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Top 10 reasons why CIOs should adopt Cloud

The current economic climate is forcing organizations to refocus their systems and IT operations with minimal resources. CIOs are quite used to ‘doing more with less’, the squeeze on IT budgets and personnel creates new approaches and solutions to cope with demands. According to Salesforce.com, the unprecedented financial limitations led to the optimization of existing resources and since 2009 enterprises are moving to cloud based solutions and deployment. It is also envisaged that cloud will drastically change the economics of IT in the coming years. Cloud computing offers a different paradigm compared to in-house or outsourced IT operations.

Cloud computing is traditionally implemented as an infrastructure service model to reduce IT costs. Cloud models have evolved to prove it is a better business solution with many benefits. Today, business organizations big or small having understood the abilities of cloud services are using cloud in their organization to transform their business capability, to improve agility and to gain competitive advantage. From the perspective of business technology clouds offer measured service, on demand self-service, redundancy, resource pooling, scalability and broad network access along with other technical benefits.

Due to global economic downturn, IT departments are currently re-evaluating their IT strategies to fulfill three main financial demands: initial capital expense, operating costs and return of investment or time to value. Therefore, CIOs face the challenge of delivering more with less due to reduced budgets. The role of CIOs is also changing from managing IT operations to a more strategic business role to develop business value, foster innovation and overall business growth all using technology.

CIO adoption to the cloud

Cloud services offer an ideal solution to fulfill these demands because IT projects continue to be critically evaluated on these demands. Cloud computing offers huge potential for easily overcoming most of the challenges faced by CIOs in terms of providing secure, faster and cost-effective alternative to internal application development and management. Here are some reasons why CIOs should adopt cloud computing.

  • Faster time to value: Companies normally delay projects that take time to deliver ROI. CIOs can make use of fully pre-built applications and project management services that streamline design, coding, testing and training and so on in the cloud. Developers can quickly create user experience by defining the data model and business logic in a cloud environment to result in delivery of faster time to value.
  • Requires no upfront capital costs: CIOs can benefit from subscription pricing model available with cloud computing platforms. The pay-as-you-go model significantly reduces risk because projects can be scaled based on customer satisfaction. Also in clouds no upfront capital cost for purchase of hardware is needed.
  • Significant reduction in operational cost: Clouds offer multiple environments which benefit developers, testers, trainers and end users. All these environments are available as an integrated service which is ready to use. CIOs can make use of available services that include administration, centralized management and governance, etc. which significantly reduces project time and cost. Also cloud adoption eliminates capital costs for purchase of new hardware.
  • Extensive technical resources are not required: The cloud service provider handles all resources needed to support applications and maintenance. CIOs have the advantage of optimizing cloud resources for more business growth.
  • Overcome challenges in integration: Integration is easy with cloud models as enterprise applications can be quickly deployed and made available. Existing legacy databases from major business categories such as SCM, HRM, ERP, etc. can be integrated easily with enterprise applications such as SAP, Oracle, etc.
  • Enterprises are more TCO aware: The cost benefit analysis on cloud usage within the enterprise can be quickly realized by organizations. For example, each business case can be determined for its value by adjusting resources in the cloud. CIOs can be sure to realize agility which comes along with TCO. Since performance metrics are established for agility, the organization can easily realize TCO.
  • Cloud accelerates innovation: Cloud deployments significantly minimizes time, expertise and separate technology resources needed for innovation. CIOs can quickly provision resources for experimentation cycles or innovation thus enhancing time to market.
  • Potential for more revenue and opportunities: Cloud models avoid duplication and redundancy across all departments in the organization. Business strategies are aligned with IT. CIOs can focus more on product launch in new markets, identify potential opportunities, innovation and business growth.
  • Better customer engagement: Cloud systems have the ability to handle large data storage and perform analysis on them efficiently. CIOs can use this analysis to gain business insights easily from customer data and use it for improving business outcomes.
  • Security and compliance: Security and privacy are handled well by clouds as they offer in-depth protection to data and applications. For instance, private cloud models offer SLAs and privacy protection assurances for organizations. In addition to security, compliance requirements can be fulfilled by the CIO by defining appropriate data ownership and controls in SLAs with cloud providers.

In addition to the above reasons for cloud adoption by CIOs, there are numerous other benefits for both business and IT. CIOs can help business growth by improving connections with suppliers, etc., enhance employee productivity and optimize operating expenditure and so on.

How TIO (Total Infrastructure Outsourcing) is transforming the role of a CIO

Organizations to cope in volatile economic climate are increasingly investing time, talent and resources on core competencies to maximize business value. IT is no longer viewed as a business core competency area, but the capabilities of IT as a business enabler is well acknowledged. Internal IT infrastructure and operations are becoming a big burden due to increased risks and complexities in deploying new technology and synchronizing the infrastructure to cope with dynamic business demands. Total infrastructure outsourcing (TIO) offers the solution for overcoming internal IT management in order for the CIO to play a more strategic role in business growth and innovation.

The role of IT as a business enabler is highly emphasized in scenarios where business growth relies relentlessly on business innovation and customers. The focus of CIOs is shifting from managing normal IT operations to playing a more strategic role in business growth where innovation is gaining momentum and driven by technology. Technology enables a CIO to focus more on streamlining business operations, improving solutions, enhancing service competitiveness and generating revenues from new business models. CIOs strive to fulfill these expectations in a highly challenging environment and to a large extent they are successful.

Business expansion is one top priority for enterprises. IT infrastructures that drive business operations depend on three aspects namely, managing risks, enabling agility and flexibility and innovation. For IT to contribute fully in business expansion towards growth and innovation, it has to overcome multiple challenges if the IT infrastructure is maintained internally. The major challenges faced by CIOs with internal IT management include,

  • Complexities in controlling an expanding infrastructure and networks at minimal cost
  • Unable to meet demand spikes and service quality due to limitations in infrastructure
  • Provisioning a highly scalable and secure computing infrastructure with high availability, at the same time keeping costs down
  • Providing a flexible IT environment which is agile in changing market demands
  • Managing vendors needed to support high levels of service delivery
  • Difficulties in identifying and retaining skilled IT staff

These challenges can be overcome to a large extent by optimizing the infrastructure and by avoiding wasted capacity which results in excess spending, and avoiding inadequate capacity which is influenced when responding to market demands. Business enterprises look towards total infrastructure outsourcing (TIO) as an effective alternative to optimize capacities, improve business focus while reducing business risk and complexities.

Successful outsourcing depends on a comprehensive understanding of business and IT objectives and the services worked out by different functions and the management. Here the CIO plays an important role in working out cost-benefit analysis, technology selection and evaluating the needs, risks and benefits.

In a total infrastructure outsourced environment the organization’s leadership focuses on service management as defined in the contractual terms and measured by SLAs. Changes are imminent for the CIO after transition to outsourcing. The role of the CIO undergoes dramatic transformation in TIO and the roles and responsibilities will focus on assessing service performance and compliance by outsourcing provider as agreed in the SLA.

The CIO’s roles and responsibilities in infrastructure outsourcing are examined below:

  • Avoiding costs: TIO services from data centers offer extensive resources with access to latest technology to result in world-class capabilities to gain knowledge, processes and tools. CIOs can significantly reduce the need for capital investments in IT and focus resources on business innovation and development.
  • Improve business focus: CIOs should take advantage of the cost structure in TIO and operational efficiencies. The focus should be more on core business development and strategies, technology solutions for business growth and innovation. Costs incurred in availing TIO services are always much lower because there is no capital expenditure involved in IT hardware. Also costs of maintaining the infrastructure is less compared to maintaining an in house infrastructure. In outsourcing, IT operations are managed by skilled experts available with the provider. This further reduces the time spent on IT by CIO and other IT staff.
  • Re-engineering: CIOs can accelerate re-engineering of systems and processes towards maturity and compete in world-class standards. TIO shifts IT expenditure from Capex to Opex. The pay as you go model offered by service providers or data centers promises significant cost savings for organizations.
  • Enhance agility: TIO offers the ideal solution for developing latest technology infrastructure capabilities from ground-up. The CIO can focus on business agility and competitiveness because outsourcing offers flexible, dynamic and adaptable IT systems for the company to readily compete in changing markets and demands.
  • Easily address business challenges: CIOs due to their technical backgrounds have strong understanding in technology and business processes and develop solutions to directly address business challenges. This process is quickened in TIO because the infrastructure is readily available. CIOs can shift their focus to management skills which include planning, organizing, developing, communicating, etc.
  • Reduce complexities and risk: Expertise is readily available with TIO provider which can be used to handle complex IT systems and applications. CIOs should plan to re-assign internal IT staff with tasks that generate maximum business value.
  • Managing innovation: In the current business trend, service providers play a role in development and delivery of services. In this scenario the key to success for CIOs is to synchronize business and technology strategies with diverse groups with clear objectives will motivate the use of technology in new directions. Therefore managing innovation becomes an essential requirement for a CIO.

In addition to the above responsibilities, outsourcing offers variety of benefits for businesses. CIOs can concentrate more on managing resources to easily meet market demands. With outsourcing CIOs can demonstrate the strategic role of IT in business for growth, innovation and competitiveness and at the same time eliminating risks to business and to IT.

Ten questions the CIO should ask his technology vendor

CIOs often face challenges in evaluating technology vendors and identifying the right strategic vendor for their IT needs. CIOs prefer vendor solutions which are able to provide business growth in dynamic and agile organizations. In this era of rapid technology growth the focus of vendors’ is normally more on system usability and features rather than fulfilling CIOs concerns on strategic IT. In this post, top 10 questions for technology vendors are provided which is intended to help CIOs in identifying the right IT vendor.

Business companies look for ways to increase efficiency and maximize their value. There are many examples to demonstrate the role of IT as an enabler for business. For example, e-commerce, web based applications, cloud computing, etc., to name a few. Vendors have also understood this well, and most of the vendors are quick to talk about their product features for its business benefits without understanding customer requirements or market demands. According to IDG Enterprise survey 2015 titled CIO Role and Influence Research it was found that in some of the CIO or industry gatherings, vendors fail to understand the specific business goals and challenges from CIOs. Vendors tend to talk more and listen less to CIOs and the much intended focus on achieving business objectives using technology is often lost.

From the technical perspective IT is undergoing fundamental shifts in technology where a variety of technologies are converging on business – some CIOs see them as disruptive. These trends create certain unique challenges for CIOs to identify strategic vendors for the organization. Strategic vendors are those that offer highest quality of service, understand business objectives and goals of customers and offer superior and proactive post-sales support and service.

It has become highly imperative for vendors to understand what exactly CIOs look for in their products and how their products can meet business goals easily without stretching IT budgets.

The role of CIO in any organization is highly challenging and critical because they play the role of bridging IT and business in order to enhance value for both. Therefore, CIOs by asking the right questions to vendors can maximize return on IT investments by implementing the right solutions that ensures business growth and value.

Given below is a set of top 10 questions every CIO should ask vendors in the current business and technology scenario:

  1. How the new system or technology can adapt with increasing tech savvy workforce?
  2. How can the organization capitalize opportunities in this era of data growth (big data)?
  3. Will the technology be able to integrate existing legacy systems and data?
  4. How can new technology adoption drive business growth?
  5. Can the solution handle integration across platforms?
  6. Is employee training included in the implementation cost? Can the vendor support the system for a period of time without any additional cost?
  7. How secured is information or data in the system/application?
  8. What are the recovery options and DR plans and how will data security fit into those plans?
  9. Will the solution ensure performance, availability and uptime?
  10. Where are the references?

CIOs look towards leveraging technology in a cost-effective and secure manner in order to improve productivity and efficiency within the organization. CIOs can use the above questions to evaluate potential vendors and identify strategic IT vendors for business growth and technology innovations.

Decisions a CIO should not make alone

The success of IT in an organization will require commitment from business managers who stand to benefit from technology. Unless business executives take responsibility for IT’s success or failure in achieving business impact, the role of IT will remain elusive. The main responsibility for CIO is to deliver systems and implement IT projects on time within budgets that has high usage potential and can ensure business growth. It is now the responsibility of the CEO or business executives to make organizational changes required to realize business value from IT.

For many years, business executives are often frustrated with IT personnel due to the failure of IT to accurately understand business needs. IT department in organizations is often viewed as more focused on technical management. Organizations, in order to succeed in digital business scenarios must focus their IT on areas where it will create maximum impact. This is possible only when CIO and IT functions work alongside business in customer facing solutions, data and tools that will provide insight and intelligence and technologies that can penetrate new markets and enable new offerings.

In one international survey done by Forrester Research Inc, it was identified that most of the decisions related to purchase and IT capacity sourcing or co-location in data center companies is done by the CEO instead of CIO. This survey involved senior level decision makers from companies of different sizes. In the digital age organizations focus on using technology to enable new capabilities, create revenue, enhance customer satisfaction and so on, hence the CEO ultimately makes the go or no-go decision for IT deployments by weighing on recommendations from the CIO.

IT executives and CIOs are the right people to decide on IT management in terms of technology standards selection. This decision involves building the infrastructure, designing the IT operations for the company and following standards in implementing new systems and applications. In spite of IT’s important role in establishing an enabling environment for business operations, decisions that have an impact on company’s business strategies must not be given to IT department or to a CIO by default.

In the dynamic business environment where decisions are driven by consumers, it has become highly essential for IT to work alongside business to identify opportunities where technology can create value and accelerate business value. In this scenario, decisions need to be made more broadly to foster business growth and not just a normal IT decision made by a CIO. In order for a CIO to generate full value of their IT investments and to avoid IT disasters, given below are some important decision making areas where the CIO should not take leadership responsibility or accountability.

  • IT spending strategy: IT funding is an important aspect where executives often ponder on the question whether IT spending is high or low. One standard approach to determine appropriate IT spending is to follow the industry standards and benchmarks. There are companies where IT spending is quite high but has failed to develop the right IT platform to execute business strategies. In such situations, the management defines the strategic role played by IT and appropriately determines funding levels required to achieve those strategies.
  • Companywide IT Capabilities: CIOs must understand that flexibility in business units becomes limited if their technical and process standardization is above normal limits. Excessive standardization results in frequent exceptions in IT which can increase costs and minimize business synergies. The management or CEO takes the call on deciding whether to have a centralized IT capability or to have IT systems developed by individual businesses.
  • IT investments and funding: IT becomes overwhelmed when many projects are implemented simultaneously. IT can lack focus when many projects that have less companywide value are scheduled to be deployed simultaneously. Therefore, the CEO or senior management will decide on which IT initiative is funded on priority and which is not funded or scheduled for later funding and deployment.
  • IT services strategy: In certain circumstances companies end up paying more costs for service options which are not worth the money spent. For instance, system characteristics such as responsiveness, accessibility and reliability will incur costs. In such situations, the senior management will decide on spending for various IT features and services. For example, improved reliability, response time, etc., forms the basis for costs and benefits.
  • Acceptance level of risks: IT risk management is a tricky area because if security and privacy is overemphasized this can cause inconvenience to suppliers, customers and also employees. Likewise if security is underemphasized this can make data vulnerable. To ensure a secured environment, the CEO decides on the trade-off between convenience and security.
  • Accountability on IT failure: When there is an IT failure the business value of IT is ignored. In order to monitor business metrics, a business executive must be made accountable for every IT project to overcome disruptions while achieving business metrics.

The above decision making areas suggest that CIO does not make decisions alone in the organization on strategic use of IT. Business decision making in organizations is based on their governance approaches, structure, strategy and culture. For example, IT spending decisions are made by a budgeting process which is approved by the senior management. Decisions related to IT architecture and associated standards are made by the CIO in coordination with business executives. A good governance structure will identify a person responsible and accountable for critical IT decisions and apply uniform principles for the role of IT in the organization.

CIO’s Priorities in the Digital Enterprise

The role of CIO in organization is very critical because CIOs play a major role of transforming business to result in enhanced value by the use of technology. CIOs plan technology implementations to drive new business initiatives and generate new revenue streams for maximizing business value. CIOs make use of new technology trends to enhance business and also transform challenges into opportunities. The CIO predictions for 2015 and beyond are provided.

In the current scenario, technology has enabled business companies to become highly distributed. Organizations face a new set of challenges in the current context of globalization and in free markets. The challenges are mostly related to the ability of organizations to capitalize on potential business opportunities, people and resources in distant markets. New sets of challenges arise when operating business in distant markets and they provide a dilemma to both CEO and the CIO. While planning IT systems for business processes, CIOs often face the problem of delivering acceptable IT services using existing resources. CIOs also face challenges in using IT to generate business value. They often come across fundamental questions like, investing more money on infrastructure, using IT to drive new business initiatives and/or consolidate at the expense of user experience and save cost.

In such scenarios, it becomes important to understand the expectations of IT in business. Business expects IT to fulfil certain fundamental requirements such as,

  • Flexibility: Businesses look at IT to support business to respond effectively to opportunities and challenges presented by the market. It must also provide models for business to develop strategies for making use of new opportunities. Many global enterprises make use of IT to achieve value quickly.
  • Simplicity: The increases in technology implementation must not led to more complexity, in fact just adding more storage or bandwidth may not always provide as an acceptable approach for business to compete. To ensure simplicity, CIOs may consider investing in technologies like data protection, virtualization and wireless connectivity, and so on to compete effectively in competitive markets. Simplicity refers to making an assessment on where to cut costs and take business forward.
  • Security: Security refers to the protection of systems and information from threats (viruses, worms, etc), disasters (natural or manmade) and from hackers with malicious intent. IT must ensure that business is able to prevent and recover as quickly as possible from threats.
  • Business continuity: Business expansion across geographical boundaries has increased the need for anywhere, anytime access to IT. Applications must be available at all times (24×7) and therefore, delays or loss of data for any reason can lead to adverse consequences for businesses. IT needs to ensure business continuity by ensuring IT service availability and reliability.

The above are some of the business imperatives for IT. Gartner Research and IDC technology trends suggests that in order to meet business demands through IT, CIOs can leverage on new technology trends that include,

  • Hybrid clouds and cloud architectures
  • Smart machines
  • Web Scale IT
  • 3D Printing
  • The Internet of things (IoT)
  • Mobile applications, mobile diversity and management
  • Big Data analytics

The business imperatives for IT and trends in new technology take us to having a closer look at CIO predictions for 2015 and beyond. IDC in October 2014 hosted a web conference named IDC Futruescape: Worldwide CIO Agenda 2015 Predictions to highlight the predictions for 2015 and beyond. Based on this conference and IDC FutureScape report CIOs and company leaders can capitalize on emerging business opportunities and plan for future growth.

The predictions for CIOs in 2015 as given by IDC include,

  • CIOs will spend maximum time in analytics, cyber security, and creating new streams of revenue through the use of digital services. By 2017, CIOs will be spending 80% of their time in these areas.
  • IT-as-a-service (ITaaS) will be required by organizations to achieve global competitive strategies. IDC predictions indicate 65% third-party ITaaS adoption by enterprise organizations.
  • The top business priority for CEOs of global enterprises is security.
  • CIOs will use DevOps as their primary tool to effectively engage the speed and sprawl of mobile, cloud and open source applications.
  • IDC suggests that by 2016, CIOs will be able to deliver new frameworks that enable innovation and improved decision making in business.
  • Global organizations by 2020 may move the position of CIO to be named as Chief Digital Officer (CDO) for the delivery of IT enabled products and digital services.
  • CIOs in order to counter premature expiry of IT assets may accelerate the existing infrastructure to third party platforms. By 2016, 80% of CIOs are likely to make this step.
  • CIOs in global organizations are in the process of developing a pan-enterprise data and analytics strategy.
  • Third party platform technologies used for vendor relationships are quite likely to fail. This failure will result in CIOs rolling out new sourcing processes.
  • CIOs favour open standards and frameworks instead of traditional mode of technology control.

The IDC study provides top decision imperatives for CIOs in 2015 and beyond. These predictions are based on strategic contexts on how CIOs apply technology to business challenges and transform challenges into opportunities in the enterprise.