The 5 things every CEO needs to know about the Cloud

Posted by Mike Walsh

7/21/14 7:00 PM




The Cloud is not a trend or a fad. Nor is it simply Silicon Valley’s flavour of the month. It has become, in fact, a fundamental part of the engineering that drives the world. Our entertainment, our social networks or our communication systems would simply not work without Cloud technology. Unfortunately the strategic importance of the Cloud today also means that it is no longer a subject purely for your technology teams. Whether it be transforming how you engage your customers, how your teams work or how quickly you can bring to market new services - the Cloud is a business revolution that no CEO can ignore.


Here is your cheat sheet on the top 5 strategic opportunities that you need to consider:


1. Re-imagine Work

A client of mine wanted to transform their staid bank headquarters into an office of the future. Most offices are designed to a simple formula - 70% desks and 30% communal spaces. The bank, to their credit - flipped the equation, replacing traditional cubicles with cafe style public spaces and meeting areas. Even better, in lieu of desks every employee was given a locker for their personal possessions and a Macbook Air to do their work. Staff loved the new offices - but there was just one problem. IT had installed old school productivity software on all the new Macbooks which ran unbearably slowly and at times, failed to work properly at all.


As part of your evaluation of the Cloud, take a closer look at the the tools people use to work. Ask more questions. How might the planned Cloud migration support a new culture of collaboration? Is there a better way for your people to share great ideas and innovative practices? How might your teams identify other projects in the organisation relevant to them? Can you make it easier for freelancers and partner organisations to work inside your building? Creating an office of the future requires more than just re-imagining your physical spaces. You have to re-imagine work as well.


2. Reboot IT

Until very recently, IT believed that their primary mission was to play defence. Keep the trouble out - hackers, viruses and malware - while keeping your sensitive information secure within. Things have changed. Security is still important, but it has to be balanced with new realities. Your people want to select their own mobile devices. Your customers want to access your services quickly and easily. And your partners want to be able to leverage your platforms and data without long delays, legal approvals and custom IT development. In other words - everyone wants a new model of IT. In truth, so does most of your IT team.


Behind the discussion of Cloud is a deeper debate about the future of the IT profession. The next generation of IT leaders already know they should be spending less resources on installing servers, deploying patches and fixing computers - and more time negotiating vendor relationships, managing integrations and collaborating with line of business managers. Technology is no longer a barrier to achieving those aims, but your organisational design and legacy IT management teams might be.


You will need good IT leadership, because the Cloud introduces new risks that you and the board need to be fully briefed on. Security in a Cloud environment is more complex and nuanced, and there are constantly shifting consumer and regulatory expectations of how you manage privacy. There are also perils in the Cloud’s new pricing models. Aggressive enterprise IT vendors will try and sell you on a total stack of cloud applications - whether you need them or not. What starts as a cheap variable cost proposition for 50 people, suddenly becomes cripplingly expensive at 5,000. If your IT teams are not giving you the advice you need to be a 21st century leader, then you better quickly find some that do.


3. Re-invent Engagement

How easy is it for your customers to do business with you? How many pieces of paper, forms, approvals and other impediments to getting deals done has ‘usual business practice' put in the way of winning on customer experience? One of the advantages of migrating to the Cloud is that it offers companies a chance to fundamentally transform how they engage, serve and ultimately delight their customers.


In the past - innovating around the customer experience was more complex. Designing some nice looking interfaces was not enough - you also had to fundamentally re-engineer whole parts of your back end operations as well. In the Cloud centric enterprise, you can start to think of your data and services as modular components that you can combine in intuitive ways. Discuss with your team how might leverage your new technology infrastructure in the future. What kinds of mobile applications might you deploy that you were not able to a few years ago? Can you partner with other companies and platforms and create compelling new services through inter-connected Clouds?


4. Re-write The Rules

If you could create a new product or service, at a fraction of the normal price but with a better service proposition for your customers - would you do it? Or would you wait for one of your competitors to disrupt your industry first?


One of my clients was the CEO of an accounting software company. For many years they had enjoyed a comfortable business selling practice management software to accounting firms. However in recent years, new Cloud based platforms had made life difficult - not just for them, but for many of their clients. When I asked the CEO to explain - he said that the problem was not that their competitor was giving away partner editions of their software away for free but rather new Cloud platforms like Xero had led to thousands of cut price accountants, working out of cafes - who were now challenging the economics of small business audit.


Here’s your challenge - how might technology impact your plans for re-writing the rules of your industry? Front office business functions are not the only opportunity. Sometimes the most interesting ideas come from when you make services like business analytics more available to your front line people, or you start to integrate realtime information from back office functions. How might you change the way you run manufacturing, logistics, or your supply chain - and in doing so, disrupt your product or service offering to the market?


5. Re-evaluate Your Cost Curves

The final, and perhaps most important thing you need to know about the Cloud is how it changes the way you think about costs. In a traditional IT based organisation, costs are a step function. Launching a new division, adding more people or planning a new product or service will in the short term dramatically shift your cost base to a new level, amortised with time over new revenue growth.


The Cloud offers leaders a very different calculus. Even the smallest of companies or startups can access world class applications, storage or computation services on a per user basis, allowing them to ramp up very quickly as demand increases. Think about it. Could Instagram have scaled to millions of users and sold for a billion dollars in twelve months on a traditional technology development model? And even if you can't imagine how your organisation could innovate as nimbly as an Internet startup - what would happen if one of your competitors did? 


I’ve asked you to consider lots of new questions, but hopefully one idea is very clear - the Cloud is a strategic discussion that belongs in the boardroom, not in the basement.


Here's my advice - plan an executive team meeting in the near future to brainstorm the issues raised by these five points, and while you are at it - put the most important question of all on the agenda. How can new technology not only change, but help you re-imagine the way you do business?

Topics: Technology

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