Capturing the potential value requires a cloud transformation engine that is made up of three mutually reinforcing and constantly evolving elements.
Some 15 years into the cloud revolution, it’s clear that there’s tremendous value enabled by adopting cloud—more than $1 trillion just for Fortune 500 companies. Almost all of that value comes from business innovation and optimization rather than IT cost reduction. Rapid growth in cloud infrastructure spending (the top three cloud service providers reached $100 billion in combined revenue in 2020) still represents a small fraction of the global $2.4 trillion market for enterprise IT services. Capturing the potential value requires a cloud transformation engine that is made up of three mutually reinforcing and constantly evolving elements.
Different starting points
Where a company begins its cloud transformation journey, the entry point - the frequency of iterations along that journey - will depend on the context, and the emphasis between the three “rings” of the cloud transformation engine will vary over time. For example:
- One business-services provider lacked the funding or alignment for a major strategic effort. So it initially focused on the business-domain-adoption loop, starting with putting workloads with large benefits from agility on cloud platforms and building foundational capabilities along the way.
- A large financial institution with very stringent security and resiliency expectations invested first in a set of foundational services that would serve as the basis for building critical workloads in the cloud.
- A biopharma company developed a granular, multiyear strategy first so it could negotiate a deal with a cloud service provider and a systems integrator that would fund its transition to the cloud at scale.
Since the three rings are mutually reinforcing, successful cloud transformations require companies to operate across all three rings in parallel. As business needs evolve, confidence increases, and richer external capabilities come to market, companies must continuously evolve their strategy, their adoption approach, and their foundational capabilities.
How enterprise architects need to evolve to survive in a digital world
Many CIOs at large incumbents have made a startling discovery about digital natives: those businesses often don’t have architects or at least anyone with the formal title of “enterprise architect.” With CIOs increasingly moving their organizations to an agile DevOps operating model, that discovery has prompted much questioning about whether they still need architects, and if so, what they should be doing.
While incumbents can learn plenty from digital natives and adopt many of their practices, eliminating the architect role shouldn’t be one of them. That’s because digital natives have the benefits of a highly skilled and experienced workforce operating in a start-up culture on a modern architecture with few legacy issues.
Development teams in most incumbent organizations, however, don’t enjoy those benefits. They are used to workarounds such as creating direct point-to-point connections because, for decades, that’s been the only way to get things done. The reality is that most organizations still need architects. In fact, our research with Henley Business School is clear: digital transformations suffer when architects are not involved (Exhibit 1). Technical debt increases, and fewer services are reused.