Who cares if your IT department moves to the Cloud? Or doesn’t? IT has a mandate to provide all of the data processing needs for the organization, and a budget. IT is full of experts, expensive experts, and they are going to do what is best for us. Right? Besides, I don’t really understand it; it’s magic.
If you ask people to describe their IT organization, you get a lot of different answers:
- Sales prevention.
- We have an IT organization?
Often the answer will change from one hour to the next.
When you ask what they mean by, for example, “slow” you often get multiple definitions: the system is slow in responding to my request, IT is slow to make the changes I need to do my job.
To your customers and your partners, your IT organization is like dust on the furniture. When it is working perfectly, nobody notices and you do not get complements. When it fails, everybody notices and nobody is happy and they tell you. Customers and partners have the means to make that known, often in ways that have bad side effects. As one example, I will never use AT&T for cell phone coverage. I explain it to others that it is because Verizon has better coverage in the US. The real reason is that AT&T customer support is, in my view, far worse than Verizon customer support. Verizon: do not consider this a complement. I had a trivial billing issue. It took over four months to get resolved, and then only after escalating it and finally threatening to report the issue to the FCC and the Pennsylvania Utilities Commission, which got it escalated one more level. I got a series of incompetent and not very friendly customer service reps that could not solve the problem, and more importantly thought that I would be happy with “we can’t do that.” In reality, it was probably some issue with AT&T’s IT environment that made the problem non-fixable. The end result, AT&T lost a customer that they will never get back.
Who are your IT’s customers: probably everybody in the company, and all of your company’s customers and partners. A more critical question is, who are your IT’s stakeholders? These are the heads of the organizations that require a responsive IT to get their job done. Obviously, this includes the sales and marketing organizations, but also product development and production, HR, legal, and finance. These heads often have different views on the purpose of IT, and place different, and sometimes contradictory, requirements on IT. You can usually tell who really controls IT by whom the head of IT reports to. Just like everybody in an organization, the head of IT reacts to how he is rewarded.
If IT reports to the CEO, then it is usually very independent and acts like a black box. Just give us money and we will give you everything you need, as we see it.
IF IT reports to the CIO (Chief Information Officer) or CTO (Chief Technology Officer), then it is usually very technology focused. It may not jump to the latest technology fad, but it will almost certainly be running on the “best” that it can afford and is periodically updating its infrastructure to stay current with best practices.
If IT reports to the COO (Chief Operating Officer), then it is viewed as another piece of enabling equipment, like a milling machine or a truck. Cost effective efficiency is what matters. It has to be barely good enough, and no better, to keep the company going.
If IT reports to the CFO (Chief Financial Officer), then it usually very business focused. It is difficult to get anything new without a financial analysis supported by at least the sales and marketing organizations.
Of course, these are just generalizations based on companies I have worked with, and I’m sure your company is different.
In my experience, it has been unusual for IT to report to the CFO. What is really disturbing to me, however, is that according to research by Saugatuck Technology and others only a minority of financial organizations pay much attention to Cloud adoption in their company. This can be a real costly problem. Moving to the Cloud can have substantial financial implications.
- Reducing total IT infrastructure costs. While this is usually a good thing, it sometimes leads to …
- Depreciation problems. The CFO is not going to be happy if suddenly a lot of capitalized equipment becomes totally obsolete and has to be written off.
- Moving cap-ex to op-ex (capital expense to operating expense). Again, this is usually a good thing, but can have serious financial implications for the company. In most cases, the approval process for cap-ex is significantly different than for op-ex. CSP contracts can have significant cost and often commit the company over time.
Two years ago in a currently unavailable report, Saugatuck recommended that finance should lead, follow and get out of the way on Cloud projects.
- Working with IT leadership to plan where the Cloud will be used and build the financial model
- Establish and enforce Cloud procurement standards in cooperation with IT
- Develop, with legal, consistent policies and practices for selecting and contracting with cloud service providers.
Follow by allowing IT and business leaders to lead finance into those areas of likely or existing Cloud use. Without this, finance will not be able to develop the high-level picture of the financial impact of the journey to the Cloud.
Get out of the way by not trying to micro-manage the journey. Leave that to IT. The key to maintaining control of the Cloud journey but staying out of the daily grind is to manage the relationships with your Cloud partners.
The last word:
When I start a Cloud project, I always start with “why.” Why are you thinking about moving to the Cloud. What do you hope to gain by the move? If my client has not already done so, I strongly encourage them to survey the stakeholders. What are their issues with IT today? What do they need from IT tomorrow? When you lay the requirements out, you often see some interesting mismatches and sometimes contradictions. Take the time to sort them out and determine a consensus set of measureable requirements.
If you do not do this up front, you will pay later in delays and possibly an externally ordered “stop that!”
Keep those stakeholders involved and informed throughout the journey. Things will change, even those requirements “everybody agreed to.”
Keep your sense of humor.