Saturday, June 23, 2012

The pressure points of Cloud Adoption

The values and benefits of cloud adoption is increasingly clear and well known. Not to be carried away with these values and benefits, it is important to identify and be aware of the pressure points that the Cloud Adoption brings in as called out by ISACA in its white paper titled as ‘Guiding Principles for Cloud Computing Adoption and Use. Essentially the differences in technology itself and its use impacts the way IT is governed and managed and the management’s reaction to these impacts brings on the pressure points as well, which need to be managed.

Differences such as change in cost allocation from capital to operational may have consequences that may not apparent at the beginning. For instance, contracting for a cloud based software would be an operational spend and may have a lower cost of entry and thus, such decisions may fall outside the review and approval process. While in most cases, the pressure points are to be managed as risks, these are not necessarily risks.

Speed and Agility

The time-to-market is a driver for cloud adoption as solutions to meet market needs would be available more quicker at lesser cost though there could be gaps in meeting the exact requirements. This agile exploitation in a reduced time frame puts greater pressure on enterprise, in which culture, process, and human factors related to technology have been developed to support longer development cycles and long term technology use. This pressure when not handled appropriately could result in increased risk level in the following areas:

  • An unbalanced prioritisation of value over trust in technology solution choices
  • Missed opportunities when other alternatives are not considered
  • Recovery mishaps because fallback positions are not fully exploited
  • Missing functionality if full requirements are not identified
  • Increased long-term costs due to reliance on multiple short-lived solutions
  • Reduced performance when enterprises are hesitant to introduce new solutions because of existing technology investments

Changing Boundaries

The reliance on cloud providers calls for change in the roles and responsibilities within the enterprise and transfer certain responsibilities to outside parties. Contracts and SLAs with service providers attempt to assign accountabilities, but governance dictates that the enterprises themselves, their board and management remain accountable. With this, the locus of decision making changes from governance functions to business line leaders. This change in the organizational boundaries can put greater pressure on enterprises. The risk outcomes out of this pressure point could be:

  • Role confusion when accountabilities and responsibilities are not clearly defined
  • Diminished effectiveness when decisions are made without engaging in a wider consideration of trust and value before cloud acquisition
  • Failure to satisfy constituent and end-user expectations for protection and privacy
  • Project delay and increased costs due to the need for personnel with governance responsibilities to revisit cloud plans
  • Unclear specifications of provider responsibilities and accountabilities in SLAs
  • Incomplete information being provided to board members and senior management

New Technologies and Technology Expectations

Cloud follows a sequence of disruptions in how technology is viewed, integrated into organizational strategy and managed and in how IT risks are identified and managed. Areas of high pressure can result when strategy and enterprise architecture do not consider the unique qualities of cloud computing and when enterprise processes and procedures do not easily adapt to changes made possible by cloud computing. The following risks could be the outcome of this pressure point:

  • Missed opportunities to extract value from the integration of cloud and internal systems
  • Increased vulnerability from incompatibilities and inconsistencies between cloud and internal systems
  • Less than expected results when human factors are not considered in the design and integration of cloud services and infrastructures
  • Levels of organizational performance that do not meet expectations because cloud solutions do not fully support organizational processes
  • Levels of technical performance that do not meet expectations because processes do not take full advantage of cloud capabilities

Level Playing Field

Cloud computing removes the advantage that large enterprises have traditionally had in terms of availability of technology specialists and technical sophistication. Smaller enterprises now have the ability to leverage the cloud services and use technology sophistication that large enterprise used to enjoy. This brings the small and medium enterprises on an equal position with much larger enterprises. This level playing field can have an impact on the strategy and its implementation. Ignoring this impact can result in increase of risk levels in the following areas:

  • New entrants claiming a segment of traditional market dominance
  • Strategies that do not address competitor capabilities
  • Less-than-expected benefits received from technology-dependent solutions

Utility Services and Service Supply Chains

With cloud computing, where computing is viewed as a utility, focus is shifting to the value and benefits obtained from such utilities. Agile enterprises benefits from solutions that can be used as needed and discarded when they no longer provide value. This view of computing as a utility and the delivery of solutions supply chain of information systems solutions puts greater pressure on enterprises that contain a culture that is not accepting of utility solutions, a structure that does not facilitate cooperative planning and processes that cannot take advantage of computing solutions provided as supply chain of utilities. Ignoring this could result in the following risk outcomes:

  • Over-investment of resources in planning and building internally developed information system solutions
  • Less-than-optimal results when value-producing cloud utilities are missing from the total solution
  • Duplication of effort when specialist services available through cloud providers are not integrated as part of system management
  • Less-than-expected results when utility components are not integrated into and managed as an information system capability supply chain

In the white paper, ISACA suggests that enterprises follow a six guiding principles that can help illuminate the path for cloud adoption. Click here to download the complete white paper which is available for registered (free registration) users.

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