My colleague Daryl Szebesta joined Oracle earlier this year as vice president of cloud transformation. He came from BT, where he was CIO for four years. The two of us are working on a presentation that addresses the cloud imperative from the perspective of our previous professional experiences—mine as a former CMO, Daryl’s as a former CIO. Here’s a preview.
Cloud computing has been getting good press lately, with some very bullish forecasts. Still, a number of barriers are holding back CXOs.
Inertia is one. Companies have invested a lot of money in training and personnel for their legacy systems and processes. And big, dynamic changes don't happen overnight, especially at large, complex organizations. Also, there’s fear that the cloud will introduce a “vanilla” capability that won’t meet business needs. And there’s a fear of commitment, especially about the right approach: single vendor or multivendor?
There are legitimate, even if inflated, concerns about security, data privacy, and data residency. And some CIOs still stand guard at the gates of IT, protecting their turf, their colleagues, and their on-premises approaches.
We don’t want to minimize the problems inherent in such a major technology shift. We would like to provide a clearer understanding of the cloud and how its benefits outweigh its potential downsides.
For instance, there’s the transformation of the “back office,” those systems that are mission critical but not core: payroll, procurement, performance management, HR, and so on. State-of-the-art business processes are key to developing motivated and engaged workers who, with the right tools and support, drive innovation and competitive advantage. That “up-to-date-ness” comes from the cloud, which distills the experiences of multiple organizations and makes them available to your organization.
CIO-CMO Partnerships
The cloud’s ease of implementation accelerated a trend whereby today's CIOs are positioned to play more of a business partnership/consulting role with their line-of-business counterparts. For example, tapping social networks became a priority for CMOs several years ago. But social technologies weren’t on the CIO’s agenda, so in many cases marketers went around the IT department to implement them because they needed to innovate fast, and conventional on-premises software couldn't keep pace. Savvy CIOs learned from this experience and today seek to partner with CMOs on social networking and other marketing efforts.
The cloud demands, and rewards, strategic talents such as agility, adaptation, partnering, and thinking like an entrepreneur, but building at large scale, which are equal parts art and science. The CIO must become more business-focused and think more broadly about the customer experience, while the CMO must become more ROI- and data-oriented. So you end up with some blending of skills.
The most compelling reasons for implementing cloud services have been much discussed: speed, agility, reliability, flexibility, cost savings. Other reasons need more emphasis.
For instance, the cloud is where cutting-edge vendor R&D is being conducted and implemented—period. In marketing alone, there are 3,800 cloud services providers, up from 100 in 2011—versus zero new vendors offering pure-play on-premises systems.
Employee Engagement
Another less obvious advantage has to do with increased employee engagement—an HR concept that translates to genuine enthusiasm and productive involvement. One way organizations can promote such engagement is to give employees the latest mobile capabilities, and cloud services can make those possible (see point above).
An additional cloud advantage is standardization in a positive sense—data standards, standard processes, and so on. It’s the flip side of the complaint about the cloud’s “vanilla” nature, and a much-underappreciated merit, especially to global organizations. However, to achieve the advantages of standardization, an organization’s enterprise architects must think through their cloud deployments, especially if contemplating a heterogeneous cloud (one consisting of services from disparate vendors), which can create a data and integration rat’s nest that drives up costs.
In that regard it’s important to develop a “transformational partnership” with your cloud services provider, one built on trust. A single-vendor approach may be the most expedient, especially at the beginning, because it minimizes the time and effort involved in transitioning from the non-cloud world to the cloud world. The more complex that “transformation” is, and the longer it lasts, the more expensive it is in implementation and ongoing operation.
Finally, the cloud upends the traditional vendor/customer relationship in several important ways—most of them positive. For instance, cloud transfers the R&D effort and expense to the service provider (see point above), and mitigates the overhead and hassle related to upgrading.
The cloud obviates the 1990s approach to procurement and vendor management, whereby organizations worked with several vendors to try to maintain “competitive leverage.” Today, because most cloud services are charged on a subscription basis and it’s relatively easy to switch providers, vendors no longer can "lock in" their customers. Meantime, only those cloud providers that develop simple, easy-to-use, easy-to-integrate platforms with open interfaces will prevail in the market.
We reached a tipping point about a year and a half ago, when we moved from “if” cloud to “when.” There are clear benefits in terms of cost, flexibility, and speed of deployment, and we’ve crossed the chasm to where the benefits now greatly outweigh the risks. If you were starting a business today, you’d absolutely build it with the cloud as core. So why wouldn’t you have the same vision for an existing business?
Reggie Bradford is Oracle's senior vice president of product development at Oracle. Daryl Szebesta is vice president of cloud transformation for Oracle.
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