The following blog comes from an interview with Perficient’s Strategic Advisors Consulting Director, Victor Wolters, and is part of a series on cloud trends with experts from within Perficient.
Undergoing a digital transformation is going to drastically change the technology that businesses utilize. That’s not a secret to businesses. Some don’t realize that this transformation is going to change much more than technology, though.
While the transformation has a significant impact on the IT organization, the disruption it brings affects everyone in the company. Cloud technology is one of the primary items that is driving digital transformation across all industries. Embracing the cloud during this transformation changes everyone’s job.
This means that the adoption of cloud-driven technology changes the way in which a business functions. Businesses must prepare for this impact and ensure the entire organization, top to bottom, is ready for change.
What causes the disruption?
Companies that are born in the cloud are able to leverage modern technology from day one. These businesses don’t have to deal with the large legacy systems and processes that older companies often have in place. This often leads to a rapid market share decrease for current companies. New companies can gain market share rapidly with the use of cloud technology, which often allows them to deliver a new offering faster, at a lower price, and with a better customer experience.
Businesses largely understand this shift and have acknowledged the need to embrace cloud. This acceptance allows them to develop apps and improve front-end and back-end functions at the speed that only cloud provides.
Consumers, somewhat unknowingly, demand this change. These consumers have higher expectations than ever and now demand an enhanced level of customer experience. Customers expect companies to have actionable information immediately, even if the customer does not completely understand what makes that possible.
Another driving force for disruption is the increase of cloud-based solutions that provide more comprehensive solutions than current options at a lower overall cost factor. Specifically, there has been a boom in software-as-a-service (SaaS) offerings. These SaaS offerings meet very specific needs and often allow almost unlimited scalability. Many business units hear about these products and see them as necessary, bypassing their IT unit to purchase them. This often leads to a situation where the business unit is asking the IT organization to integrate and secure the SaaS offering after they have already contracted the solution. This causes a ripple effect for the IT organization with reprioritization of current work and more disruption.
Although these changes are of different scale, they all cause a disruption that a business must manage.
How IT has to respond
The IT organization can no longer have siloes of functionality. Everyone within the IT organization has to work as part of multi-functional team across the company. This multi-functional team will include members from sales, marketing, business product/service owners, finance, and all the IT functional groups. The delivery of the products and services to the customer must be the single focus of that work.
DevSecOps teams are a good example of a multi-functional team. Here, business product owners and application development, architecture, security, infrastructure, and operations teams combine and collaborate to deliver business products and services in a rapid fashion. They must work much like the cloud providers that have triggered these changes with rapid responses and solutions. Current on-premises infrastructure management must adopt cloud technology or hybrid architecture for teams to fully utilize this automation strategy.
IT organizations are being forced to consider alternative ways to deliver solutions faster while still meeting all the governance controls and regulatory/security requirements for their company. The way these IT workers will meet these demands will be very different from the way they have accomplished this in previous years. Everyone in an IT organization, practically speaking, will do more programming and coding to support this new way of delivering basic computing infrastructure. The cloud technology has provided the ability to deploy a new business product/service from idea to full production in weeks versus months.
The increase in speed means business services or products are redesigned faster and thus have a shorter lifespan. This will change the way IT organizations must think about how to deploy and support these new offerings. Current on-premises data centers will need to move to a private-cloud model and utilize generic hardware that is operationalized with software. This requirement will heighten the importance of having a flexible/disposable architecture. As a result, there is even more importance on the enterprise architecture function within the IT organization.
These are just a few of the changes IT encounters. The CIO is required to plan and manage many different strategic and tactical plans in a short time period. Most IT organizations will require significant training and reorganization to keep up with the business demands of the future. Cloud technology and the rapidly changing business demands will continue to set aggressive expectations for delivery of new solutions.
The wider disruption
The disruption from a digital transformation impacts more than just the IT organization. Business units will need to engage at a more technical level than they have done in the past. There is a growing array of options to address business-solution requirements that have a significant impact on cost, performance, risk, and many other dimensions. Companies will ask business units about their opinion on these areas due to their greater direct control of more and more of the computing budget.
This shows the significant amount of disruption happening in the financial side of the business. Many companies now calculate ROI in a very different way. The focus has shifted to customer-related metrics as opposed to pure money-related metrics, and the way companies’ IT spending is expensed is different because of the subscription-based pricing model for most cloud-based services. Capital investments and depreciation don’t have the same impact on financial statements as they once did.
Marketing, sales, accounting, and customer support staff will continue to experience disruption in their daily activities, too. Cloud technology has altered the normal patterns of interaction with their current and potential customers with an explosion of “points of contact.” Customers expect everyone in a business to know “all” of the history about their interaction with the company. Expectations will only increase as the company increases its use of tools like AI and cognitive technology.
Finally, HR, boards of directors, and leadership teams will be facing a significant expectation gap for their internal customers/employees. This internal group have also had their “expectation gap” expanded by the high availability of new cloud-based technology and the related capabilities. We see this disruption on a daily basis with a manpower shortage in high-demand skillset areas. Changing the way these groups reach out and meet the expectations of this internal customer group will become one of the key metrics to determine life or death for companies in the future.
The reality is that most companies aren’t ready for this disruption. Businesses will change or eliminate many of the job descriptions that they currently use in the near future. This will be an impact from the top of the organizational chart to the very bottom. Businesses will also ask many employees to embrace totally new job skills, new processes, and a new group of co-workers. For many, this change will simply not be possible. For companies undergoing this disruption, there is a need to develop a comprehensive digital transformation plan that covers not only the business and technology changes, but also the organizational and people changes that will be required for the company to stay in business.
This transformation is unavoidable for all companies in all industries. However, this transformation also comes with a tremendous upside for everyone, enabling companies for today and the future.
“When you’re finished changing, you’re finished.” Benjamin Franklin
