This is part one of a three-part series. Subscribe to our blog or stay-tuned for the full series.
Cloud computing is no longer the hype we once thought it was. With revenues for IaaS predicted to reach $176B by 2020, and the public cloud service market (IaaS, PaaS, SaaS) becoming a $200B industry by that time, adoption of cloud is said to be among the biggest change disruptor in the classic IT operating model in the past 15 years. At an adoption rate of 20% increase year-over-year, companies are flocking to cloud services to stay ahead of competition, increase revenues, keep costs down, or simply stay relevant in the market. Those who don't make that leap or migration to cloud will find themselves left far behind, unable to compete, with their survival threatened. As history informs us - only 71 of the original 1955’s list of Fortune 500 companies remains today. Why? Failure to adapt, failure to change. Don't let your organization be one of those statistical numbers destined to fail because of fear and resistance to adapt, denial for the need to change, or complacency.
If you are in the camp already convinced of the need to transform (albeit gradually) or transition (incrementally) to public, hybrid or private cloud, then, as the leader or decision-maker responsible for championing this critical change initiative, you must already be thinking of the top 3 or 5 things you must get right to ensure the change and adoption of cloud is a success. As we know, there are many critical success factors to consider- from choosing the right model and provider to selecting the right applications to pilot. One thing that remains elusive to many companies however, is embracing the notion that the change must be managed and managed well.
Adopting cloud (irrespective of the type of deployment model; public, hybrid or private) delivers enormous economic, top-line and bottom-line benefits. However, as the saying goes, (if) there’s no pain, there’s no gain. Whether done incrementally or transformationally, it will be a journey of change. Succeeding is not an option. You must succeed, else the enterprise stands to lose much more. Once the motions are set in place, if the change fails, the project doesn’t end there – you would have to roll-back to on-premise solutions and this cost is not insignificant. Worse, with cloud becoming mainstream, you and your company would likely have to make another attempt to implement cloud months or another year down the road. Let’s say even if you do miraculously get a second chance with additional funding approvals and senior management’s support, you are still going to have to deal with the repercussions of the change going wrong the first time. Resistance among your people, the business units and stakeholders at large who were soured by the first experience - will be much stronger. Getting everyone on board a second time when the change failed the first time will be a great deal more difficult.
Adopting cloud is more than simply replacing an antiquated technology with a new. To go cloud is to cultivate a change in mindset and do things contrary to how we have intuitively done so in the past, been trained and have gotten good at over the decades. It requires both businesses and intra-IT departments to collaborate more than ever before. Some people would have to relinquish controls they’ve earned and come to value over time. Select skills and expertise would be considered obsolete in the new model, and others would lose decision-making privileges, ownership of data and sole decision-making authority they previously had. Also, greater standardization across applications, IT and business units may be needed. In a nutshell, adopting cloud has far-reaching change implications. All of these implications can be addressed and managed, and ultimately, the gain does outweigh the pain, but if we think one can breeze through implementation with success without a good change management (Footnote 1) approach – it’s a foolhardy thought.
Numerous renown thought leaders and researchers (Harvard Business Review, McKinsey, Forrester and others) estimate as high as 70% of change initiatives launched by companies, big or small, fail. More than seventy-seven million articles, scholarly studies and literature written have discussed the widespread failures companies experience with their change initiatives. In cloud implementations alone, Gartner’s 2015 study finds 95% of (private) cloud change implementations fail. 40% are said to be caused by organizations’ failure to change their operational models and/or manage those changes in an essential manner. Sure, one could argue that private cloud solutions are flawed, highly risky and therefore doomed to fail anyway. Or, one could look at those cloud deployments with an open mind and ask the less obvious question which is "What is the one thing adoption of private, hybrid and public cloud have in common and what lesson can we take away from those failures?" Right! Besides all being cloud-based, companies would need to consider, evaluate and manage the impacts of change to their operating models (people, organization structure, skills, jobs, roles, processes, policies, standards and service levels). Infrastructure and application teams as well as business units and support functions like legal and purchasing would all be impacted. The shift to cloud requires changes to how the enterprise, business and IT think, behave, plan, manage, control and provision resources. The classic models cannot remain status quo. In a cloud environment, IT is no longer simply managing technology components but also service. Organizations that remain hopelessly optimistic and dismissive of the notion that the change could, if not managed well, fail spectacularly - set themselves up to fail even as the wheels of the initiative are set in motion.
Want to get it done right? Rather be in the camp of leaders who’d rather drive your cloud transformation to success rather than let luck dictate your slim chance of success, then hit your change management approach out of the park for a home run implementation.
Where do you begin? The first crucial step involves change leadership. There must be recognition, awareness and education among business and IT executive decision-makers that this is not just another technology project. When so-called critical stakeholders are rounded up to explore and discuss the (cloud solution) merits, plans and implementations – one would commonly find executives and teams representing various technical, engineering and security network functions in attendance but rarely will one find their change management counterparts invited. The responsibility of ensuring the implementation to cloud should reside with a single executive sponsor. It is this sponsor’s responsibility to ultimately ensure that change management is front and center of this key initiative. Change management should be on every agenda, part of the proposal and is integrated into the team’s approach, and equally represented as any other major stakeholder is. More importantly, the sponsor should set the tone for the change and ensure that the change management approach is strategic rather than an afterthought exercise, and that the appropriate change management skills are not only represented on the team, but integrated and empowered as an equal decision-maker and authority among the leadership team charged with driving the initiative. Appointing a change leader suitably qualified to this multi-disciplinary team would be key.
The second is ensuring change management is an equally important thread of work on your program team. Allocating sufficient time, attention and resources to the change management effort just as you would to the technical details is part of the game plan. Expect your change management leader to have a change strategy, a change and communications plan, and program in place that is integrated with all the other disciplines and pieces - to move in lock step with one another to roll-out the implementation. Don’t make the mistake that technical or technology teams are the driving force in this initiative, and therefore dictates what change management is and is not, and when their activities should or should not occur. To get this right, the change management lens on this program must be strategic, providing the lead and guidance alongside, not in isolation, and not as a mere thought behind all the technical decisions. Like any other project, change management must also be adequately project managed – there must be estimates, requirements planning and workplans to ensure that there is sufficient funding, the right skills, and the right activities are conducted at the right time. The right team size (one, five or more FTEs) must be afforded to match the scale of the program’s needs.
The third is ensuring visible and active sponsorship and leadership engagement. Proper adoption of cloud will have implications across the enterprise, beyond its IT organization. IT sponsorship of the program at the most senior executive level is key and the most obvious requirement. Few companies realize however, that just as important is having influential business sponsorship at the same level. Particularly in a federated model where management of business applications and infrastructure are dispersed across the enterprise, with IT reporting lines running up the food chain in the individual business units, you will find that getting active sponsorship and buy-in from those business CEOs will be critical to success. How much sponsorship and what leadership roles are needed from which businesses are all part of the change management approach that must be carefully evaluated and established to match the objectives and scale of the program. A leadership and stakeholder engagement model must be defined as part of the change program.
In part two of this series, we will discuss some techniques and key pieces of change management activities and deliverables one would expect to see on such a program - as we explore in a little bit more depth the implications of shifting from traditional (what Gartner terms as Mode 1) (Footnote 2) to cloud (Mode 2) or a hybrid of it operating model.
In the final part of this series, we will discuss the roadblocks and enablers of change – and how they can either grind your change journey to a halt or enable a smashing success. Culture is likely the factor that is most commonly neglected in an organization’s effort to change. It is squishy, messy, and deals with emotions and behaviors - an intangible, it is hard to monitor and get right. Yet, a culture of resistance arising from the need to shift from the traditional (old) to the (public, hybrid or private) cloud (new) model cannot be underestimated. The saying, ‘Old habits die hard’ – is never more true in an organization’s culture, and unless the culture of resistance is managed, above all else, it will be the Achilles heel that undermines, and will most certainly sink any possibilities of a home run transition to a cloud environment, let alone a transformational leap to it.
Change management in this article refers to the discipline “organization change management” and not system change management (how changes to a system are managed). The discipline of “organization change management” should not be confused with HR or the function of human resource management. The two disciplines are distinctively different; each with their own set of skills and expertise.
The authors of this article is not married to the notion of Mode 1 and Mode 2 in the way defined by Gartner. However, for simplicity and to correlate definitions with other schools of thought our readers may be more familiar with, we equate Mode 1(predictable) to be more akin to the traditional operating models, and Mode 2 (agility) to a cloud model – recognizing that the optimal cloud model for an organization could be somewhere in-between the two or a hybrid, also known as bimodal.