Barry Whittle - September 19, 2019

Cloud, Agile, and the New IT Operating Model

In anticipation of this year’s TBM Executive Strategy Forum at TBM Conference 2019 hosted by Apptio, Emerge presents a summary of TBM Executive Strategy Forum 2018.

One hundred executives attended the 2018 event to discuss the new IT operating model of cloud and Agile, and the impact on organization value.

Register for the TBM Executive Strategy Forum 2019

TBM Executive Strategy Forum 2018

Executive Summary

We are in the midst of a comprehensive change to the business model. Technology is no longer about IT; it’s about driving business innovation and growth. IT organizations can – and need – to focus on designing not just products, but teams for the speed of change, and deliver value through agile, adaptable process.

This new operating model embraces more accountability and increased complexity. By 2019, technology spend by business units will exceed that of corporate IT and most new solutions will either exist in the cloud or be “cloud-aware” and ready for migration. The cloud value proposition of speed and innovation resonates in Agile software development too. The waterfall approach of long project cycles isn’t conducive with the new IT operating model. Business partners value speed to market and Agile delivers the velocity they need.

Because of all this, the new IT operating model means cloud and Agile are a necessity. More than 120 IT and finance leaders came together to discuss what this future looks like and how to find solutions to manage this increasing complexity in the IT organization at the TBM Council’s Executive Strategy Forum.

Every company is a technology-fueled company. Technology helps businesses drive competitive differentiation, innovation, and revenue growth through digital transformation. And in today’s age of constant change, we are in the next phase of a new IT operating model, focused on bringing the best and quickest value to the customer. To differentiate, CIOs need to emphasize new (agile and user/usage centric) approaches to development and delivery or risk losing the customer relationship.

To move beyond IT to drive departmental change and operational productivity, CIOs need to build a strong partnership with the business and create a comprehensive strategy for tools and data. The most successful CIOs won’t stop there. If IT is truly to drive a differentiating business strategy that focuses on growth, IT leadership needs to focus on investing in technologies and teams that can provide quicker time to value in the development lifecycle and measure success based on the end-user satisfaction and speed of innovation. The only way to do this is to design not just your products, but your teams for the speed of change, and deliver value through agile, adaptable process.

Forrester Research has found that companies must:

  • Use customer insights to gain a competitive advantage
  • Drive revenue with CX
  • Differentiate with digital
  • Accelerate growth with marketing innovation
  • Transform IT to win, serve, and retain customers
  • Secure customers to protect the brand

However, cloud migration and agile innovation top the list of priorities for CIOs application modernization agendas, according to Forrester. Success with the new IT operating model depends on holding users accountable for their use of cloud and embracing the complexity of multi-cloud management, informed migration decisions, and on-going evaluation and adoption of innovation.

Agile development accelerates delivery and time to value of IT products. Agile is more than just a software development approach; it’s a cultural and technical revolution to organizations all over the world. Agile represents a massive shift from a project-focus of time, scope and budget, to a product-focus that is collaborative, ongoing and iterative.
The 120 executives attended the 2018 TBM Council Executive Strategy Forum and discussed Agile and clouds impact on the modern IT organization.

Here are the highlights.

Enabling Agile Transformation

Living the culture

During the Executive Strategy Forum, we found that 53% of our attendees said that less than 30% of their projects are Agile. This is a key indicator that the biggest brake on Agile adoption is finding the right people because Agile is not only an opportunity for the business, but it is a cultural change agent with ripples throughout an organization. An obsessive customer-focus and integrative improvements in product are values embedded in Agile, and if an organization’s culture is antithetical to those values then Agile will be unsuccessful. To change this culture, infrastructure teams need more orientation to the goals of Agile and assistance in executing it. For example, some organizations will identify the skill shortage within their teams and bring in “Agile” coaches (first at contractors and then FTE’s) to support Agile adoption and success.

Utilizing “Water-Gile”

Organizations have different reasons for adopting Agile. In the Executive Strategy Forum, we found that 89% of respondents said reducing time to market is one of the primary reasons they adopted Agile. With waterfall, there is no guarantee that the issue you want to resolve at the start of a project is either a priority or concern at the end of the project. Every organization wants to project the best image possible to their customers. A faster time to market tells business partners that IT is delivering on a need and that shadow IT fades away when IT steps up and delivers fast innovation. With “water-gile,” an organization can reduce the risk with large ERP by being able to start with a larger project to gain that initial value and then iterate. Organizations seek agility and agility means responding to the unseen and prioritizing work based on changing priorities.

Agile Adoption Barriers

A successful Agile adoption depends on the credibility of product owners to both IT and the business, but it’s a difficult role to fill, and there is a shortage of talent. Our Executive Strategy Forum found that the biggest barrier for Agile adoption is alignment throughout the business—Agile requires retooling a new skill set for developers which takes time, energy, and funding. A dedicated team does not inherently deliver the benefits of Agile any more than simply having a work schedule of two-week sprints. The benefits of Agile flow from soliciting and integrating customer input in product on an incremental and on-going basis

IT Carries the Cost. Business Reaps the Benefits

Time to market must be a blended metric that includes quality and market-fit criteria. When the velocity of shipping product is the measure of success, organizations deliver a lot of releases with a low-quality bar. A maniacal focus on time to market blinds you to whether you are delivering the right product—a customer is just as disappointed by a poor-quality product delivered fast as a poor product delivered fast.

The burden for quality falls to the development teams, and market fit falls to the business. The cost of a quality bar is carried by IT, but adoption and usage are driven by the business. For those in IT, this often feels a poor tradeoff of risk-for-reward.

Maximizing the Value of a Hybrid Cloud Mindset

Incremental cloud adoption

The Executive Strategy Forum participants reported that public cloud delivered 71% of their cloud services. Organizations are motivated to get out of provisioning and supporting their infrastructure when tech ops is not core to their business. Inflection points to make these choices (offers to sell a datacenter, an expiring co-lo lease) are forcing functions for migration. Decommissioning fully-depreciated on-premises solutions to spin up new cloud solutions doesn’t sound like good corporate citizenry to anyone outside of IT.

Cloud adoption happens at the speed of the business (and velocity is maintained) when legal teams are satisfied with cloud security. Hybrid cloud is seen as an intermediary step to broader public cloud adoption. Vendor lock-in isn’t a concern when the cloud footprint is small, but it becomes an issue when workloads are better suited to certain vendors. A multi-cloud strategy is a hedge to protect against vendor lock-in.

Two-in-a-box cloud leadership

Public cloud adoption decisions are largely driven by IT and the business. In the Executive Strategy Forum, we found that 56% of respondents develop their cloud strategy with IT and business units working together. The benefits of public cloud are shared between the two groups, and so is the strategy. Goals for cloud adoption are informally captured in a cloud strategy but not always in a formal decision framework. A cloud strategy is often built from the experience of rolling out multiple cloud pilots and codifying best practice in a formal decision framework. Lines of business (LOB) bought in on the value of cloud are advocates for change. If those LOBs feel they are in a “go-slow” dance with corporate IT they spin up their own shadow IT.

Agility is its own reward

Corporate IT delivers for the business when it has financial and operational agility. Cloud is the vehicle to deliver this. Our Executive Strategy Forum found that 61% of respondents regard agility as the greatest benefit of using public cloud. A common scenario is to handle normal demand in-house but leverage the cloud for demand spikes. This requires accurate predictions of demand spikes and selecting the correct billing type (e.g., on-demand vs. reserved instances) for cost optimization. Retirement of existing solutions too expensive to re-architect in the cloud is a forcing function for application rationalization, and the availability of IaaS/PaaS forces a re-assessment of existing on-premises solutions. Cut ties with your hardware vendors to simplify vendor relationships and asset management.

TBM Executive Strategy Forum 2019

An exclusive, invitation-only event designed for collaboration among business-minded IT and finance leaders.

This year, we are joining forces with the National Association of Corporate Directors (NACD), to provide attendees with unique insight and tactics to navigate complex boardroom challenges.

In keeping with executive needs, the forum agenda includes case studies from the boardroom, conversations around CxO dynamics and idea exchanges with your peers and the members from NACD.

Enjoy rich networking opportunities, a welcome lunch, and an exclusive VIP cocktail hour.

Add your voice to this gathering of 100+ leaders aimed at translating strategy into action.

Register for the TBM Executive Strategy Forum 2019

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