Cloud-native transformation is organizational, not technological

At HFS’s 2022 Super Summit, Tom Reuner, Executive Research Leader, led an active discussion with a panel of cloud land industry leaders, including Anant Adya, Executive Vice President, Infosys; Marina F Bellini, Former Global CIDO, ABInBev and BAT; Varun Bijlani, Global Managing Partner, Hybrid Cloud Transformation Services, IBM Consulting; Jason Eichenholz, SVP, Global Head of Ecosystems & Partnerships, Wipro; Steyn Huizinga, CTO & Head of Cloud, Xebia; and Ryan Lockard, Global CTO, Cognizant, gathered to discuss the importance, impact, and influence of driving cloud discussions back to business impact.

How have others successfully transformed their operating model using the cloud as a catalyst, not a solution?

During HFS’s recent cloud-native transformation research, a leader from a Big 4 firm told HFS’ Tom Reuner that, in their experience, “Half of the cloud transformations are abject failures.” This is concerning, as 38% of companies say they are almost done with their cloud journey. And yet, 37% are unsure if they are doing the right thing with the cloud.

With statistics like this, the call to arms is not about getting the technology strategy right but rather making sure that the business and operations of the company are active participants in efforts to transform their firm into a cloud-native organization.

When asked about why these stats are so dire, Anant commented his firm regularly sees three reasons for failure:

• Too often, the cloud is viewed as a cost take-out by business leaders looking to reduce expenditures.
• Firms have poorly defined business outcomes about how they plan to leverage the cloud.
• Businesses haven’t adequately defined their data, service, or app needs in the context of business and customer experiences.

Ryan added, “where [he has seen] organizations doing the right thing is where they begin by “closing the IT and business gap.” They achieve this by bringing senior leaders, both the C-suite and the line of business, into the discussion about “what they are trying to do”, then addressing the “how” they would do it. According to Ryan, “By business and IT creating a shared language, they change the aperture by setting the right targets. [They start by] looking at holistic change and the impacts on the operating model that the cloud transformation effort will impact.”

Steyn argued, “Successful transformation has three stages. These include engaging with stakeholders, understanding the mobilization of workloads to the cloud and how experiences change for good and evil, and aligning the need to educate and learn how applications and data change how people work.”

What measurements does your organization need in its effort to become cloud native?

As Ryan pointed out, a firm’s leadership needs to ask themselves two critical questions early in their cloud-native journey: What is a cloud transformation? And have they set the foundation rules? Without these elements, how can they set goals, identify success, and know how to achieve a successful cloud transformation?

Building on this, Tom Reuner offered, “Firms must operationalize their journey to cloud-native.” As illustrated in Exhibit 1, there are seven components to achieving success. If you don’t understand how you’ll adopt and apply them, the chances of your organization’s success may be limited.

Exhibit 1: Operationalization of a journey to cloud native in seven easy steps

Source: HFS Research, 2022

Jason added, “Cloud is a mindset or culture shift. If you don’t get that, you are more likely to fail.” While technology is a good foundation for getting the work done, the technology team often owns the metrics, not the business. Not involving the business at a crucial juncture is a fool’s journey.

Marina added an enterprise perspective from ABInBev’s cloud-native journey; her firm’s painful lesson was that it made the cloud-native journey too much a part of its digital transformation efforts. Marina cautions other CIOs, “They are not the same. Measuring cloud transformation as a percentage of what is in the cloud isn’t a relevant metric. Rather, take cloud transformation out of IT and elevate it to the board. This is important, as this is where questions are asked about what operations and models need to be transformed, why, and when.”

Anant echoed Marina’s end-user viewpoint, saying that success can be seen where the C-suite is directly involved and measuring the right things like business solution adoption versus just efficiency or gains resulting from technology improvements.

The net of our discussion on metrics came down to how stakeholders, leaders, and end-users are engaged about technology augmenting how they work, collaborate, and contribute. Changing how individuals and teams operate brings about cultural change.

How do you drive successful cultural change?

A successful native transformation is a culture shift. Varun explained that “culture is the outcome of how you do things.” Developing a cloud-native culture is essential to getting the outcomes you expected when you planned the effort in the first place. Varun added, “As a leader, you can recognize when the cloud-native cultural shift is happening if you look for these two things:

• Employees in your firm (or on your team) succeed by adopting new habits as to how they work and measure success.
• [Employees] share a consistent view of the desired business outcome/goals with their team members and business leaders.”

The Bottom Line: Accelerate and transform the right things—not everything. We need to be brave to reset the cloud transformation discussion, making this an organizational shift with inputs from the business about metrics and the desired future operating state.

For a CIO or CEO, a successful cloud-native transformation is a shift from a technology-enabled mindset toward an operational and product perspective. Business leaders must recognize that cloud-native changes are about how products and services are delivered and how these changes impact employees, processes, partnerships, and technologies. Set the strategy for cloud-native transformation around these points, not technology-delivered efficiencies or cost reductions.