Don’t just take cost out; put innovation in.
Businesses around the globe have done great things with their first-generation cloud investments. Solutions like Software-as-a-Service have boosted efficiency and reduced capital expenditures. Unfortunately, enterprise leaders too often focus on cutting costs via the cloud instead of tapping into cloud as a powerful enabler of innovation and business transformation.
It’s a new era. Companies must shift their focus from taking cost out of the value chain to bringing innovation and agility into it.
This is a big opportunity. As advances such as artificial intelligence, machine learning, the Internet of Things, big data analytics, automation and agile development gather momentum, IT has the chance to refocus itself: not just as a business support function but also as a driver of innovation that enables business growth.
But will your organizational structure and talent pool support innovation?
Here’s the challenge, though: To ride cloud’s innovation wave, companies need operating and organizational models that are designed and managed to be cloud-centered.
As competitive pressures compel enterprises to move to an innovation and business transformation mindset while adopting a more agile development approach, technology leaders need to determine what must change at the operational level. Here are a few of the key questions to be answered:
How will we balance our heritage organizational structure with a new, agile structure? As they contemplate the operational changes ahead, technology leaders need to figure out how to transition from the company’s heritage operating model to a new, agile model. The heritage organization is valuable because it holds institutional knowledge—but it moves slowly, and speed is now an imperative. It’s important to create an agile organization that values quickness, frequently reassesses and adapts projects to market needs, and cultivates an entrepreneurial, “freedom to fail” mindset. With that mindset, organizations don’t wait until they have perfected innovation but instead move forward quickly using an iterative process of continuous improvement.
What new roles and skills will be required? There’s strong competition out there for cloud-qualified employees, who often will only consider working in innovation-led organizations and cultures. With the right talent, companies can boost their institutional speed and market position to create and capture opportunities quickly.
Two caveats: First, attracting, developing and retaining the talent needed to execute a cloud-based innovation strategy will require more time and effort than before. Second, it’s important to effectively manage the mix of agile and heritage talent, helping both workforces converge eventually on a common set of capabilities (and attitudes) needed in an innovation-based culture.
What technologies can help me become more agile? Several emerging technology trends will support companies in their quest for new capabilities and enhance their organizational agility and flexibility. One example: the growing availability of automation can revolutionize and accelerate agile development that supports both process innovation and the cloud platform.
What path will you take toward cloud-based innovation?
Given the individual nature of most cloud-based innovations, each enterprise will select the transition path that works best for the business. The two primary paths are:
Organic. This is an evolutionary path within the company’s heritage operational structure. The firm first implements or reconfigures cloud for the back office to reduce costs, acquire skills and fund future cloud-based innovation. It’s a moderate transformation conducted at the company’s traditional cultural pace.
Agile. By contrast, the agile path (which we recommend) allows companies to start fresh with fewer legacy concerns. Teams focus on speed-to-market, seeking faster solutions and products to drive growth. Companies often establish an entrepreneurial start-up culture and a venture capital-based operating model. Agile-path companies often find talent recruitment easier due to the company’s commitment to innovation and leading-edge technologies.
Whichever path appeals the most, leaders need to determine the organization’s optimal innovation pace from a competitive standpoint, recognizing that the company’s commitment to becoming agile—now or in the future—will guide its speed of innovation and the quickness of its business transformation.
Conclusion: Cloud is the only choice for innovators
Cloud technology offers the only platform that can provide the speed, scalability, global reach and agility required by businesses seeking to embrace innovation. Firms need to reposition the cloud within their organizations as the fundamental element of competitive technology operations to enable innovation. That typically requires reengineering their operating model to address change.