Cloud is now a boardroom discussion and more are requesting CIO adoption

Originally posted @ Gigaom Research 8/18/14

http://research.gigaom.com/2014/08/cloud-is-now-a-boardroom-discussion-and-more-are-requesting-cio-adoption/

Cloud computing and the board of directors may seem like an odd match. However, it is not the first time that executives and technology have met up. It may come as a surprise, but those magazines in the airplane seat back pocket are influential for technology. An airline publishes their magazine in which features about the latest innovation have influenced the direction of technology for years. The inflection point of a technology going mainstream often happens when it becomes the magazine cover story. An executive reads the article and asks when their company can leverage said technology.

Cloud goes mainstream

Using this methodology, cloud computing’s inflection point to mainstream took place in May 2009 when Continental Airlines (now merged with United Airlines) published a cover story on Russ Daniels, then HP’s Vice President and Chief Technology Officer, Cloud Services Strategy. Surprisingly, cloud was still very much in its infancy in May 2009. Corporate IT organizations were neither broadly discussing cloud nor planning wide-scale adoption. That was five years ago.

Fast-forward five years later to August 2014. Over the past several months an interesting trend in cloud is starting to emerge. While cloud continues to be a discussion point among executives, the board of directors is now raising the topic of cloud.

The Chief Information Officer (CIO) is already under pressure to adopt cloud among an increasingly complex IT portfolio. And now the board of directors is asking their CIO about cloud adoption. Ironically, the overall adoption of cloud continues at a rather sluggish pace.

Is the boardroom the right place to discuss a company’s wholesale cloud adoption? Probably not. Cloud does present the single largest lever for the CIO to help catapult the company forward. Which specific tools are used and how they are applied does affect business strategy. However, at the end of the day, cloud is still just a technology. Technology is a tool, not a strategy. Nor does simply employing cloud result in a magical business windfall. Connecting the dots between cloud and business is a bit more complex.

Upping the ante

The board of directors asking about cloud should not be a surprise. Cloud is a technology, but is widely used across both consumer and corporate worlds. Cloud also spans industries and geographies. In many ways, cloud represents a wide range of solutions to a quickly changing landscape. Conceptually, cloud is a broad solution to a number of problems. So, why should the board of directors not be interested in it? The problem is not that it comes up in a board meeting. The problem is in who brings it up: The CIO or a board member?

In a related vein, shadow IT is seen as a response to a discrepancy between needs and solutions. This is very similar to the questions being asked by board members today. The pace of business is increasing and companies are looking for ways to break free of the constraints. To some, traditional IT is viewed as a constraint that must change.

As IT pressure increases, so does visibility up the leadership chain to the board of directors. Customers are already making purchase decisions based on the technology of one company versus another. Companies and their respective IT organization must adapt to this changing customer behavior through the use of Social, Mobile, Analytics and Cloud (SMAC).

Seeking relief from the pressure

Change is hard. The world of IT is not getting simpler; it is getting far more complex. IT organizations see this first hand every day and are seeking relief from the building pressure. However, traditional approaches are simply not enough to keep up.

Relief needs to come from non-traditional means. In many ways, cloud presents a non-traditional approach to the norm. It is important not to underestimate the amount of momentum behind traditional IT approaches. Looking back at the anthropology of IT, one quickly understands why.

The challenge for today’s CIO comes down to a few key items:

  • Understand the Business: First and foremost, understand how the company makes money. It may sound simple, but understand the different value chains, opportunities and challenges. Look for opportunities to improve and/ or grow.
  • Executive Engagement: As CIO, engage peer executives and board members at a business level. Up-level the conversation from that of technology to business.
  • Balancing Innovation vs. Legacy: Strike a balance between quick adoption of new methodologies and management of existing legacy solutions. Specific to cloud, establish a holistic cloud strategy while maintaining a solid operational footing with legacy systems.
  • Challenge the Norm: Traditional IT approaches are not enough to turn the corner. Look for new, innovative ways that change the path of inertia.
  • Organizational Shift: Establish a vision that engages staff in the changes.

In specific terms for the CIO role, it could be more dramatic and mean the difference between relevance and extinction.

The number of 9’s don’t matter but business metrics do

Originally posted @ Gigaom Research 8/11/14

http://research.gigaom.com/2014/08/the-number-of-9s-dont-matter-but-business-metrics-do/

Information Technology (IT) organizations across the globe use a number of metrics to measure their success, failure and standing. One of the more popular metrics is the ‘number of 9’s’ as a measure of system uptime. Why use 9’s? It is relatively easy for technology organizations to measure system performance. Unfortunately, it does not matter outside of IT.

What are 9s?

The number of 9’s refers to the percentage of system uptime. Typically, we hear about three 9’s, four 9’s or five 9’s. Three 9’s refers to 99.9% uptime, or .1% downtime whereas five 9’s refers to an ever-illusive 99.999% uptime or a mere .001% downtime.

These metrics have been used for a very long time; from internal IT organizations reporting status to Service Level Agreements (SLAs) from service providers. The number of 9’s is used as a metric to set performance targets…and measure progress toward them. The problem is, they are technology focused. When looking at the inverse as a function of downtime, it equates to the following table:

Downtime TableEven at four-9’s, that equates to a maximum of only 52.56 minutes of downtime per year. Unfortunately, this means very little if the company is in retail and those 52 minutes of downtime came during Black Friday or Cyber Monday. In addition, the number may be artificially low as other factors may not be included in the calculation.

The Fallacy of Planned vs. Unplanned Downtime

First, it is important to differentiate between scheduled downtime and unplanned downtime (outages). Most measure their system performance based on the amount of unplanned downtime and exclude any scheduled downtime from the calculations. There has been an ongoing debate for years whether to include scheduled downtime.

Arguably, if a system is down (planned or unplanned), it is still down and unavailable. In today’s world of 24×7, 100% uptime expectations, planned downtime must be considered. Ironically, the inclusion of planned downtime causes uptime figures to drop and may cause a rethinking of how applications and services are architected.

Technology Metrics

In today’s world, do these metrics even make sense anymore? They are not business metrics…unless you are a service provider that makes your business about uptime. For the majority of IT organizations, these metrics are just ‘technology’ metrics that have little to no relevance to the business at hand. Just ask a line of business owner what five-9’s means to their line of business. For IT, it is hard to connect the dots between percentage uptime and true business impact. And by business impact, this refers to business impact measured in dollars.

Business Metrics

If not 9’s, what business metrics should IT be focused on? Most companies use a common set of metrics to gauge business progress. Those may include Cost to Acquire a Customer (CAC), Lifetime Value of Customer (LVC) and Gross Margin. Customer engagement is a key area of focus that includes customer acquisition, retention & churn. For IT, these metrics may seem very foreign. However, to a company, they are very real. Increasingly so, IT must connect the dots between that new technology and the value it brings to business metrics. As IT evolves to a business focused organization, so should their metrics of success.

The Role of the CIO

The CIO, above all others, is best positioned to take the lead in this transformation. Instead of looking for ways to express technological impact, look for ways to express business impact. It may seem like a subtle change in nomenclature, but the impact is huge. Business metrics provide a single view that all parts of a company can directly work toward improving.

A good starting point is to understand how the company makes money. Start with reading the income statement, balance sheet and cash flow statement. Are there any hotspots that IT can contribute to? And what (business) metrics should IT use to measure their progress.

Not only will this shift IT thinking to be business focused, it will also highlight better alignment with other business leaders across the company.