For companies grappling with digital transformation, IT must act as a strategic driver of the business rather than just a service organization or, worse, a bottleneck that chokes off innovation. IT teams often describe their cloud project goals similarly – to create better business results and customer experiences. And interestingly, at companies succeeding with digital transformation, the transformation and hybrid cloud work often intersect. Where, exactly?
“In short: Everywhere," says Jeff Budge, VP of advisory consulting and product management at OneNeck IT Solutions. He’s not alone.
“I believe hybrid cloud technologies are a requirement for organizations going through digital transformations,” says Nathan A. Ulery, managing director, performance services at IT consulting firm West Monroe Partners. “In many ways, IT leaders are seeing hybrid cloud technologies as a way of allowing them to transform from being the ‘department of no’ to the ‘department of yes’ – which is a critical component for digital efforts.”
For Jonathan Feldman, CIO of the city of Asheville, North Carolina, cloud and digital transformation come together as his team opens up new ways for internal and external customers to access and analyze data – especially to quickly test hypotheses. “We’re enabling employees to use data instead of worshipping at the altar of IT. And the data is accessible to people inside and outside the organization.”
[Want a deeper dive and more advice for CIOs on digital transformation? See our guide: What is digital transformation?]
Collaborative applications and cloud storage will start an organization down this road, but the real magic and speed happen when you start tapping into APIs for that data, Feldman notes. “Now we can put together dashboards that are user-created,” he says – as opposed to the old days of holding weeks of meetings about what needed to be in a dashboard, then IT building it.
“A digital organization is extremely performance-metric based,” Feldman says. “We have to be able to collect data about whether hypotheses are true.”
For IT and business leaders who want to learn more about the connections between digital transformation and hybrid cloud, Budge breaks down digital efforts into three common categories:
- Using digital to transform your business model. “This is where a company re-evaluates their business model, or expands their business model, due to the influences of digital,” Budge says. “This is most often a business-driven imperative.” He points to GE’s Predix as a classic example of this type of digital transformation.
- Using digital to transform your operating model. “This is where a company automates existing operating model functions to gain better efficiency, reduce cost, and/or increase repeatability,” Budge says. This commonly occurs within IT shops themselves, especially those embracing automation and orchestration tools to streamline manual, day-to-day tasks and processes.
- Using digital to optimize a business function. This is the most common form of digital transformation, according to Budge, harkening back to business process optimization. “The concept of microservices and their alignment to specific business functions is where customers are beginning to focus.”
With that as a backdrop, let’s look at how each type of transformation intersects with cloud.
1. Business model transformation
In this category, an organization needs the ability to build and test new concepts quickly and efficiently, without running existing lines of business into the ground.
“The bottom line is: digital requires experimentation,” Ulery says.”Experimentation in your own data center is complicated and expensive, where a hybrid cloud setup allows experimentation to occur quickly – as long as there is an appropriate governance structure to consider security, compliance, performance, and reliability considerations.”
Budge sees public, hybrid (including private cloud), and multi-cloud all coming into play at various stages of this type of digital transformation. (Here’s how Budge defines multi-cloud: “The use of multiple clouds to support a customer’s business and technology needs.”) Both he and Ulery see a public cloud environment, because of its ability to to be spun up (and later decommissioned, if need be) quickly, as an ideal sandbox for experimentation and proof-of-concepts in this category.
As this type of transformation progresses, multi-cloud and hybrid cloud become increasingly crucial, he says.
“As the concept evolves, we often see multi-cloud used to support some of the necessary transition and migration from the old model to the new model,” Budge says. “Finally as the concept is being realized, we often see hybrid cloud used to handle usage variability and cost management.”
2. Operating model transformation
Let’s stick with the example of IT itself transforming its traditional approaches to operations via automation and orchestration tooling. Here, Budges sees his clients most often beginning their experimentation in on-premises environments.
“As these experiments increase in complexity, we often see private cloud or hosted private cloud be the next step especially where the customer is also experimenting with public cloud usage, hybrid IT,” he says. “In this instance, multi-cloud and hybrid cloud also usually come into the picture.”
3. Business function optimization
Hybrid cloud and multi-cloud play a significant role here as IT groups move toward a multi-cloud approach for running critical business applications that support their business processes. Budge explains: “We’re finding that public cloud is seeing a good deal of interest for non-production, disaster recovery environments, and long-term data retention uses – which all tie back to cost optimization of the digitization of business processes. Private cloud and hosted private cloud are used when the business application needs to remain isolated, or close to facilities such as a shop floor or warehouse. Hybrid cloud is increasingly seen in e-commerce and order management areas, especially in businesses that are influenced by seasonality.”
No matter your organization’s particular definition of digital transformation, speed and agility are key, according to Ulery, and that’s where cloud becomes crucial.
“The most successful digital transformations have a ‘fail-fast’ mentality – a willingness to try new features, functionality, data sets, algorithms, et cetera,” he says. “In a fail-fast world, waiting several weeks for infrastructure to be deployed in order to support a new idea – that may only be deployed for a few days – is a nonstarter.”