Is there a right way to design a Cloud Operating Model?

How do I effectively change the operating model of a Technology Function to support successful transition to the Cloud?

Far too often, this is a question many enterprises fail to ask.

CIO’s and CTO’s mostly begin by talking about cloud technologies, benefits, cloud providers and their strengths, approach: private, public cloud or a hybrid approach, and at best discussions about how to technically implement cloud solutions. However, they leave out important questions such as: “how would cloud change the way I operate?” and “how can I best position my organisation to achieve the benefits of cloud adoption?” which are foundational in determining successful cloud adoption.

Establishing the right cloud operating model for your enterprise is critical to the successful adoption of cloud technology, and harnessing its benefits. This is because moving to the cloud is not just an IT or technology decision, but a strategic one which impacts how your organisation operates. As Mckinsey puts it, there’s a $1 trillion value to be gained by successfully transitioning to the cloud (depicted in image 1 below). Therefore, cloud adoption is no longer an IT or Technology decision but a strategic decision which could become a source of competitive advantage for your enterprise.

If Cloud adoption is important, why do so many enterprises miss the opportunity?

1. Lack of an appropriate cloud operating model

2. Divergence on what good looks like for successful cloud adoption

3. Major dependency on manual intervention for key activities

4. Lack of clear ownership structure including roles, responsibilities and scope

5. Undefined and/or misaligned metrics and key result areas

6. Too much focus on engineering and little focus on operations

The best way to solve these problems is by defining an appropriate Cloud Operating Model. However, what does that look like?

It may seem like a straight forward answer but it isn’t as even the top 3 Cloud Infrastructure and Platform Services according to Gartner’s Magic Quadrant (as shown in image 2 below) differ on what a cloud operating model should look like.

Amazon web services (AWS) hinges on the design of an appropriate operating model for the cloud on the Product mindset. The model proposes a move away from traditional pillars of an operating model: People, Process, and Technology to a product based approach which ensures greater customer benefits and experiences as depicted below in image 3.

Enabling the product centric approach means moving away from a systems and technology focused alignment into collections of products, services and technologies that are grouped together into a product/platform.

On the other hand, Microsoft opines that operating model should be built on their the Cloud Adoption Framework and Azure landing zones shown in image 4 below which breaks down each aspect of the operating model into methodologies. Azure landing zones provide deployment guidance and reference implementations to act on operating model decisions in the form of environmental configuration. Furthermore, they propose that your cloud environment should represent how you want to operate. “As you define your operating model, environmental readiness should match your operations, governance, security, and organizational requirements”.

However, they are quick to also highlight that organisations adopt different operating models depending on their Strategic priorities and motivations, and scope of the portfolio to be managed.

Google adopts the traditional lens of operating models that align with People, Process and Technology as workstreams/epics required to define your journey to successful cloud adoption depicted in image 5 below. The framework which enables organisations move from tactical, strategic to Transformational maturity — where data and insights derived from the collection and analysis of new data sources (i.e. sentiment, image, voice), and the application of predictive and prescriptive analytics (i.e. machine learning) becomes the engine for innovation. your business transformation.

To add more complexity to the divergent views from the top 3 Cloud Infrastructure and Platform Services leaders, Mckinsey the global consulting firm in their recent article: “Building a cloud-ready operating model for agility and resiliency” opines that a cloud ready operating model requires 4 key components: DevOps/site reliability engineering, Productized infrastructure, Outcome driven governance and Engineering-centric capabilities as shown in image 6.

What becomes clear from the best practices above is that designing a cloud operating model to harness its full benefit and value is complex. All companies seem to have a view on the right approach to accelerating cloud adoption, but even in their divergence they all agree on the following:

1. Start with the end in mind: Define a clear strategy

2. Plan and start small: Have a clear plan on how cloud would change your organisation and an agile squad working to deliver clear outcomes.

3. Talent is key: Your organisation is only as good as your people (i.e. Engineering, Change management and Product teams)

4. Build the right capabilities and governance structure

5. Adopt a culture of Experimenting, Failing fast, Iterating and Scaling quickly