Tuesday, April 24, 2018

From Shadow IT to Shallow IT: How CIOs Can Leverage Cloud Service Partners to Drive Business Transformation

In our recent book, Competing for Customers, we describe the new hyper-competitive pressures that technology companies face as they move to cloud-based, subscription services. Our thesis is that these companies must adopt new business practices that optimize their ability to listen to customers needs, engage customers to define and quantify the value proposition, and ensure business value is attained through adoption services. But what about the customers of these companies? How can they thrive in the age of the cloud? What should they expect from their technology providers and what new pressures will CIOs encounter in this market transition?

With the advent of the cloud, CIOs are experiencing a revolutionary change in their roles and responsibilities. Subscription-based solutions can now be “turned on” vs. “implemented,” greatly reducing the IT requirements for deploying and maintaining these solutions. With cloud services, limited or no systems integration is required, minimal support services are needed, and the data center isn’t impacted. All of this is changing the fundamental nature of IT organizations, as “Shadow IT” gives way to what we call “Shallow IT”.

What does “Shallow IT” mean for CIOs and IT organizations? Is the gig up? Not at all. Rather, we believe this next-gen IT organization will mean a renaissance for IT teams. Thinks about it: For decades, IT has been the black sheep of most businesses. Basically, they could do no right. If they delivered a new IT solution on-time and on-budget, they were merely doing their job. But if there were any bumps along the way -- even if not of their making -- the daggers would come out. That’s why the CIO is often the most endangered species in the C-Suite.

But with the shift to cloud services, IT’s stock is swiftly rising. No longer is IT a bottleneck to deploying critical new capabilities: There’s no more waiting to stand up a new data center; large upfront CAPEX investments are no longer a barrier to new IT solutions; and systems maintenance or performance issues are no longer directed at IT. The new IT organization is now free to take on truly valuable tasks, such as identifying and adopting innovative technology solutions that could redefine the competitive nature of the business.

For example, what if IT could help a retailer identify technology-enabled solutions to drive performance for its store network by researching the marketplace, providing a data-driven selection process, and managing a pilot-to-purchase process to ensure success? IT has now gone from a “keeps-the-lights-on” organization to a “consultative” business partner focused on driving business value.

So many IT organizations will look at their current resources and ask whether they are equipped to take on the new roles and responsibilities of the next-generation IT organization. In Competing for Customers, we discuss ways to facilitate this transition without a total retool of the IT team. Our research showed that the balance of power between the technology buyer and the technology provider is going through a massive shift in favor of the buyer. CIOs can put this new-found leverage to good use, starting by imposing strict standards and responsibilities on your cloud technology providers.

Our recommendation for CIOs is to rethink the traditional services that technology companies provide to your company. In the age of the cloud, these providers should be providing an end-to-end customer lifecycle service model that includes:
  • Business case services to clearly define your ROI of moving to their solution
  • Strategic business use cases that define the current and future business-process impacts from their solution
  • Business KPIs including baseline metrics and post-release targets
  • Adoption services that provide the change management, education, and training required to move your business users onto the new solution
  • Business value realization services to track the progress of the business case and report on the value created on a periodic basis

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In conclusion, CIOs need to take advantage of the power shift of moving to cloud solutions, make the necessary organizational changes to adapt to this new business model, and ultimately position IT as a strategic resource to the business.

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