Prepare For The Cloud: Your Operating Model Must Change
Moving to the cloud impacts IT in many ways — the infrastructure and information integration landscape, the make-up and skills required of the IT workforce, the interaction model with the business and more. One way to address this disruption is to think in terms of an operating model.
What is an operating model? Most people confuse this with the organizational model. The operating model takes an objective view of the functions required to manage an organization across a range of domains. Before we explore that notion, let’s consider the challenges that are likely to arise.
Many institutions grapple with the complexities and disruption brought about by migrating to the cloud. One of the first questions raised by the workforce is, “What does this mean, and what will my role look like after the cloud?”
The questions that leadership must consider are:
- What is required to support a cloud-based environment?
- What skill sets does the organization need? Will we have the right skill mix for a post-implementation world? How should the institution handle workforce transformation? (These questions particularly affect higher education, considering colleges and universities are far more constrained than corporations when it comes to replacing the work force.)
- How should the organization fund IT moving forward given the shift from capital to operating expenses? (A net positive in terms of improved predictability and smoother cash flows, but on the other hand has an impact on the overall budget model of the institution.)
- Is the benefit really a financial one? (This may often not be the case. Efficiencies realized by the business far outweigh the IT cost, which means that business cases cannot be narrowly defined to include the cost benefits from IT alone. There must be acknowledgement that cost is not the only prerogative.)
- What is the impact to business processes? (While this is not something IT has control over, they must be prepared to deal with the fact that cloud solutions impact business processes in ways that are arguably more disruptive than the impact to IT.)
- How does IT manage more self-service IT by the business? (The cloud is likely to accelerate the growth of “shadow IT” and this trend will test IT’s ability to govern effectively without stifling innovation.)
- How does IT manage cloud based information stores as a component of the extended enterprise?
"One of the first questions raised by the workforce is, 'What does this mean, and what will my role look like after the cloud?'"
Which brings us back to the operating model. It’s important to first distinguish the difference between an operating model and an organizational structure. While there are several feasible organizational structures within an institution, the operating model tends to be more constant and is focused on the future functions needed. Certain functions and capabilities take on more significance in a cloud-based ecosystem, including:
- Vendor management
- Business analysis and functional knowledge
- Business relationship management
- Change management
- Risk management and governance
- Enterprise architecture
There’s less of a need for developers and maintenance personnel, and more of a need for business analysts, relationship managers and enterprise architects. The IT department adopts a more business-centric role, assessing internal processes and needs, mapping them to vendor solutions, architecting hybrid environments and then managing the implementation process.
There’s still a need for technical capabilities and skills, but more so with respect to integration abilities — a key component of interoperability of the cloud with other critical enterprise systems, such as data warehouses and business intelligence solutions. But often this skillset may not currently reside on a sufficient scale within an organization that’s been entrenched in legacy systems.
Large-scale transformations can, and often do, disrupt the business. But an institution that has a solid understanding of the functions required to support its operating model will be better positioned to offer its employees clear paths forward, including retraining, reassignment, and, in some cases, attrition.
The IT operating model is just one thing to think about when building your financial plan. Learn more about other financial plan tips.
About the Author
Manoj Krishnan is a director in the strategy and operations practice with more than 10 years of consulting experience in the IT strategy and transformation disciplines across a range of industries, including hi-tech, financial services, manufacturing and higher education. He has focused on IT capability assessments, formulating IT operating models, governance and service delivery models to achieve IT transformation. Manoj is very familiar with IT financial management, having conducted IT spend analyses and cost-reduction campaigns, quantified the benefits of consolidation, designed, and advised clients on service costing, pricing models and sustainable funding strategies.