Cloud Target Operating Model (TOM): Revolution, Evolution or a Bit of Both?

By Matt Gall | 25 September 2015

The economic and computational benefits of cloud have been evident for some time, but more recently, barriers to adoption have started to be swept aside. Perceived security vulnerabilities have been addressed (both through tooling and processes) and regulators are starting to recognise that Infrastructure as a Service (IaaS) providers may even offer a more secure and resilient environment than in-house data centres.

However, for firms looking to accelerate their adoption of cloud services, the transition is not simple. Although the term is routinely misused, cloud really does pose a “paradigm shift”. Cloud services are not just defined by their technical architecture; they encompass a broader range of characteristics that together necessitate a different target operating model (TOM) to support.

The TOM for a “New IT Organisation” that has fully embraced the cloud paradigm is significantly different and in some ways incompatible with the established or “Legacy” model/s of managing IT estates. It requires new people (or at least skills, with more of a service centric approach), governance (one example being a greater focus on vendor management), processes (just think how different most traditional IT organisations are from cloud pioneers), tools (particularly with regards to service integration and monitoring), and controls (with careful consideration to all aspects of information security).

Thankfully, a significant amount of work has already gone into defining frameworks to guide service-centric operations. Initiatives such as SIAM (Service Integration and Management) are helping to address the challenges of managing services across multiple vendors and service providers, including hybrid and public cloud models, while USMBOK (Universal Service Management Body of Knowledge) looks to extend ITIL’s service management concepts into a model where solutions are designed and built around customer needs.

But even with established frameworks at hand, the question of “how firms transition towards a cloud target operating model” is still up for debate. On a broad scale, most firms are still struggling to work out how to incorporate new practices into established IT organisations, which inherently are weighed down by technical debt.

Although the right answer will invariably depend on the individual firm’s circumstances, I wanted to describe an approach that could be described as “evolutionary revolution”.

The “revolution” part of this approach is that we would advocate that firms establish an agile, project-based group that is entirely cloud-focused and has the requisite skills and know-how to operate as such. This group, which we will call “new”, will not only be in charge of defining the future vision – i.e., what the Cloud TOM looks like - but also managing how that vision is realised.

That means the “new” team will take charge of on-boarding new workloads and cloud providers, redesigning processes and evolving the operating model, one piece at a time. However, their role will be transitory, as the end-goal will be to prepare the entire “legacy” organisation for the wider cloud story.

Over time, the “legacy” organisation will develop more and more “new” characteristics. Automation and the move towards software defined infrastructure will play a key role; as will the increasing number of applications developed on (or migrated to) cloud platforms or sourced directly from SaaS vendors. The differentials in skills, processes and tools between “new” and “legacy” IT organisations will also diminish over time.

For this transformation to happen, market forces will have to play a role. The “new” project team will need to demonstrate the benefits of operating in a more customer-centric, agile and cost effective manner. This is likely to prove a virtuous circle, with business users demanding more “new” services, and IT talent gravitating towards “new” disciplines.

Eventually, the IT organisation for the firm will have ‘evolved’ to a state where its “legacy” has been transformed. The majority of the IT organisation will therefore be “new” and although it has happened through a gradual evolutionary process, the cloud “revolution” will be complete.

By Matt Gall, Associate Partner, Citihub

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