Creative Destruction Makes Way for the Cloud

by Chris Barbin, CEO of Appirio

Change is inevitable. Any leap forward in innovation, particularly of a technical nature, disrupts existing industries - telegrams to telephones, fax to email, closed systems to the Internet. It's impossible to dismiss that cloud computing is having a similar disruption to the IT industry. For the first time, all that is needed for a virtual worldwide labor force is an Internet connection, which profoundly impacts jobs, education and the economics of countries around the world.

Enterprises have worked for decades with a confirmation bias that IT should be managed internally, by the business. This practice has often led organizations to waste dollars on broken systems that don't deliver. In fact, experts calculated the global impact of IT failure as being $3 trillion annually. Despite the disruption lessons of history, enterprises commonly dismiss agents of change because it's just easier to believe that the goliaths of an industry will persist. But in the IT world, it's hard to dismiss Apple's dominance of consumer phones and tablets and Google's ownership of search and personal email. The notion of multi tenancy has started to become a sought after IT best practice and the term "cloud" is no longer just referencing the weather in comic strips and nationally televised commercials.

The long-term economic inevitability of public cloud computing can't be denied, but this leap forward in innovation is still in the early stages. As VMware CEO Paul Maritz once said, "In the long run, companies want to get out of the digital plumbing business...but that has not really played out yet." Even when companies acknowledge the initial disruption of cloud computing, the ultimate impact is far wider than most of us ever thought possible. Will companies resist this change or adopt and accelerate its potential?

For those looking to capitalize on the cloud trend, they must first acknowledge two structural disruptions of "cloud" over its legacy predecessors.

1. Speed to value: Cost advantages of the cloud were the initial spark, but the ability to realize value in weeks and months (as opposed to years) created a firestorm of enthusiasm in the enterprise. For the first time ever, businesses can rely on technology to change current market dynamics.

2. Certainty of success: The cloud is flexible and doesn't need long, waterfall rollout projects that make it nearly impossible to determine if an implementation is on track. By being able to show users and business owners progress as you go, the project is agile and iterative, lending far more potential for success.

Companies that treat the cloud like an ERP initiative are certain to fall far short of translating cloud potential into business impact. Success will depend on how the cloud is used and managed. Cloud technology can boast similar value as on-premise technology if it's implemented and used similarly. To avoid that, cloud implementations must focus on business transformation - spending less time maintaining IT and spending more time focusing on end users and customers. To succeed, companies must:

• Demand speed and agility: Organize teams and trusted partners around a model that expects every initiative to start to create value in months.

• Mitigate the right risks: Recognize that for large-scale cloud initiatives, hierarchical, highly structured governance (PMOs upon PMOs) hamper rapid iteration and actually increase risk. What used to be fundamental to a successful voyage may today be anchoring. Use cloud technologies to enable iteration and micro failures that will lead to macro level success.

• Think disruption: Move beyond the template for last year's best practice. Yesterday's best practices are technology-centric and inward looking. Today's technologies enable businesses to focus outward - on customers and customers' customers. Start creating "new practices" that use today's technologies (mobile, social, cloud) to change the way customers, partners, employees, investors and other stakeholders engage. Think innovation and disruption rather than regressing to the mean with the last generation's best practices.

In the long term, progress is inevitable; the only question is what side of history your organization will be on.

For more information about cloud computing or an introduction to Chris Barbin, please contact your GA team.