Cloud Operating Model Comparisons

The transition to the cloud represents an opportunity… an opportunity to change the framework of how the traditional IT organization interacts with the business. When I was first starting my career in IT it was untouchable, in the sense that the business didn’t understand what IT did… they just knew that it was important. It was just scary enough that nobody looked behind the curtain. Just keep throwing money at it and it will be fine. For YEARs this model has persisted and as the global consciousness toward technology has become more enlightened, we’ve seen the untouchability of IT waver and die. The business has discovered they have options and that the meager service they were getting from the IT organization isn’t good enough anymore. Any IT organization reading this might say, “this isn’t us” and with that we should realize, “this is EXACTLY us”. The transition from IT provider to technology enabler is a hard one for the IT organization, but no time has been more critical than now. The transition requires an understanding of IT’s traditional failures and the opportunity to move to a better spot in the journey. For this differentiation we’ll leverage the models in the Microsoft Cloud Adoption Framework to discuss the transition. In this case we’ll draw it though for clarity sake.

The first thing to understand is that IT is needing to move up in the maturity scale to survive and be relevant. monetization, customers, and needs. The delivery of the operationalized cloud is the re-start of the partnership between IT and the business. Maturity lower represents disconnects. Maturity above represents partnership.

The IT organization needs to move from delivering commodities to engaging the business. In the image below you can see the drop off of legacy services in the IT model and the need to focus more toward governance… lifting into capabilities,In this conversation we’re going to discuss four options that relate to the box below:

The four options you see above (de-centralized, centralized, enterprise, and distributed) are defined in the CAF and are also where some solid best practices emerge. I believe that many of these represent anti-patterns vs. being good options.

Option 1: De-Centralized (completely)

Understand the de-centralized option as “the business does what it wants”. It has its own environment, runs its own environment, and has its own standards. The CAF shows it like this:

This is happening because the IT organization has not partnered well and the business is working around it. This is VERY common and is sometimes described as “shadow IT”, which is a symptom, not a problem. The reason for shadow IT is because the business is trying to achieve an outcome and they are doing it without the help of the IT organization. What we are really trying to achieve is business enablement, which is a better way to think about shadow IT functions. See the diagram below as to where this exists in the maturity curve.

The operational framework for this is essentially, whatever the application group is deciding to do. That doesn’t mean it isn’t done well… but it does mean that there isn’t centralized control or governance to mitigate risks. In my experience, it is rare to see an organization run this model well. Typical environments completely run by business groups CAN have high maturity, but tend to drift because features take higher priority over governance, cost control, risk mitigation, compliance, etc.

The reason to avoid de-centralized operations is because you lose the overall governance of the organization, IT is zero percent involved, and you have no oversight of critical compliance, risk, and cost functions.

Option 2: Centralized operations

The centralized option represents where the IT organization has brought all cloud operations, governance, and execution under one roof. The IT organization runs everything and controls everything. It is very similar to the organizational models of the past, with control being in a central organization. You can see below an example from CAF:

The evidence shows this achieve’s an operationalized environment, but stifles the forward movement of the business. It tends to NOT empower the business to drive transformation within the business and instead prioritizes control.

As you can see, this essentially repeats the mistakes of the past and tries to recreate the IT organization in the cloud. In the diagram you see the blockage of innovation, the staff leaving because of lack of control, but the presence of the operationalized cloud. See how in this case the presence of the operations organization is actually the blocker, not the enabler.

Option 3: Enterprise Operations (TARGET STATE)

The third option is to form an organization that provides organizational governance but enables the business with the freedom to engage and innovate on the could. This forms an enterprise business standard, with multiple landing zones, scaled to multiple workloads, with distributed authority. It brings the best of the distributed and centralized architectures together and forms an organization that reduces waste while simultaneously encouraging operations excellence. See the CAF image below of the enterprise state.

This organization fully enables the movement up the maturity curve. It establishes the operational state and allows the business to build on and through the technology platform’s capabilities. It is focused on constructing Centers of Excellence (CoE) that empower the business to ideate, build, and own solutions in production scenarios.

You can see in the maturity curve how this drives the business to not only produce, but to innovate and operate what it creates. It does so however without complete freedom, but with guardrails to keep the business safe. It also establishes a structure without significant compromises.

Is there an option 4? Yes, the CAF framework talks about an option 4, which I won’t present here, but essentially describes a combination of several sub-structures, presently primarily when organizations don’t have control over their subsidiaries. In some cases, you may have control over one part of the organization, but not another. That said, this is to be highly discouraged as a NORTH STAR, because it remains in a state of ineffectiveness. Bold leadership accepts that there are a variety of reasons an organization may be in an un-optimized state, but it is not content to leave it there. Bold leadership guides an organization to a north star. The breakdown of responsibilities (from CAF) between models is particularly telling. See how the fourth one is a mess of options?

Now is the time to build a true cloud operating model that sustains itself over time and contains the necessary elements to let the business thrive.

Nathan Lasnoski

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