Cloud Computing: Advanced Business and IT Strategies

CLOUD COMPUTING

ADVANCED BUSINESS AND IT STRATEGIES

THE EBOOK EDITION

PHILIPPE A. ABDOULAYE

PMPragmatic Series

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Copyright © 2014 by Philippe A. Abdoulaye

All rights reserved. This book or any portion thereof may not be reproduced or used in any manner whatsoever without the express written permission of the publisher except for the use of brief quotations in a book review or scholarly journal.

First Printing: 2014

ISBN: 978-1-304-94165-7

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DEDICATION

This book is dedicated to God, to my wife, son and mother Michelle E. Agarande, Samuel H. Abdoulaye and Julienne F. Roger. Thank you for your patience and support.

Special Thanks to Didier Ontchangalt, Georges Abdoulaye, Marie-Flore Nabor, Fadelle M’bingt, Hugo-Alexandre Ribac, Etienne Ribac, Colette Essomba, Desire Sirou, Romain Ogandaga, Brice Robert, Lilian Roger, Tony Capo-Chichi, Guy-Roland Akaye, Linda DeMarco, Laetitia H. Mombey and Jorge Robledo.

ACKNOWLEDGMENTS

A highly experienced executive project management office (PMO) expert, formalizing a 24-year IT transformation background into an integrated Cloud Computing Transition Methodology (iCCTM) is necessarily indebted to several people, businesses, and not-for-profit professional organizations.

I am extremely grateful to those who through their books, conferences, and knowledge have helped me develop an authentic approach to IT; it has been helping me for 24 years make business people and processes effective and drive business efficiencies, performance, competitiveness, and savings.

My first thanks go to Harvard’s:

Michael E. Porter

Robert S. Kaplan and David P. Norton

Robert M. Torok and Patrick J. Gordon

Their best sellers radically changed my perspective and my professional interest; they helped me sense changes were needed with the story told to client organizations about how IT should be leveraged to extract durable value. These best sellers include:

Competitive Advantage: Creating and Sustaining Superior Performance

The Balanced Scorecard: Translating Strategy into Action

Operational Profitability: Systematic Approaches for Continuous Improvement

Thanks to authors, bloggers, professors, and speakers:

Erik Brynjolfsson – Wired for Innovation: How Information Technology is Reshaping the Economy

Nicolas Carr – IT Doesn’t Matter

Daniel Burrus – Today’s CIO Needs to be Chief Innovation Officer

Dave Gardner – Enterprises Should Implement Changes, Not Applications

Patrick Phillips – IT Must Adapt or Die

Joe McKendrick – Cloud and Business Transformation: This Time it is Different

Through their articles, blogs and books they reassured me; I’m not an isolated case in thinking that cloud computing is taking IT to an inflection point; business will have to leverage additional value drivers.

PREFACE

What the technology adoption life cycle teaches us about cloud computing is, cloud is at the Early Adopters stage which is characterized by two types of mindset including the Technology Enthusiast and the Early Adopter. The technology enthusiast considers that new technology is better than existing one and will always be among the first to acquire it with no hindsight while the Early Adopter relates the benefits of new technology to specific concerns and embraces it with no hindsight.

It is exactly what seasoned IT professionals and a number of informed observers of the IT industry have been witnessing for more than five years.

The fact of the matter is, there is a plethora of experts focused on praising and promoting the financial benefits of it, unfortunately very few to address the radical changes the IT industry is experimenting and more important, very few to alert businesses about the significant changes they have to go through if extracting sustainable value from the adoption of cloud is their goal.

The Techno-centric Perspective of Cloud Computing Might Lead Several Businesses to Terrible Disillusions

The fact of the matter is, cloud computing is significantly changing the ecosystem and failure to adjust their operating model might result for several businesses in terrible disillusions.

Since roughly the early 2000’s, two schools of thoughts have been dominating the industry and intensifying the proliferation of questionable beliefs, they include the Techno Centrism and Business-Centric Perspectives. The techno centrism school, led by the major IT players including consulting firms, vendors, and senior IT consultants, gives the feeling that the bottom line with cloud transition is to technically migrate applications and infrastructures to a third-party environment and then enjoy the promised savings in capital costs (CAPEX) and operational expenses (OPEX).

The business-centric perspective of IT, involving visionaries such as Daniel Burrus, Erik Brynjolfsson, Joe McKendrick, Nicolas Carr, Patrick Phillips, Dave Gardner, and many others promotes a more balanced, broader and integrated perspective that includes transformational, competitive innovation, and technological issues. They are completely right; the techno centrism approach of IT is keeping businesses away from what it takes to enjoy the full benefits of cloud.

Cloud Computing Trivializes Today’s IT Value Propositions in Favor of Innovation and Change Management

The competitive equilibrium that is slowly taking place whereby all businesses leverage the same IT-based competitive advantages is trivializing traditional IT value propositions and will ultimately force businesses to move upmarket, show more interest in and get back to the fundamentals of value: Innovation and Change Management.

Innovation is the differentiator factor that will enable businesses to outperform their competitors and increase revenue. Apple and Samsung take advantage of the same IT assets; however, they struggle to differentiate each other on the innovation field. Similarly, change management is the competitive differentiator that will equip businesses with the organizational agility they need to embrace industry changes and keep their value chain competitive. It is an open secret that to remain competitive, Apple and Google maintain an agile organizational structure.

IT is at an Inflection Point in Strategic Management, Project Portfolio Management and IT Service Management

In fact, IT management professionals including consulting firms, vendors, and consultants ignore the obvious fact that IT as a key competitive advantage is at or near a historical inflection point; the time has come for aggregating strategic management, project portfolio management, IT service management, innovation management and enterprise architecture into an integrated approach for effectively managing IT contribution to business value. That’s the price to pay for extracting substantial, tangible, and durable value from cloud computing.

An Integrated Approach Like the iCCTM is Needed to Cover Risky Transformational, Competitive and IT Issues

This book seeks to demonstrate that there is a valuable alternative to today’s technical approach to cloud computing by:

Highlighting the critical impacts of cloud on the industry and their implications on businesses

Developing a business-oriented perspective of cloud

Providing a comprehensive cloud transition framework, the integrated Cloud Computing Transition Methodology (iCCTM )

iCCTM is in reality an Enhanced IT Transformation Approach to cloud transition that spans areas as critical as Cloud Strategy Definition, Operating Model Alignment, Service Catalog Definition, Engineering of IaaS and SaaS Delivery Capabilities, and Organizational Changes Deployment.

The IT transformation perspective underpinning iCCTM is based on the belief that cloud transition is primarily transformative and should primarily seek to equip businesses with competitive differentiators.

Why Innovation, Value Chain, and the Cloud Consumer-Provider Service Delivery Model Matter

Before we get to the very heart of the matter, I would like to introduce the guiding idea of this book as well as its underlying concepts which include Innovation, Value Chain, and the Cloud Consumer-Provider Model:

"Cloud computing by trivializing traditional IT value propositions creates a competitive equilibrium that raises competitive issues and has disruptive impacts on business operating models. In order to remain competitive and prosper in the cloud era, businesses must do three things:

Leverage innovation as the competitive differentiator

Implement the concept of value chain

Establish the cloud consumer-provider service delivery model

This is the price to pay if extracting tangible value is the goal."

Competitive Innovation

Competitive innovation refers to the process of converting an idea into a product or a service that outperforms competitors and creates value for which customers will pay.

The point in this book is, by providing affordable access to IT, the cloud creates a competitive situation whereby all businesses will not have the choice but to adopt innovation as a competitive differentiator at the expense of traditional IT value propositions i.e., cost savings, productivity gains, and short time-to-market. 

An increasing number of the observers of the IT industry underscore the urgent need for businesses to embrace competitive innovation as their primary factor of value, this requires for businesses, the adoption of capabilities – processes, organizational configuration, people and skills – specifically thought to bring in value.

This book through the iCCTM framework provides the methodology businesses need to implement competitive innovation mechanisms.

The Value Chain

The value chain concept was initially developed by Michael E. Porter, a leading authority in competitive strategy in his best seller Competitive Strategy: Creating and Sustaining Superior Performance; it is the notion that, in order to deliver sustainable value, successful businesses builds on specific chains of added-value people, processes, organizational configuration, and technology.

Another point in this book is, by formally implementing the concept of value chain, businesses equip themselves with the capability needed to put together their strategic marketing, IT service management, project portfolio management, and new product development assets into an integrated team supporting the competitive innovation needed to prosper in the cloud era.

Adopting the concept of value chain requires a change in perspective as to the contribution of IT to value; it demands the adoption of the notion that IT by itself does not create value, durable value results from a combination of factors identified as key for the business including added-value people, processes, organizational configuration, and of course information technology.

Unfortunately, the value chain has been turned into a marketing gimmick used to sell software, hardware, and infrastructure. That’s bad because value chain is what will really help businesses extract tangible value from the cloud.

This book through the concept of cloud-oriented value chain provides a step-by-step approach to implementing high return value chains.

The Cloud Consumer-Provider Service Delivery Model

Cloud Consumer-Provider model is an on-demand and self-service service delivery approach introduced by cloud computing. The point in this book is, the cloud consumer-provider model changes the work flows between the business and the IT department and creates new work flows between the IT department and the cloud service provider.

Failure to properly address the issues raised by the cloud consumer-provider model might severely disrupt businesses’ operating model and value chain.

Like most organizational change issues raised by cloud, the impacts of the cloud consumer-provider model on businesses aren’t properly addresses.

This book through the iCCTM framework provides the methodology businesses need to implement the consumer-provider service delivery model and help businesses absorb the disruptive impacts of cloud computing.

Who Should Read This Book

The book is written for a broad range of readers from business and IT executives to enterprise architects and IT service management experts through business and IT strategists and outsourcing subject matter experts.

It provides a comprehensive and detailed real-life case study that guides the readers throughout the cloud transition journey to illustrate the ideas and concepts of the methodology; it brings out resistance factors along with the techniques to change them