Measuring the financial value
These capabilities, and 15 others, are taken from the Business Technology Management Framework, a management standard advanced by the BTM Institute, a sister organization to BTM Corp. According to this management framework, a maturity model is designed to assess the progress of organizations in adopting these capabilities. It specifies five levels of maturity, which can be determined using an assessment tool.
This then would be the first measurement of an enterprise’s readiness to move to the cloud: assessing the enterprise’s management readiness in such areas as strategy and planning, technology investments, and managing partnerships. Cloud computing is not an incremental variant of classic outsourcing. It is more fundamental, and the organization must be made ready. If it is not, if it blindly pursues the cloud without the clarity of an SEA and with the organization arrayed as it has always been, then it can expect less than pleasing results.
A company could move all or some of its computing to a cloud and simply compare the costs of cloud versus in-house, but that would be missing the larger potential. The organization might very well be simply trading one source of computing for another in support of redundant or inefficient business processes. If it takes the time to create an SEA, however (and this should include both current and desired state scenarios) it can optimize the entire business, not just its technology.
An SEA and maturity in these other capabilities can help the enterprise answer such questions as:
- What information do we need and aren’t getting? How can we get it?
- What information could we have with the resources of a cloud or grid? Would this give us the basis for a new strategic thrust?
- How would we benefit from more sharing of information internally and externally? Would a cloud enable this?
- Is anyone managing each process end to end? How does a process interact or interfere with others? What effect does each process have on customers? Do currently available clouds have the technical sophistication we need?
- Above all, what can we and should we be doing differently using a cloud?
At some point the enterprise will need to answer the big questions: Is the company, as a whole, better off? Is it finding and retaining good customers? Is it delivering new, innovative products to them? Is it adjusting on the fly to changes in customer demand, marketplace realities, new technologies, and competitor moves? Beyond that, what are changes in management and technology doing for the bottom line?
Taking the holistic measure of an enterprise’s performance is a rather straightforward process. This measurement can be combined with interim assessments on the efficiency of individual business processes currently and in a projected best state, and the costs of internal versus external computing. In no case should such measures be made in isolation from their impact on customers and the firm’s overall purpose and strategy.
Now is the time to wrestle with these issues. Purveyors of the cloud from traditional big-picture providers to relative newcomers are ramping up their capabilities, looking for benefits in joint ventures, and trying to understand the value proposition for future customers. Traditional suppliers of pay-per-seat, one-niche software applications are also anxiously wondering how they fit in.
Some “big thinkers” are prophesying the end of IT departments as we know them. It is more likely, however, that IT departments will continue but in a new, more strategic role. The CIO will become truly the “Chief Information Officer” as opposed to the Chief Information Technology Officer signifying a shift in focus from the technology to its ultimate purpose.
Faisal Hoque is an internationally known entrepreneur and author, and the founder and CEO of BTM Corporation. His previous books include Sustained Innovation and Winning The 3-Legged Race. BTM innovates business models and enhances financial performance by converging business and technology with its products and intellectual property.