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This article was first published in the May 2019 UK edition of Accounting and Business magazine.

Companies that haven’t done so already need urgently to face up to their ‘technical debt’. This debt comes from decisions that the IT departments of many organisations made in good faith in the past that would generally not be the best decision today. The challenge for these businesses is to address the cost and risk of unpicking the past, and setting a strategy to move forward.

Failing to grasp the IT nettle affects not only cost and performance, but also the ability of a business to evolve in step with a rapidly changing market. Competitors with less debt and more flexibility will be in a much stronger position.

In today’s digital economy, choosing the appropriate technology is a key differentiator, enabling you to adapt your systems to match changing stakeholders’ needs and expectations. But the cloud is much more than a change in technology; its flexibility offers commercial value because it provides the services the business needs today and can react quickly to what it will need tomorrow. You need to think of digital technology in terms of the experience that your stakeholders (customers, suppliers, employees, etc) get when interacting with all of your business, from anywhere and on any device.

Historically, IT developers sought capital investment and aimed to create capabilities without always building a direct relationship with the business’s strategy and its performance. The technology your organisation needs today has to be service-driven, and your supply chain also needs to be service-rather than support-focused.

The strategy

Once you’ve established that there is a business case, next you’ll need to develop a cloud and digital transformation strategy, which should include a review of the operating model as well as the relationship the business has with technology. Cloud technology enables a business to fund its IT on a pay-as-you-go model, rather than facing significant upfront capital investment. It offers scalability and flexibility that can keep pace with changing demands.

To set your direction and priorities, you need to establish your performance benchmarks and targets. Building a hierarchy of services and value is not easy, but if the transformation is to succeed, the business needs to benefit as well as the end user.

You need to consider what is driving the change and prioritise these drivers according to how you differentiate your business within your sector. Some of the common strategic drivers include:

  • the pace at which you can innovate to meet customer expectations
  • how often you can reuse an existing service rather than reinvesting
  • the ability to delegate to your stakeholders so that they enjoy self-service
  • reducing costs and increasing automation while delivering a ‘right first time and every time’ service culture.

There is a real danger of following an isolated path towards investing in new technology and losing focus of the operational transformation that is needed to deliver it. This can result in increased costs without achieving the business objectives, such as improved performance and agility.

So beware of working in organisational silos, and avoid support-driven commercial agreements with suppliers that are hard to change. You should balance your focus on optimisation of technology (often cost-driven) and optimisation of business (revenue-driven). The flexibility and agility of a service-focused (cloud) operating model will support this.

Planning and horizons

But your strategy cannot be delivered without a plan – and one that can handle a broad scope, complexity and bumps in the road. It must be driven top-down with board-level sponsorship. It will also need a strong transformation governance team that ensures the buy-in of those with interests in the architectural, operational, security, risk and financial concerns. Organisational resistance may well arise and become a major obstacle if you don’t bring all functions with you on the journey.

You need to define your transformation horizons, or steps, which will also help align the business benefits. They should include milestones that reflect where multiple project activities come together. Although the plan needs to take a long-term view, the detailed planning and execution should focus on one horizon at a time. Each horizon should be manageable, focusing on achieving small but meaningful targets. Later horizons should reflect longer-term goals, strategies and targets. Looking for compelling events can help shape the plan. These may include goals to close datacentre facilities, remove or renegotiate supplier contracts or handle assets that are near the end of their life.

Good governance is also needed if the organisation is to make the right decisions collectively. The selection of the most suitable cloud provider and services that align with your business needs is a group decision. When making that choice, bear in mind the business’s possible future needs and ensure that the provider’s offering can grow with you – being flexible, scalable and continuing to offer cost benefits.

Cloud isn’t just another technology trend, it is an enabler for digital business. As such, its adoption should be treated as a significant business transformation project, including careful consideration of timing, phasing and capacity issues. So take the time to make sure you have a strong and committed team around you.

Mark Preston is a consultant and author of Laying the Groundwork for Cloud.