.
Mobility offers channels for accessing applications and data and gives end users with a wide variety of device choices. The combination of Cloud, social computing, and mobility can be used to increase geographic diversity and raise the productivity of virtual teams.
Trust but verify
Users expect to get access to personal, work, business applications and data from any device, anytime and anywhere.¹ This can be a challenge to command-and-control companies whose employees want to be empowered and lead the decision-making process. Most company organizational structures are too middle-management laden to accommodate such a shift. Additionally, this begs the question as to whether employees are technically, emotionally, and socially prepared to assume this new role and responsibility. Therefore, the thought of change management being important to success, begins to emerge.
To address this change, companies must reassess their thought patterns regarding where and how employees do their jobs. Organizational redesign and realignment of span of control will be needed to orchestrate a change of this magnitude.
Business processes will need to be redesigned for changing workflow patterns and collaborative decision making by virtual teams. There will need to be an emphasis on building virtual teams, which will require additional training.
Most IT departments will not allow the mix of business and personal-use computers, much less free flow data access outside the company firewall. The biggest argument that is used is security, which translates to an unwillingness to accept the risk or simply being uncomfortable with data being outside of the internal control of the organization. Both approaches are viable, but manageable risks that have been identified and evaluated can be planned for and mitigated. CIOs must reassess their mandate to meet the business demands by instituting proper controls of the application and tools and providing skilled personnel who can support an internal environment.
The need for flexibility is driving constant change. CIOs are already facing the need to keep up with and balance market and business trends, an increased emphasis on data integration and security, governance and compliance, application erosion, mobile device models, and information consumption in both structured and unstructured forms. The addition of Cloud computing is causing a seismic shift from IT hardware and network management to IT services delivery. This emphasis and shift in the management model affects the entire workforce.
To ensure success, enterprise IT must not fail to anticipate the emerging skills shifts that will be necessary to compete with the major Cloud services providers (e.g., Systems administrators are now developers of "programmable infrastructures")².
The CIO and IT manager roles are changing. This shift will require IT personnel to gain business acumen, technical knowledge, and a service-oriented mindset. Information life cycles require IT personnel to focus on business users, and without a sufficient knowledge of the business, user requests will take too long to implement.
The complexity and rapid acceleration of change of this nature means that companies will need to aggressively engage in organizational change management activities. These activities should include:
- Leadership alignment (What’s the mandate?)
- Stakeholder impact analysis (Viability, risk, benefits, socio-political influences)
- Organizational readiness assessments (Cloud deployment)
- IT skill assessments and training
HR organization and job restructuring (role and responsibility modeling), business process redesign (support models), team building (problem solving and decision making), and massive amounts of communication will also be foundational to this effort. As a result of these variables and their potential impact on the organization’s operational effectiveness, decision makers must evaluate the proposed Cloud adoption from multiple stakeholder perspectives.
Cost savings and expected ROI of the Cloud are highly touted. The lure of reduced or no infrastructure overhead management, costs derived from operational versus capital budgets, and paying for what you use (theoretically) seem to make a strong case. Yet, simply outsourcing a company’s IT portfolio solely as a means of spreading out the payments associated with IT spend to save money is short sighted.
Cloud computing cannot be counted as assets on balance sheets. A myriad of fact-based scenarios must go into a cost-benefit analysis, along with the pros and cons of various resource usage patterns and deployment options. Whether public or private Clouds are on your company’s horizon, we highly recommend a cross-functional analysis to determine true cost of the Cloud ownership. Try the Cloud in small segments first. The price to experiment is low, and gaining experience while the technology matures is invaluable. From an enterprise perspective, costs are important, but so too are customer relationships, public image, flexibility, business continuity, and compliance.
In times of economic downturns, companies have been forced to become leaner and do more with less, causing the workers’ skill gaps to widen. Companies must now consider how technology is driving how things are done and evaluate job changes and how people work together.
In lean times, companies are moving away from outsourcing models, confident in the notion that if they don’t have all the expertise you need inside the company you can rent it. This type of resourcing may be economical, but it’s not without its risks. There are still customer (internal employee) and operational (vendor) people management components. Within HR, the approach to staffing and workload effort management requires a significant shift in resource planning. Organizations will have to totally re-engineer their hiring, training, promotion, and pay practices.
While many organizations view the Cloud as the next logical transition step in IT outsourcing, getting there can have far-reaching effects. Cloud and social computing are creating disruptive change across the enterprise. Leaders must understand these changes to ensure that they are buying the right things and managing them the right way to maximize their ROI. Foundational change management thinking and approaches associated with obtaining buy-in, inspiring employees, driving organizational changes, overcoming objections, and linking strategies between IT and its customers are critical to a successful Cloud-computing initiative.
Decide for yourself
Cloud-adoption decisions are challenging for a variety of market, socio-political, and organizational reasons. It is unlikely that all organizations will completely outsource their back-end computing requirements to a Cloud service provider. It is more likely that companies will establish hybrid models based on dedicated servers, organizational Clouds, and possibly using more than one public Cloud provider. How the application portfolio is distributed across the enterprise depends on technical issues and concerns about costs, security, risk, compliance, and control, all of which affect work practices and constraints from existing business models.
Therefore, the challenges that need to be addressed are:
- Developing a Cloud strategic plan that includes people, processes, technologies, and how that strategy will align with the business strategy of the organization
- Providing accurate information on the costs of Cloud adoption, including end-user training and communication
- Supporting risk management
- Ensuring that decision makers can make informed decisions about trade-offs between the benefits and risks
- Preparing the organization for the change
A transition to virtual platforms and management approaches and the speed of that change is unlike any other time in our history. Traditional, hierarchical A organization structures are too inflexible to support this rate of change. New organizational structures with smaller, flatter designs are emerging. Empowerment and innovation of self-defining. Self-organizing work groups are replacing top-down management approaches and models, and “on-the-job training to provide the work experience” is shifting to “grow your own experience” with its own intrinsic rewards.³
Get in focus
Organizations must be prepared to consider strategies for coping with fast-paced changes in the marketplace or risk being left behind. Change management and organizational alignment initiatives are always needed when change occurs and must be woven into the overall fabric of an organization. This dramatic shift in IT thinking and management is no different. It will require a focused, organizational change management approach.
Here are three basic questions to ask yourself about your company’s readiness for Cloud computing.
- Does your organization have an overall Cloud-computing strategy; do you have consensus on the use of Cloud services?
- Is your leadership aligned around the stated business, IT, and strategic goals and objectives?
- Would you describe your company culture one of sharing and collaboration?
If you would like to more about your organizational readiness, we invite you to contact David Amborski, TrainingPros’ Vice President of Enterprise Learning Solutions. He can help you determine if your company is well positioned to weather the storm of the ERP Cloud.
About the Author
David Amborski is Vice President of Enterprise Learning Solutions for TrainingPros, Inc. David is the former Practice Director and Leader of the Change, Learning and Performance Practice at Deloitte Consulting. David has over 40 years of industry experience and has led numerous Change and learning engagements related to Enterprise Resource Planning (ERP) system implementations.
He is an expert on large scale Business Process Optimization (BPO) projects and a specialist certified in Lean Manufacturing and holds a Six Sigma Green Belt certification. He is also recognized as an expert in process assessment and employee skill development. He has been a guest instructor for Process Improvement courses at several universities. He is regarded as a thought leader in Education and Performance Support as evidenced by his numerous publications.
TrainingPros works closely with learning and development departments of large organizations to identify, attract, and support leading contract specialists for focused training and development engagements. A proprietary onboarding process led by experienced relationship managers helps ensure the right personnel for the job.
If you would like more information about TrainingPros’ expertise in aligning learning & development objectives with your organization’s business goals or any other services we offer our clients, please visit our TrainingPros Services page.
TrainingPros President Steve Kapaun welcomes your feedback.
¹ “Gartner Predicts: Four Forces Combine to Transform the IT Landscape,” Published Analyst(s): Daryl C. Plummer, Peter Middleton.
² “Hype Cycle for Cloud Computing,” Gartner: G0001557, Cameron Haight.
³ “The Cloud Adoption Toolkit: Supporting Cloud Adoption Decisions in the Enterprise,” Ali Khajeh-Hosseini, David Greenwood, James W. Smith, Ian Sommerville. Cloud Computing Co-laboratory, School of Computer Science University of St Andrews, UK.
"Partly Cloudy, Blue-Sky Thinking about Cloud Computing," by William Fellows. Whitepaper. 451 Group, 2008.
“The Value of Cloud: Building the Case for Adoption and Transformation,” by Paul Mayne and Manish Sharma. Whitepaper. CIBER, Inc., 2011.
"Tom Sullivan, "Nick Carr: The Ways Cloud computing will disrupt IT," by Tom Sullivan. InforWorld, 2009.