As part of its Predicts 2021, Gartner concluded that the events of 2020 have accelerated cloud adoption to the point where it is the de factor new normal, in part to support the unexpected remote working exodus that happened following the pandemic.
Some CIOs FutureCIO spoke to commented that the cloudification of legacy enterprise applications is going to take a slower route.
“At the end of the day, the conversation that every organization needs to go through is what's the business value? Where do we tend to drive the most value of having the infrastructure? Is it an on-prem or in an off-prem public cloud environment?” opined Rajnish Arora, vice president, Enterprise Computing, IDC Asia/Pacific, during a separate PodChat discussion.
Pat Phelan, vice president of market research with Rimini Street, observed that any crisis puts a company into one of three modes: survive, stabilising and thrive, representing a continuum. She qualified that the CIO role is different depending on where the company is in that journey.
She conceded that the CIO role has never been set in stone although for a long time it was about keeping the lights on and costs down. During the pandemic she noted that cost control has taken a back seat to survival tactics – when it came to investments.
For organisations that have passed survival and the stabilising aspects of their journey, business leaders are pushing CIOs to be more strategic in terms of helping prioritise where the investments should go.
Phelan clarified that throughout this journey of 'survive, stabilise and thrive', the CIO is expected to focus on strategies that can help with customer engagement, attracting new customers while retaining existing ones, and activities that will drive revenue foremost as opposed to just keeping the business running.
She suggested that the CIO approach IT investment planning around business priorities and outcomes. This is reflected in a Gartner survey of CIOs in Southeast Asia wherein the CIO is expected to deliver higher value and more strategic things, by providing a platform that enables the enterprise to navigate the changes impacting the business.
Create not consume budgets
One of the 2021 directives for the CIO is to continue to accelerate enterprise-wide digital transformation. But against the backdrop of stagnant if not declining overall IT budgets, how will the CIO achieve this feat?
Phelan suggested one way to create a new budget is to reduce cost and optimise the spend. She envisoned the CIO as helping to find the budget to fund innovation and digitalization, and from her perspective, one of the proven ways to do so is by optimizing costs around keeping the lights on.
Stop fighting shadow IT
One of the trappings of digital transformation has been the empowerment of businesses to pursue innovation outside of the direct supervision of IT. Phelan concedes that this is not a battle that the CIO can win as business units has the biggest purse strings – they bring the revenue.
Phelan suggested that a CIO actively support the business’ use of technology, even solutions outside of the official IT roadmap, by setting some guiding principles.
“This way, whatever business is doing, if IT needs to help, integrate it, support it, fix the breakage or whatever of it, that there's this partnership, again, instead of an adversarial relationship,” she opined.
Does the ERP need to be cloudified?
Phelan raised the point that software vendors have long influenced the IT investment strategy, aka roadmap, of enterprises. With Board-sanctioned cloudification of enterprises, she observed that software vendors are pushing enterprises to upgrade their ERP infrastructure to a cloud version.
She warned that there is no real business advantage to replacing an organisation’s on-prem ERP solution. From her perspective, it is vendors who will benefit from these upgrades, including moving core ERP functionality to the cloud.
“What we are seeing CIOs do is they are rethinking that strategy of always being on the most current release with a current patch. They are stepping back and saying: wait a minute, it's not broken. Why do I have to keep fixing it? Let me go fix something that the business needs more than me just making sure that I can keep my maintenance agreement current with my ERP vendor,” she recounted.
“For enterprises that have spent years customising their enterprise software to fit the business and industry requirements, it may well be that as they pursue a cloud-first or cloud-only strategy, their ERP software will become the exception.”
The rational is to squeeze as much value from existing licenses considering so much has been poured into this part of the infrastructure.
On-prem vs cloud
Phelan acknowledges that going to the cloud does offer some advantages at least when it comes to the hardware infrastructure. The cloud offers very clear cost and resource advantages. “Let somebody else worry about evolving the hardware infrastructure, keeping it modern,” she advised.
On the other hand, moving an application into the cloud is not a cost decision but rather a strategic one, according to Phelan, as for example, looking to acquire a piece of functionality. She argues that cloud-best technologies like artificial intelligence, are likewise not cheap. She conceded that when deployed in the cloud, AI can be so much faster. But you will need to get past the initial costs associated with design and set-up.
The myth/risks of failing fast
In a Forbes Article, self-described leadership strategist, Dan Pontefract, wrote that there is a risks muddling together concepts like agile, lean and ‘fail fast, fail often’. To him these are different concepts. To sees the real aim of “fail fast, fail often” is not ‘to fail’ but to be iterative.
“To succeed, we must be open to failure—sure—but the intention is to ensure we are learning from our mistakes as we tweak, reset, and then redo if necessary,” wrote Ponefract.
For Phelan, to set up the mindset that it's okay to fail, there's more to it than that. “The organisational change and the organisational impact of going to that kind of shop really do require transformation from both the business and IT, it's not going to succeed if only one of one half of the company gets on board with it. I'm not knocking it, but it is easy to say and it's a lot harder to do,” she explained.
Click on the PodChat player above to listen to the Phelan’s take on what strategies CIOs and heads of technologies need to take into consideration when planning their enterprise-wide technology roadmap for 2021-2022.
- How has the pandemic impacted the roles of CIOs?
- Business priorities and IT measures are swiftly changing to adapt to the current economic outlook. How can CIOs make an impact on their corporate strategy?
- What are the considerations businesses need to improve their ERP strategy?
- A high percentage of IT spending is dedicated to the cloud to support the growing remote workforce. Should enterprises move all resources to the cloud?
- What are the signs to look out for in the global market forces that could affect an organization’s IT roadmap?
- How can enterprises determine the best business-driven roadmap?