A new era in cloud
requires a new approach
Companies use cloud for innovation, and it works well. The advent of cloud-based AI solutions, which demand greater compute power and data capabilities, will turbo-charge the need for and growth of cloud. As cloud usage expands and accelerates, companies must act to govern and retain control.
What was a single, neat solution a decade ago has matured into a complex, robust portfolio of capabilities. Today, the questions What is cloud for? How to pay for cloud? How to keep cloud secure? and Who owns cloud? all have multiple answers. The answer varies from enterprise to enterprise.
But the new cloud approach must come with clarity on cost and governance, center on business value supported by deep technical skills, and involve a diverse decision-making team aligned around customer needs and responsible, secure processes.
Cloud and its adoption has reached a tipping point — just like legacy systems, with time cloud starts to become unwieldy and costly. Cloud has transformed from a tech imperative to a business imperative. Companies risk losing the benefits of this new era of cloud unless they take a new approach to how they manage it.
The following three steps guide enterprises to better manage cloud costs, security, and governance:
Master monitoring and prediction
Embed the business case into cloud
Adopt a value-centric cloud operating model
Business plans change, customer desires shift, and value sources evolve. With change comes the opportunity to reevaluate cloud goals and strategies — and the challenge of not adding new cloud costs and more complicated governance.
Cloud cost management and compliance are two significant cloud challenges for enterprises, especially without clear guardrails for who can purchase, deploy, and secure cloud.
Companies should be able to easily answer the following questions: What is the business case for purchasing more cloud? Who will be using cloud? Who is responsible for deciding to purchase it? And who will pay for it?
These answers are crucial to optimize cloud decisions. Answers to these questions empower organizations for future cloud contract negotiations. Historically, companies have more leverage in their first negotiation, but incumbent providers hold the cards in renegotiations.
Even companies with informed, optimized cloud cannot guarantee cost control and effective cloud management. Technology experts and business leaders should collaborate to keep everyone on the same page and predict future costs.
“These are not controversial concepts, but it’s hard to change habits,” says Infosys Consulting's Rakhi Gupta. “Structuring your cloud strategy needs to be extremely dynamic because cloud providers constantly change their models, and business needs rapidly evolve.”
As companies continue to add technologies such as generative AI, internet of things (IoT), and data analytics, cloud environments will continue to become larger, more complex, and more expensive. To master monitoring and prediction, companies should establish guardrails for governance and costs.
Cloud started out as a tool to save money and boost efficiency. But now this technology supports growth and transformation initiatives, and many companies still have not changed their cloud governance to thrive in this new cloud era.
Currently, too few enterprises link cloud deployments to a business case. Only 21% of our survey respondents said they always have an approved business case for adding cloud, and just 24% said they always link cloud deployments to the relevant business unit.
Figure 12. Too often, companies add cloud without a business case
Source: Infosys Knowledge Institute
These are vital steps. Without a business case or business owner, tracking and attributing the return on investment of a cloud initiative is challenging, if not impossible.
And in a growth mode, the stakes are higher, because growth investments carry more risk than those predicated on cost savings.
But cloud must remain fast and flexible — those are its key attributes. So, the answer is not to slow down growth by hampering governance. There is no call for long forms to be filled and slide decks to be created for each cloud decision. Instead, forge a more transparent, agile collaborative relationship between IT and business units. Both sides should share the responsibility to identify, track, and report the value delivered by cloud deployments, says Carlos "Caloi" Santos, chief information officer at JG Summit Holdings.14
“Make sure the move to the cloud is aligned with business strategy and understand cost will be a factor because it’s a huge investment. Present the cloud proposal to the board as a collective effort between three C-level executives — the CIO, CFO, and CPO — endorsing it together. Moving to the cloud is not just an IT project.”
Agile collaboration between business and IT is critical for rapid and responsible cloud investment in an era of cloud growth. But this does not happen when communication and connectivity between teams is ad hoc. An updated operating model will enable teams to track value flow, create alignment, and encourage engagement around measurable goals.
“You must change the way you work to maximize the value you can get from cloud. To do that you have to ask questions: Who are the users? Do the products offered across the stack serve their needs? How do you organize dev and ops into one team focused on value? How often do you update products? And how often do you ask whether your cloud users like what they are using?”, says Satsang Randhelia, associate partner, Infosys Consulting.
Companies increasingly realize the need to adopt a product-centric or value-centric, operating model.
Figure 13. Six guiding principles of a cloud product-centric operating model
N = 2,523. While respondents reported high overall effectiveness, when we control for individual biases from the respondents, we find there are some areas where companies feel they are less effective than others.
This model is product-centric in how teams organize — but it’s less about products and more about the value delivered to the end user. This model is set up by organizing cloud teams around these customer journeys, client experiences, or value streams.
Successful organizations implement a value-centric cloud operating model, which consists of six differentiating principles:
Value-based delivery: Develop cloud products and services for business value through revenue improvement, cost reduction, scalability, and customer satisfaction.
Customer-centric outlook: Adopt a customer-first mindset that understands and addresses customer needs; use customer feedback and data to drive product development and adoption.
Diverse ways of working: Leverage Agile and DevOps methodologies to foster collaboration, and develop training to ensure the skills to deliver are in place.
Strategy alignment: Establish a clear vision, objectives, and direction for each product and connect the product strategy to the overall business strategy.
Engineering mindset: Evaluate every aspect of cloud services, products, and delivery for automation to minimize cognitive workloads.
Innovation: Leverage cloud to innovate and develop differentiated customer solutions, stay ahead of industry trends, and respond to market demands.
A value-centric cloud operating model, infused with these six principles, empowers enterprise cloud organizations to act as internal hyperscalers that provide innovation and value to end users.
