Just about everyone is talking about or moving into the cloud and that is ok. But when it comes to your IT strategy, the cloud is a red herring. A red herring is distraction, something that deliberately draws attention away from things that are more important. In the case of the cloud, it is taking business and IT attention away from the IT strategy.
Your IT strategy becomes obscured by clouds when it dominates IT priorities, plans and projects to the point that it crowds out discussions regarding business value and IT’s capacity to create business value. When this happens all you talk about is the cloud, how it is going to fundamentally change IT and how it will be better for the business. That is fine, but while you are talking about the cloud your not talking about how your resources are raising business performance, executing the strategy, creating demonstrable value.
Right now the cloud appears to be crowding out everything else as shown by the figure below. This is a brief analysis of the top 10 search terms on a popular technology website over the past year. The chart shows the percentage of each term in relationship to the other top 10 terms.
The cloud represents an infrastructure and operations play for many IT organizations. The expectation is that lower infrastructure costs driven by the cloud will liberate a significant portion of the IT budget by reducing server, storage and other operational costs.
Those are all operationally important. They are the basis for a plan. They do not constitute a strategy because they do not address the fundamental question of how the cloud creates competitive advantage for your organization.
An IT strategy that contemplates the cloud needs to have at least expect statements that cover one or more of the following:
- The reasons behind the decision to move to the cloud and moving away from current owner/sourced/operated models. What is the organization gaining and giving up by making this decision?
- The abilities moving to the cloud will give the organization that it cannot get via another alternative. Cloud technologies create flexible capacity and cost, how will those abilities be applied to products, services, operations or structure to create competitive advantage? Does the cloud give the organization a different cost structure and therefore different price points to address new markets, customers, or segments?
- What happens to the resources ‘liberated’ via a move to the cloud? What are the strategies these resources can pursue? What will they deliver, do, achieve of higher value? Returning the savings to CFO is important and creates operational value not strategic value.
- What capabilities does this give IT in terms of agility, speed, scale, etc.? How will those capabilities be employed to drive competitive advantage? Do they change the pace, process, or scale of product launches, customer service or the information intensity of your offerings?
These are but a few of the questions that an IT strategy involving the cloud will be able to answer. If these look unfamiliar or you are thinking that you are going to the cloud because it is new, cheaper, the future, something to do, etc., then you are making an operational rather than a strategic decision.
If the cloud is the hallmark of your plans for 2012 – 2015 and you cannot talk about how it creates competitive advantage, then fine you have a cloud plan. But know that you need to answer the competitive advantage question if you hope to be strategic, otherwise your IT strategy is lost in the fog, aka clouds at ground level, and you are obscured by the cloud.