Businesses are looking to bounce back from COVID stronger. As companies start to refresh their Corporate Strategy once the dust on COVID settles down and the fog around the near-term macro-economic conditions and consumer patterns clears up, Technology will have a substantial role to play in the future direction of the company, irrespective of the direction of the company.
While there will be particular emphasis on cost discipline, companies will accelerate Digital Transformation initiatives to innovate and compete. In an environment of limited capital, companies will increasingly adopt hybrid technologies in innovate and grow.
“Technology is now seen as the ONLY game in town” - Group CPO, Betting company
Firstly, some terminology
There are a lot of terms being used these days. It can get quite confusing even when talking to an IT audience. Some quick definitions so we are all on the same page.
- Public Cloud is a type of computing in which a service provider makes resources available via the internet. Resources vary by provider but may include storage, applications or server infrastructure.
- Private Cloud is similar to the public cloud. However, a private cloud, also known as an internal or corporate cloud, is dedicated to the needs and goals of a single organisation.
- Hybrid Cloud is a solution that combines on-premises data centres, private cloud with one or more public cloud services.
- Distributed Cloud is a public cloud computing service that lets you run and manage a hybrid cloud infrastructure in multiple different locations.
- Multi-Cloud is a strategy where an organization leverages two or more cloud computing platforms to perform various tasks.
Please note that this was not meant to be an exhaustive explanation of any of these terms. Its purpose was to ensure readers from different background have aren’t confused by the use of this terminology. Future papers will inspect the implications of these technologies in greater detail.
A recap of what the hybrid world looks like
There is a lot of change happening in the Technology world.
It is important to understand this change in 3 layers – Application Architecture, Infrastructure Deployment, and Delivery frameworks.
The traditional stack typically consisted of monolithic architectures deployed on physical servers delivered in waterfall methodologies.
Many enterprises moved several of the applications to Service-oriented architectures (SOA) deployed on Virtual servers delivered within agile methodologies.
The next stage of this evolution is the emergence of a microservices-based architecture deployed on (multiple different types of) Cloud infrastructure leveraging a DevOps style delivery framework.
The below image depicts these 3 stacks
It would be simplistic to think that ALL of Technology is migrating from an SOA stack to a Hybrid Cloud stack; the reality is that in most enterprises multiple of these stacks coexist simultaneously.
A review of the implications of a transition to a hybrid world
- Code Refactoring: While this paper will not go into the specific strategies and patterns adopted while transitioning to the hybrid world, no matter what the approach, a significant amount of code refactoring (i.e., improving operation of the codebase without altering functionality) can be expected. This will be influenced by factors such as the existing application architecture (monolith vs service-oriented), time-to-market considerations, specifics of the business demands and the availability of market alternatives.
- Standardised foundational layer: To take advantage of the hybrid cloud, companies will need to agree and invest in standardised operating stacks covering a consistent operating system such as Linux, a container-based deployment platform such as Kubernetes and applications, data and security solutions. Adopting such a consistent foundations layer will solve issues such as integration, automation and ease management of multiple cloud environments.
A special focus on the cost implications of this transition
As mentioned in the earlier section, the transition to a hybrid world, when done right is going to undertake a significant one-off investment. This is to ensure initial one-off investments in the standardised foundation layer and incremental investments in code refactoring on a per-application basis is considered.
Any attempt to implement this transition as a piecemeal strategy or to try to take shortcuts is going to have a detrimental impact on the cost base.
For this reason, this transition will have to be discussed at a strategic level between the CIO, CFO & CEO and agreed upon as a multiyear journey – not relegated to the discretion of the siloed application development teams nor undertaken by the Architecture teams without C-level mandate.
Key personal priorities for the CIO
While the focus of this article is primarily for actions that the CIO can undertake for the entirely of the Technology department, there are crucial changes a CIO will undertake personally to adapt to this hybrid world.
- Become an Educator & Translator
- In the past, IT transformations have often proven expensive, time-consuming, and short on value, and this has made some companies nervous of undertaking them again. To address this issue and build trust, the best CIOs play an active role in educating leaders about technologies and their applications for the business. They must undertake this by making the business implications of technology decisions clear.
- Get more deeply engaged with the business
A full technology transformation is not about moving to the cloud or embracing new IT solutions. It also involves infusing technology into every strategy discussion and process throughout the organization. Generating support for a transformation among business leaders across the organisation requires creating true partnering relationships with them based on common goals, mutual responsibility, and accountability. CIOs thereby need to develop a deep understanding of the business and even attend client meetings to further deepen their understanding of key challenges.
Key priorities for the Technology department
- Measure the business value created by Technology and share it more broadly
- The complexity in the Technology environment has been creeping into all aspects of IT including Cost Management. With the adoption of a hybrid model, this complexity will further accelerate. It is, therefore, essential that CIOs implement IT Cost Management tools such as CostLens to demonstrate effective cost control.
- CIOs must communicate the value of IT beyond just a cost dimension. By leveraging data analytics to support revenue generation opportunities, the IT Department can add further value. If possible, CIOs also try to generate profits by monetising technololgy.
- Similar to mature Finance functions that adopt a Business Partner approach aligned to the function that it serves; CIOs need to strengthen IT-Business partnerships at all levels of the Technology organisation.
- Upskill, Upskill, Upskill: A skill shortage is expected to be one of the largest risk factors in transitioning to the new Hybrid world. CIOs need to implement rigorous training programmes such as in-person, e-learning platforms, top management immersion sessions, and the cultivation of an in-house expert network to ensure existing staff can enhance their skillsets. While this goes a significant way in addressing some of the gaps, CIOs will have to reimagine how to attract tech stars to build a engineering community that can support true collaboration.
- Establish Product-centric teams: Technology departments have traditionally adopted a project-delivery approach. They will need to transition to integrated product-centric teams that comprise of Business and Technology staff with integrated plans spanning all other workstreams outside IT, such as Marketing, Regulatory, Risk, and Legal.
Conclusion – A key next step for the CIO
As mentioned before, taking a siloed approach to building the foundations to a Hybrid Technology stack will turn out to be a rather expensive affair and not deliver on the benefits of the Cloud.
Also, this is too critical an initiative to be led at the AppDev team level or Enterprise Architecture level.
To ensure that the business can deliver on this holistic transformation, a root & branch review of the application portfolio to determine a cost-efficient path that best meets the time to market needs of the business should be actioned by the CIO.
A core deliverable of this exercise is to develop a multi-year Business Case for the transition to the Hybrid World.