In the 1990s, the third industrial revolution (sometimes referred to as the Digital Revolution) gained prominence, with telecommunications, automation, and digital electronics providing significant breakthroughs. The growing power of the internet, information, and computing made it a pivotal decade for the years ahead. However, IT was still a spectator to the business strategy due to limited contributions to business value. Times have since changed. Today, IT, once an auxiliary behind-the-scenes function for the business, has catapulted to the center of every company’s transformation goals, driving business disruption and innovation. Add the Cloud to the mix, and you have a protagonist in this transformation story. Not only does the Cloud convert buzzwords like agility, customer experience, scale, and cost efficiencies into action, it also ties in very closely to business objectives as an able partner for success. Consider Volkswagen who, through its partnership with AWS, is implementing the Industrial Cloud to bring its production and logistics platforms into the Cloud. The platform will aggregate data from all machines, plants, and systems in all factories to integrate more than 30,000 locations1
In recent times, cloud transformations have been structured and delivered by the Cloud Center of Excellence (CCoE), which leverages the governance function to ensure that the cross-functional organizational staff can drive adoption of the Cloud guiding principles through the overarching framework. A key area where the CCoE needs more power to wield the Cloud baton is countering the ever-changing market dynamics, which nascent Cloud organizations cannot decipher. The first of this two-part point-of-view series looks at ways to address this issue.
Adaptive governance: What does it entail?
Adaptive governance provides a flexible and responsive governance framework that helps align with fluctuating external environments – with seamless business and IT interconnections, processes, risks, structures, and stakeholders woven in. The focus is on the current and evolving view of the industry, competition, and external market forces. This governance model keeps the CCoE transformation unaffected by dynamic environments and enhances the Cloud adoption rigor. It is time for elevated conversations around sustained business improvements and growth.
Governance needs not just to be fit for use and fit for purpose but also be fit for the future. It needs a dynamic outlook to survive and thrive amidst the uncertainty, complexity, and interconnectivity of the global business environment. Organizations must improve resilience and prepare for disruption if they want to remain relevant and deliver value for shareholders and stakeholders. While a standard governance model can bring awareness and service adoption, adaptive governance drives competitive advantage.
Evolution of governance
Historically, IT governance traces its genesis to the early 1990s. It was spun off as a derivative of corporate governance and was positioned primarily to link an organization’s strategic objectives, business goals, and IT management. It has broad connotations and interpretations across the business space2
Primarily, IT governance is a framework that provides a structure for organizations to ensure that IT investments support business objectives. A set of policies, procedures, and guidelines keeps the business and IT spaces aligned and informed of the best use of investments (in processes, people, and technology) to further organizational goals. In the business technology landscape, multiple interests need to be factored in: shareholders, customers, competitive interests, government, and advisors.
If set up and executed correctly, governance leads to increased agility in deploying solutions, better business value, and a tight cost structure. Often, one of the most noticeable areas where governance execution fails is the explosion of costs through overruns and penalties. Consider the case of Facebook, which incurred $5 billion in penalties for privacy violations from its partnership with Cambridge Analytica3.
A well-defined corporate and IT governance strategy offers a better understanding of risks, regulatory policies, and requirement adherence.
How a Cloud Center of Excellence helps customers on their Cloud journey
A Cloud Center of Excellence (CCoE) helps an organization adopt a Cloud-first and Cloud-native approach. It ties into the organization’s vision and provides the direction to the Cloud. The CCoE provides the structure and governance across different customer landscapes, complexities, expectations, and maturities. It also helps uncover deeper issues and challenges that need comprehensive thinking and execution, like advocacy, building a Cloud-aligned culture, promoting innovation, scanning for opportunities, threats, and remediations.
Building a CCoE and advocating the Cloud agenda across an organization is not easy. Strong sponsorship from the leaders – not just from IT but from Finance and each business line – is needed. Typically, many transformations do not take off or meander because the value delivered is not clearly outlined to the organization, making the transformation a leap of faith. What can make this leap of faith a leap of conviction is leveraging a governance model that can define and refine the cloud objectives, setting the appropriate metrics that align to outcomes, and rigorous tracking and course corrections to achieve them.
Discrete and adaptive governance
Discrete governance centers around static and siloed elements and has an internal focus on an organization’s interconnected functions. It manages to work well with smaller-scoped Cloud engagements that are either just starting or are localized in the organization. Their impact on Cloud transformation journeys is limited because the cloud journey has many moving parts: the internal workings of the organization, the external market forces that demand a quick and scalable move to the Cloud, competition trying to seize an early mover’s advantage, and customers needing features quicker than the changing seasons.
Table 1 outlines the differentiating parameters between discrete and adaptive governance.