It's a question that's not asked often enough! Originally, people looked at Cloud as purely a money saving methodology and even today, it's often the number one reason people cite for moving to the cloud. Yet for people who've moved to the Cloud, money saving is only the secondary benefit of the cloud. Yes- it's the secondary benefit and absolutely not the primary benefit or key driver of ROI for Cloud. Well, what is? Actually it's agility. What has agility got to do with IT? To understand that- we need to ask some fundamental questions about what IT does for the organisations it serves. Gartner recently wrote a great post on the subject- What is the production function of IT?
Understanding IT’s role in the enterprise is complex and incomplete. IT is the subject of great debate as some see it as the source of competitive advantage and others see it as an enabling function. CIOs and IT professionals themselves have a tough time answering the question about IT’s role. Why? because I believe we are asking the question in the wrong way. We need to ask, “What is the production function of IT?”Asking that sounds rather academic but it frames the question of what output do you get from the combination of all the inputs? The problem for IT is that the answer has become obfuscated and that's at the heart of the problem. If you ask other departments, they can give much simpler answers:
SALES = TOP LINE REVENUE: We take prospects and turn them into orders
SUPPLY CHAIN = PROFIT: We take orders and turn them into invoices FINANCE = CASH: We take invoices and turn them into cash IT = ?????? Silence ?????? I know its silence because I have asked the question to dozens of IT leadership teams. They look at each other and cannot put IT’s contribution in a simple answer. It is not because IT is more complex than these other functions. No its more that IT professionals have thought of themselves as something apart for the enterprise, something special and therefore not falling under the same rules.When put in those terms- I've had a similar response from IT crowds. I often get answers like- to ensure uptime, or deliver great user experience. But that doesn't PRODUCE anything for the enterprise like Sales, Supply Chain or Finance does it? To understand what Cloud can do for the business- I think we need to answer that question. So what does Gartner think the production function of IT is?
There are two production functions for IT that can be summarized in two words SPEED and SCALE. SPEED: We take strategy plans and turn them into operational performance IT’s production function is to deliver speed of execution against the company’s strategy and plans. Strategy execution involves change and change requires IT participation. The faster IT is able to execute its processes, deliver results and accelerate strategy execution the better.... SCALE: We take operations and increase their capacity and reduce their average cost IT’s other production function is to create scale of operation across the enterprise. Scale in this sense is the ability to IT to aggregate activities and deliver greater capacity at a lower average cost. IT creates scale through its infrastructure and operations activities that make the modern enterprise possible. IT is one of two scale functions in the enterprise. The supply chain is the other scale function....When you put it in those terms- it suddenly makes sense what IT does for the business and I think Speed and Scale can be combined into one word- Agility. So, to enable ourselves to align IT better with the business, I think the focus when acquiring technologies should be primarily on Agility and in our new cloud survey 64% of respondents thought that the Cloud leads to better agility.