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Professor in the Cloud

How cloud computing dictates CIOs’ strategic futures

 

Chris Middleton talks to Professor Leslie Willcocks of the London School of Economics about how the rise of cloud services puts the CIO centre stage of strategic business thinking.

TECHNOLOGY SHORTProfessor Leslie Willcocks – urbane, silver-haired, forthright – is Professor of Technology, Work and Globalisation at the London School of Economics (LSE), where he heads the Outsourcing Unit. His focus is on exploring the strategic impacts of emerging technologies. As suppliers bring new technologies to market, Willcocks examines how decision-makers introduce them into their organisations and business processes.

Managing the client/supplier relationship can be a major pain point for CIOs when IT transformation programmes are outsourced. Indeed, Willcocks has found that outsourced programmes are unsuccessful in up to 40 per cent of cases.

Professor Leslie Willcocks

Professor Leslie Willcocks of the LSE.

The reason for this high failure rate is often buy-side strategists’ neglect of the retained organisation’s role in making the client/supplier relationship work, says Willcocks.

So how can C-level executives be better placed in future to exploit the digitally enabled enterprise?

As IT outsourcing (ITO) and business process outsourcing (BPO) – the external supply of functions such as HR, talent management and accounting – move inexorably towards cloud platforms and on-demand applications, the CIO’s strategic role moves sharply into focus, as does technology leadership in general.

In this new environment, buyers have to move away from decades-old talk about client/server architectures to an environment that’s really about a client/service business relationship, explains Willcocks. The CIO needs to guide that transformation. “You can’t just throw stuff into the cloud,” he says.

Journey to the cloud

In his new book, Moving to the Cloud Corporation – co-authored by fellow LSE academics, Will Venters and Edgar Whitley – Willcocks clearly outlines the strategic challenges posed by cloud services to C-level executives – especially those that have a dyed-in-the-wool IT maintenance focus.

“Since the 1980s, new technology concepts have followed a certain pattern,” he says. “First there’s hype, then there’s capability – but often in the form of technical solutions to problems that don’t exist yet. We always say: Go for the strategic application.”

A frustration within many businesses, says Willcocks, is the IT function’s focus on ‘keeping the lights on’ (being a low-level support function) instead of supporting strategic business aims.

But now that the broad trend in enterprise IT is away from the maintenance of on-premise systems and towards a culture of shared business services, the role of buy-side IT decision-makers is changing completely, in parallel with the supply market.

Moving to the Cloud Corporation

Willcocks’ 2014 book.

As one vendor executive says in the book: “With cloud, you do not have all the buffers between you and the customer that correct problems… you have a direct link with the customer. In the past, we have just thrown 170 DVDs over the fence and said, ‘Okay, it’s yours now, good luck.’”

In other words, the quality of suppliers’ service (as opposed to services) is becoming the key differentiator for buyers; a good service experience is as important as a good product. However, Willcocks says that few cloud companies have focused on this to date. That’s one of the challenges now facing buyers.

The CIO’s challenge

In a service-led culture, IT strategists need to be more business focused as the board will be relying on them to make cloud services support their business aims. But that process won’t be quick or simple, warns Willcocks, because suppliers are failing to focus on service quality.

“The critical mass of buyers is still not sure what the sell side is doing. Meanwhile, they’re still attending to the ‘big beast’ [legacy systems] they have in house. And that’s not to mention all the existing deals they have with suppliers.”

While a rapid uptake of cloud platforms may have already happened among consumers, and while cloud may be “the great equaliser for SMEs”, according to Willcocks, it’s a different story in large organisations.  As a result, the journey to becoming a ‘cloud corporation’ will take place over a 10-year timescale, not overnight.

“There needs to be hard case-study examples of innovation and payback, a capacity to absorb new knowledge, and a receptive business audience,” says Willcocks.

“Meanwhile, the innovations themselves need to demonstrate compatibility, low complexity, observable results, and a capacity for reinvention. Both client organisations and the industry need to be properly ready for the innovation before they can implement it.”

A new supply sector

This slow march towards cloud services will eventually lead to a stratification of the supply industry, with commodity processing, storage and communications at the bottom of the ‘stack’, supporting what Willcocks calls “cloud power stations”. Above this will be a layer of vertical and horizontal business services accessed through commodity networking and hardware.

But far from sounding the death knell for IT outsourcing, cloud services will have the opposite effect, claims Willcocks: the emergence of a more diverse and dynamic provider community.

This will comprise a small group of bulk utility/platform providers, a large group of specialist industry/sector providers, and a smaller group of consultancies and integrators with deep technology and business skills.

Even those CIOs that don’t go willingly or voluntarily into this future will find themselves being pushed there by other forces, says Willcocks. “There are always business imperatives, such as cutting your IT costs by 25 per cent, or ‘We’ve got to do something innovative’,” he says, “so they’ll get pushed into adopting cloud eventually. The question is: Is it going to be ‘cloud first’ in the [on premise] replacement strategy? The answer must be yes, in my view.

“Then the question is: How do you make the transition? The big issue is the retained capability. It’s not a case of just throwing it into the sky. You still need a retained capability and a retained IT function. Until you have that capability you can’t move strategically, only incrementally.”

Future impacts

And it’s not just today’s business functions that are at the core of this slow transition to a service-driven world, but also tomorrow’s, warns Willcocks. This is why learning to think more strategically about the business is so important for IT leaders.

A broad range of emerging technologies, from big data analytics to workforce automation and virtual employees (via software robotics), are already in development, with organisations able to access instances of a virtual employee that can carry out routine business-support functions 24 hours a day. TS

The Strategist says

Being cloud-ready and business focused today will enable large organisations to capitalise on emerging technologies tomorrow, including automation, big data analytics, and software robotics – developments that startups and SMEs will be able to deploy much more quickly. The CIO will be central to that process throughout this decade and beyond. As a result, IT leaders must develop a strategic business focus, and be less concerned with defending the territory of their legacy systems.
Chris Middleton is founder and editor of Strategist magazine. He is also a consulting editor of Computing, former editor of that magazine, and also of CBR and Professional Outsourcing.

 

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