The cloud revolution and its impact on the IT organization

Blog: Capgemini CTO Blog

In today’s world in which digital is omnipresent, no company, old or new, of any size, can ignore the significant impact of the cloud on its production processes, its structure or even its economic model.

But how and to what extent does this impact the IT organization?

The cloud transforms everything it touches in Services

Consumption modes are changing. XaaS (Everything-as-a-service) is everywhere and is becoming a strategic imperative for any company as a new way to address customers and as a driver for its own IT needs. With the cloud, everything becomes service and that impacts our daily life. What would the iPhone be without iCloud or iTunes? Thanks to the cloud, printers will soon be sold as a print service. Mobility services like Autolib, or even the autonomous connected car, will soon be part and parcel of the automotive sector. Not even software escapes the rule with SaaS (Software-as-a-Service), which allows companies to subscribe to software remotely instead of acquiring it and having to install it on their own IT infrastructure. Payment is then made based on consumption, constituting an in-depth revision of the economic model as adoption grows daily.

Together with DevOps, the Cloud has changed the game within the IT organization

In an increasingly competitive market, it is necessary to speed up production processes, improve quality, control or reduce costs, and free-up the energy and resources to create, innovate, and, especially, bring added value to the company so that it can stay ahead of the competition. To meet all these needs, one revolution after another is taking place at the heart of IT departments.

DevOps, the beginning

Despite the fact that the agile lifecycle has been widely adopted to reduce Time to Market, there is no point in being fast if the lifecycle can’t go into continuous production due to the permanent internal drama being played out between Development and Operations teams whose objectives are not always aligned. The answer came from DevOps, and although it brought immense value, it remained hampered by cumbersome physical infrastructure management.

The arrival of the Cloud

And then DevOps’ great catalyst—the Cloud—came into play, empowering it with the ideal receptacle for its methods and tools: immensely powerful, robust, and providing such a high level of abstraction of managed objects that we are now witnessing the disappearance of the founding elements of IT: servers, and more generally, infrastructure.

This disappearance isn’t happening all at once but rather in stages: first the servers were virtualized, and we gained agility and speed but without any real change in allocation processes. Then, the virtual servers were outsourced and rented, creating the transition from Capex to Opex, but still with no change in processes.

DevOps has thus played its part by authorizing the management of machine resources via code. This is called Infrastructure as a code and involves managing the policy of allocating infrastructure resources according to needs via code. To do this, we intensively use the capabilities of free software such as Chef and Puppet, considerably simplifying and industrializing processes.

Finally, GAFAM (Google, Amazon, Facebook, Alibaba, and Microsoft), the gigantic suppliers of major global clouds, now propose replacing infrastructure with the concept of the service quality of a cloud, which directly absorbs the application code and automatically regulates its power based on demand.

We’re talking about NoOps here.

NoOps or the beginning of the end of DevOps and the appearance of BizIT

Bringing business and IT teams closer together, along with the gradual disappearance of operations processes as we know them today, is paving the way towards new engineering models that could be called BizIT instead of DevOps.

We often see these models being used by our most visionary clients. Numerous structural impacts should be considered before this shift which is unavoidable in the medium term.

Human Resources impact

This implies an upgrade of competencies required for the IT organization efficiency, the creation of new roles, and the conversion or end of others within the organization:

Integration architects must now manage the complexity and dynamism of cloud offerings as well as the integration and migration of the existing legacy. Their challenge is therefore to master the existing applications and to get ever closer to the business teams in order to define the right solution for core business applications.
Experts in the fundamentals of IT such as security, information flow, and new features such as Cloud service catalogue specialists (and the costs associated with them) are cross sectional players working for the architects.
Developers must integrate core business applications in customized or specific packages in agile mode with cloud deployment and learn to work more closely with business teams.
Let’s not forget the business teams that use a lot of the corporate applications, mainly subscribed from SaaS providers.

Impact on Operating Models and Sourcing

On the basis of this new IT department positioning, new operating models are emerging. We are setting up for our most visionary customers something we call Transformation Service Centers (TSC), which are positioned as organizational crucibles of this transformation and which facilitate a smooth transition to the target organization while ensuring service continuity.

The objective is simple—orchestrate and secure a multi-year transformation that is backed by the principle of clear accountability with respect to the projects being realized throughout the whole organization.

Sourcing is then accordingly reimagined to fit what is most often a hybrid environment (on premise/public/private), involving the entire IT value chain, from cloud providers to business teams and third-party maintenance vendors.

Toward an IT department that guarantees the performance of the company’s business processes?

Closer IT–business ties create a new role for the IT department. It consists in becoming the guarantor of business processes performance and owning and managing the applications supporting them.

To play this new part, the CIO must implement a business process-oriented portfolio management system. This means mapping business processes and applications in order to analyze them through a business processes perspective.

In effect, implemented application characteristics tell us a lot about maturity levels of a company’s processes. For example:

Is it acceptable to have over 30 applications serving the HR domain in the automotive sector when others have only 10?
Is it acceptable not to have applications leveraging social media on recruitment when we know how important internet sourcing is these days in the hiring process?

Implemented solutions reflect the performance of business processes. Moreover, adding an economic dimension gives more weight to any analysis and enables taking better informed decisions based on factual and quantitative elements and considerably mitigates risks associated with transformation.

When such a referential is built and equipped with the right tools, it constitutes a tool in dialogs and governances with business teams.

As a conclusion, the cloud is drastically impacting the status quo of organizations

CIOs can’t ignore this phenomenon and should accompany this shift in a proactive way. The move to the cloud is about to become their top priority as the cloud becomes a prerequisite to the digitalization of the company—and with good cause, since it also constitutes its foundation.

But moving from decision to action is particularly difficult as industrialization of IT processes is low. To move forward, CIOs must take back control of the IT portfolio, acquire the right decision-supporting tools, master business processes implementation and choose a relevant long-term transformation partner.

In most cases, the decision to move to the cloud is taken at the upper echelons of an organization. Cloud providers such as Amazon, Google, Microsoft, or Alibaba have integrated this well into their commercial approach. The cloud brings the promise of agility and creates the right conditions for a new dialogue between business and IT for a stronger relationship determined by the performance of the organization.