Through research, Accenture, a leading global management consulting firm that provides strategy, consulting, digital, technology and operations services has identified that many companies attempting to add cloud to a legacy organization are unprepared for the challenges ahead.
Its findings suggest that the stakes for such unpreparedness can be high, as a failed cloud transformation can disrupt organizations and imperil business objectives.
As companies reinvent themselves for the digital age, business owner and leaders need to consider how (and whether) to integrate their established legacy operations with the sleek new promise of their emerging agile organizations. They need to retain the institutional knowledge on the legacy side while simultaneously developing new skills for the future. Achieving this goal will compel them to operate in new and perhaps challenging ways, and success will require them to adopt the cloud with conviction, which requires an unconditional commitment to innovation.
A survey of nearly 300 IT professionals’ reveals that two of the top reasons cloud implementations fail are a lack of clearly identified business objectives for migrating to the cloud, and poor planning. Clearly, it is critical that the business and technology management are aligned on specific objectives and develop a detailed plan to adopt and embrace cloud technology.
Integration success requires conviction
During this critical transition period, a tepid approach or lack of strong operational alignment (behavior change) can cause a project to stall. It is critical to have a plan that ensures the legacy organization recognizes the magnitude of the changes ahead.
A recent survey asked 140 executives what problems their private clouds faced. Over 30 percent – by far the largest response – reported their failure to change their operational model as the primary stumbling block. Clearly, agile clouds need agile processes, and people can either become big supporters or ominous roadblocks on the trail to integration.
Operationally, companies need to reconcile their legacy standard operating procedures with the cloud organization’s organic agility. In many cases, that means introducing multi-speed IT strategies and reskilling legacy staff to function in the cloud environment. And because cloud-based innovation projects often shift direction, leaders need effective ways to gauge progress quickly and accurately. Only then will they be able to mitigate issues as they occur.
Learning from cloud-based transformations
For example, Netflix began life as a dot-com DVD innovator, offering a more convenient service than its bricks and mortar rivals by allowing customers to rent movies online and then receive their DVDs in the mail. The company’s legacy DVD mail business dropped from 20 million subscribers in 2010 to 5.3 million in 2015. By embracing agile resources, Netflix replaced them with 65 million cloud-enabled, live streaming customers worldwide. In the process, the company radically transformed itself from a movie rental competitor to a cloud-focused player that competes with global media players worldwide. In making this move, Netflix proved it could support a new business with a new operating model without facing major legacy conflicts. It split its DVD mail and streaming services in 2011, indicating a desire to let each grow and operate independently. Netflix is currently a leader in over-the-top content streaming, and in 2013 became a content production company, creating its own TV entertainment that it streams to users.
To integrate or not?
Leaders face a series of key strategic decisions regarding whether the cloud business and organization nests in the legacy one and if so, when does it make sense to separate them (if at all)? If integration is feasible, leaders need to explore their options in this area. Possible solutions include absorbing the cloud business into the legacy one, which then becomes “new” by osmosis, or rotating legacy talent through the separate cloud business unit to learn the new approaches and take them back to their original jobs. In either case, companies must learn how to operate in a multi-speed way.
Critical choices ahead
As more companies embrace the cloud to enable innovation and drive profitable growth, they need to make a clear-eyed assessment regarding how to position the cloud organization in the larger enterprise, and what needs to happen, when, to ensure its success. While the new cloud business may infuse agility, the organization might need to re-engineer the legacy business, perhaps spinning off or streamlining certain areas while bolstering others. Likewise, the new cloud business could evolve into several different operational end-states – an agile standalone cloud play, for example, or an efficient and effective hybrid.
Sourced from Business Day - written by Jumoke Akiyode-Lawanson