If you’re a C-level executive, there’s a good chance your enterprise has already moved a portion of its operations to the cloud, or at least has a cloud-migration plan in place. Yet with the range of services that can be sourced from the cloud rapidly increasing, adopting cloud is now as much about delivering business capabilities as it is about IT.
The large cloud providers are now offering business-focused solutions and are delivering components with business functionality, enabling enterprises to pivot from being builders of IT systems to assemblers of business capabilities.
How will this help enterprises moving forward? If we look at cloud as a way to assemble business capabilities, companies suddenly have flexibility, the freedom to experiment, the freedom to create distinct products and services, and the ability to scale very quickly.
Let’s step back for a moment to distinguish between cloud as an IT strategy and cloud-native business capability.
Originally, cloud offered a different way to buy compute and storage (on-demand, pay-per-use and self-service). This increased agility and, in some instances, reduced cost, but did not transform the business itself. Next, the cloud providers added services for developers to build applications in the cloud — the so-called cloud-native applications. This shortened the development cycle, allowing teams to iterate fast in enhancing products and services.
However, the richness of services offered by the cloud providers has grown to such an extent that today a new level of change is possible: cloud-native business capabilities that are conceived, created and delivered through the cloud from day one. Cloud providers now offer a vast range of components that add business value. Moreover, they have built specialist services targeted at all the major technology trends such as blockchain, 5G, machine learning, artificial intelligence and digital identity. This evolution enables enterprises to turn from being builders of IT systems to assemblers of business capabilities.
Consider airplane manufacturing as an analogy. First, we moved from building planes using screws and bare metal to building them using parts (e.g., fan blades). Now we’re moving to modules (e.g., complete engines). Taking the analogy further, companies now have the option to source entire Airbus-style business capabilities (wings, fuselage, etc.).
Once business capabilities can be assembled from cloud components, investment in new products and services is radically reduced, as is time to market. If a new product or service proves successful, the enterprise will be in a position to scale rapidly.
With so much capability available on a utility basis from the cloud, competitive advantage will come to those who can envision how components can be assembled to deliver differentiated customer propositions — and to those who have the skills to execute on their vision. Ironically, a deeper adoption of cloud makes having the right people (and partners) more — not less — important. With cloud as a business strategy, companies can create competitive advantage, enhancing the potential of making cloud a business-shaping strategy.
But as the business-focused cloud strategy evolves, take note: The roles of business and IT leaders will — and should — evolve as well.
Specifically, as the focus moves from building to assembling, the chief information officer (CIO) and IT teams will spend much less time stitching together plumbing and will instead become orchestrators of change. CIOs and their teams will play a critical role in educating and advising their colleagues about cloud capabilities and the opportunity for a positive business impact.
Both the existing operating model and the culture will require transformation to harness the potential for assembling business components from the cloud, rather than building systems and capabilities in-house using traditional tools and processes. The active intervention of C-level executives will be vital in driving this transformation, and even more so, in envisioning the potential of cloud-native business capabilities.
If your company is ready to move forward, ask yourself these questions:
- What are the new products and services that will add the most value to our internal and external customers?
- Which components are available from the cloud to support new products and services?
- Which of the cloud providers offers the range of services that will contribute most to the cloud-native business capabilities we need?
- Where will we use partners to assemble and manage cloud components because they bring distinct experience and skills?
- What changes are required in our operating model to take advantage of the potential to build cloud-native applications and assemble (rather than build) cloud-native business capabilities?
Then there is, of course, one final question: Are you ready to begin?
You can read Leading Edge Forum’s complete research paper here. Leading Edge Forum is a business unit of DXC Technology.