Use Scenario Thinking to Guide Cloud Innovation

Different parts of the organization often have competing priorities for cloud innovation programs. By using scenario thinking, CIOs and other company leaders can better align business goals with technical requirements and gain economies of scale across these efforts.  Cloud technology can help modernize the business core, power computing infrastructures, drive data strategies, and enable transformation and innovation across sectors and industries.

Source: Use Scenario Thinking to Guide Cloud Innovation

Frequently, however, competing priorities within the organization can make directing cloud investments a challenge. CEOs, CMOs, chief data officers, and other business leaders may all have their own plans for innovating with cloud resources, leaving CIOs in the unenviable position of having to coordinate numerous divergent needs, varied expectations, and budgeting conversations.

What’s an IT leader to do? By taking an approach that considers business, technical, and financial priorities together, CIOs can help their organizations gain greater mileage from their cloud investments.

Business factors. On the business side, there are four major innovation areas where market forces and desired outcomes are driving businesses to the cloud:

• IT operations. With the pandemic as a fresh illustration of the need to be prepared for business disruption, many organizations are doubling down on cloud technologies to support business continuity, remote workforce management, proactive cybersecurity, and proactive governance.
• Data strategy. To harness actionable data intelligence, organizations can use cloud to enable data consolidation, analytics, intelligence through machine learning (ML), and insight at the intelligent edge.
• Customer experience management. Cloud technology can enable frictionless, agile experience management; omnichannel customer experience management; and personalized and virtual experiences, tapping technologies such as augmented reality.
• Distributed ecosystems. While platform and ecosystem models have been around for decades, the continued rise of disruptive and next-generation technologies has pushed organizations to take a closer look at whether these strategies are ripe for innovation, such as through enterprise platforms, connected digital supply chains, digital ecosystems, and networks of ecosystems.

These business drivers and outcomes can provide a useful starting point for thinking through the corresponding technology priorities across a continuum of subfactors for each.

Technical considerations. Cloud innovation programs can vary enormously in the solutions they require. Four technical factors are particularly relevant:

• The operating model. Most operating models for cloud are centralized. This may be appropriate for product strategies but could pose a challenge for programs that cut across teams, business units, industries, and geographies. In those cases, more distributed operating models—such as a committee or center of excellence—might work better.
• Adoption of standards. Standards can be technical (e.g., security), data-driven, or industry-specific. Some organizations prefer open-source software; others follow specific cloud or technical standards. It’s important to consider when standard tools might speed development, when they may constrain future options, and what the trade-offs are.
• Legacy constraints. Organizations vary in the ease with which they can modernize their technology infrastructure. Some take a regression approach, which retrofits new technologies into old contexts; others try to make incremental change to improve the solution over time. Cloud strategies, however, tend to thrive with evolutionary (migrating and modernizing solutions) or agile (developing iteratively) approaches.
• Execution strategy. There are many options for implementing cloud technology: ubiquitous clouds, with flexible computing anytime and anywhere; multiple-cloud solutions; hybrid clouds; and cloud captive approaches, where the organization is locked into a cloud-only strategy.

Financial implications. In some cases, there may be opportunities to leverage technical choices that can be shared across an array of different business scenarios; conversely, some cloud innovation programs may require separate infrastructure considerations, configuration, and budgeting. It’s important to assess each cloud innovation program for its unique economic implications and perform a corresponding cost-benefit analysis, with a focus on cost reduction and value. This can serve as a guide to decision-making for potential economies of scale.

Four Cloud Innovation Scenarios

Cloud innovation can support a multitude of different business strategies and scenarios, but how can organizations achieve those possibilities? This is where scenario thinking can help compare and reconcile competing priorities, break silos, and drive collaboration. Plotting the two more operational business drivers on the x-axis (i.e., the organization’s propensity to prioritize internal operations or external customer experience management) against data maturity on the y-axis produces four C-suite cloud innovation scenario types: reactive responders, experience innovators, proactive data defenders, and AI-fueled entrepreneurs.

These scenarios are not necessarily mutually exclusive. And while each could potentially be achieved to some extent given enough time, budget, and resources, the organization will need to decide what is most important, what is feasible to tackle first in a three- to five-year road map, and what trade-offs it’s making in the process. For example, reactive responders and AI-fueled entrepreneurs can both benefit from being standards-aligned, but proactive data defenders may configure their cloud solutions making only limited use of standards. Knowing this can help create economies of scale and more finely tune cloud innovation strategies. That said, it will likely require the CIO to work across the C-suite to understand, and perhaps reconcile, business drivers and outcomes with technical considerations.

Drilling Down: Experience Innovators

For illustration, let’s consider the example of experience innovators in more detail. These organizations consider customer experience their top priority, directing cloud resources more externally and focusing their data and computing needs on customer-centric goals. Key stakeholders may include the CMO, the chief customer experience officer, and the chief product officer.

Several variations can exist for this scenario. Let’s say the organization decides that proactive cybersecurity is the priority business outcome. Depending on what data is available across what types of devices, the data strategy can also vary. To push the customer experience to the edge of what’s possible, the organization may focus on the intelligent edge and personalized virtual experiences. We’ll assume an enterprise platform strategy. With this scenario in hand, the CIO can track the corresponding technical requirements.

A mature data strategy can push what’s possible in terms of customer understanding, but having data spread out with a hybrid cloud strategy may create data silos, potentially making it a challenge to gain a single view of the customer. Certain cloud services can create greater consistency across the hybrid infrastructure so that no matter where the data is stored, customers still have a consistent experience. Further, with applications now able to access data in a more consistent way, the next frontier is expected to be about managing data flows across devices (mobile, wearables, internet of things, edge, etc.) with equal consistency to power experiences and insights.

Of course, this is just one scenario. If organizations can think through the business and technical factors for multiple scenarios simultaneously, they can start to see overlapping outcomes and technical requirements to gain economies of scale related to their investments.

A detailed discussion of all four scenarios can be found here.

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As organizations lay out their innovation plans for the next five to 10 years, the cloud will likely become the context within which innovation programs are evaluated and decisions are made across the C-suite. In pursuing their cloud innovation programs, companies can use these drivers and scenarios to help navigate the technical and financial constraints and accompanying trade-offs. There is no single approach to successful cloud innovation, but with the right strategy, the journey is likely to create real value for the company and its bottom line.

—by Lars Cromley, technology fellow, Deloitte Consulting LLP; Diana Kearns-Manolatos, senior manager, Deloitte Center for Integrated Research, Deloitte Services LP; David Linthicum, chief cloud strategy officer, Deloitte Consulting LLP; and Mike Bechtel, chief futurist and managing director, Deloitte Consulting LLP[wsj-responsive-related-content id=”0″]

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