oc cio roundtable mooney management imperatives for realizing value from cloud computing 2013 06 12

Center for Information Systems Research (CISR)

Center for Information Systems Research (CISR) © 2013 MIT Sloan CISR – Mooney, Ross & Reynolds

John G. Mooney Department Chair and Associate Professor

Graziadio School of Business and Management

Pepperdine University

[email protected]

Research Affiliate


MIT Sloan School of Management

[email protected];

Research Fellow

Irish Centre for Cloud Computing and Commerce

Management Imperatives for Realizing Business Value from Cloud Computing

This research was made possible by the support of MIT CISR sponsors and patrons.

Cynthia Beath, Peter Reynolds, Jeanne Ross, and Jarrod Phipps contributed to the research project.

June 12, 2013

Orange County CIO Roundtable

http://bschool.pepperdine.edu/faculty/default.php?faculty=john_mooney

mailto:[email protected]

http://cisr.mit.edu/





http://www.ic4.ie/


Center for Information Systems Research (CISR) © 2013 MIT Sloan CISR – Mooney, Ross & Reynolds 1

CISR Research Patrons

A.P. Moller Maersk (Denmark) AECOM Aetna, Inc. AGL Energy Limited (Australia) Akamai Technologies Allianz Global Corporate & Specialty Allstate Insurance Co. AMP Services Ltd. (Australia) ANZ Banking Group (Australia) Australia Post Australian Taxation Office Banco Bradesco S.A. (Brazil) Banco do Brasil S.A. BBVA (Spain) Bemis Company, Inc. Biogen Idec Blue Cross Blue Shield of Massachusetts BNP Paribas (France) BP (U.K.) BT Group (U.K.) Canada Pension Plan Investment Board Canadian Imperial Bank of Commerce Capital One Services, LLC CareFirst BlueCross BlueShield Chevron Corp. CHRISTUS Health

Chubb & Son Commonwealth Bank of Australia Credit Suisse (Switzerland) DWS (Australia) Encana Corp. (Canada) Equinox Ltd. (New Zealand) ExxonMobil Global Services Co. Fidelity Investments FOXTEL (Australia) France Telecom Holcim Brasil S.A. Insurance Australia Group International Finance Corp. Itaú – Unibanco S.A. (Brazil) Johnson & Johnson Leighton Holdings Ltd. (Australia) Level 3 Communications ManpowerGroup Marathon Oil Corp. MetLife NASA New Zealand Govt.—GCIO Office Nomura Research Institute, Ltd. (Japan) Origin Energy (Australia) Parsons Brinckerhoff PepsiCo Inc.

Principal Financial Group, Inc. Raytheon Company Reed Elsevier Schneider Electric Industries SAS Sears Holdings Mgmt. Corp. Standard & Poor’s State Street Corp. Sunoco, Inc. Swiss Reinsurance Co. Ltd.

(Switzerland) TD Bank (Canada) Teck Resources Ltd. (Canada) Tenet Health Telstra Corp. (Australia) Tetra Pak (Sweden) Time Warner Cable Trinity Health United States Dept. of Health &

Human Services United States Postal Service Unum Group USAA VF Corporation Westpac Banking Corp. (Australia) Woolworths Limited (Australia) World Bank

MIT CISR gratefully acknowledges the support and contributions of its Research Patrons and Sponsors.

CISR Research Sponsors

The Boston Consulting Group, Inc. EMC Corp. Gartner, Inc.

IBM Corporation Microsoft Corporation Oliver Wyman, Inc.

Tata Consultancy Services

MIT CISR’s Mission

Founded in 1974, MIT CISR delivers practical, research-based insights on how digitization enables enterprises to thrive in a fast-changing global economy.

MIT CISR engages its community through research, electronic research briefings, working papers, meetings, and executive education.

2012 MIT CISR Research Projects Doing Business Digitally

Strengthening Your Digital Business Model

Building Digitized Platforms Can Be Slow: What Are the Alternatives?

Digital Innovation: Designing Customer-centric Products and Services

Redesigning Organizations for the Digital Economy

The Next-generation Enterprise: Designing for an Increasingly Digital Ecosystem

Case Studies in Social Media Innovations

BYOD: Radical Changes to Managing Technology and the People and Processes Relying on It

Working Smarter: Seizing the Opportunities Created by Ubiquitous Data

Rethinking the Role of the IT Unit

Managing Your Firm’s Total Digitization: The Next Frontier

Business Complexity: Shifting IT from Problem to Solution

Managing IT Supply and Demand: How to Build a World-Class Service Organization

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© 2012 MIT Sloan CISR 1 December 2012





2

What exactly do we mean by Cloud Computing?

“Cloud computing is [an approach] for enabling

ubiquitous, convenient, on-demand,

network access to

a shared pool of configurable computing resources

that can be rapidly provisioned and released

with minimal management effort or service provider interaction” US National Institute for Standards and Technology, 2011

http://csrc.nist.gov/publications/nistpubs/800-145/SP800-145.pdf

Forrester’s Cloud Computing Taxonomy

Forrester, “The Evolution Of Cloud Computing Markets,” July 6, 2010



4

Cloud Adoption Case Study

“We want to reach $10 Billion in sales by 2015

with an even broader geographic footprint.” —David Pyott, CEO, Q1 2010 Insight Magazine

“That’s Doubling our business in the next 5 years!!”

—Fred Orensky, (then) Head of Enterprise Architecture

Is our company ready for doubling the business?

Is our platform ready for doubling the business?

Will the business units wait for the IS organization?



5

Allergan Enabling Business Capabilities

Key business capabilities required:

– Talent management

– Field sales effectiveness

– Rapid integration of acquisitions

– Cost management

– Strategic agility

Key performance goals for the IS Organization

– Increase responsiveness to business needs

– Increase speed of deployment

– Reduce time-to-value realization

– Curtail proportional growth in IT budget

Adopted a “Cloud First” policy to address these business needs

– Before buying or building new systems, conduct a systematic review of whether a viable public cloud option exists

Sue-Jean Lin, CIO

“It’s not just efficiency that is

important; people take that for

granted. It’s business capability

enablement. But of the various

business capabilities we are

currently enabling, agility is key.”



2010: When Would Allergan Consider the Cloud?

High / Unmanageable Low / Manageable

Extent of Data Security Risk

Exte

nt

to

wh

ich

th

e P

roc

ess i

s a

Dif

fere

nti

ati

ng

Co

re C

om

pe

ten

cy

Hig

h

Lo

w

Cloud Sweet Spot

Avoid Experiment

Single Tenancy

Salesforce / Force

SuccessFactors

Taleo

eLoyalty

Omniture

WebEx

Akamai

Google / Postini



7

Management Practices for Enabling “Cloud First” @ Allergan

Architecture

Review

Technical Assessment — Assures the solution’s

agility, reliability,

scalability, and alignment

to IS standards

Security Review — Assures that data is

secure in use, in flight,

and at rest

Vendor

Due Diligence

Vendor Assessment — Assures quality of service,

security, compliance, and

data portability

System Risk Assessment — Identifies vendor and

system risk profile

Vendor

Management

Periodic Audit — Recertification for

expanded services

— Renewal

— Data extraction

Contract Mgmt. — Inclusion of Security

and Privacy

addendum



2010-2012: Allergan’s Cloud Journey

2010 2012



9

Realized Business Benefits of Cloud Computing

Increased responsiveness, speed of deployment, business agility

Faster pace of adoption

Improved reliability, frequency of updates, security

Simplicity

IT cost savings

“Elastic” provisioning of “burst” computing & DR capacity

Shifting CapEx to OpEx

IT budget reallocation (from “build & run” to “deploy & exploit”)

Better information (deep analytics, collective intelligence)

Distribution of digital products and services

Enablement of “web native” applications (social, mobile, location-based, “BYOD”)

Enablement of “loosely-coupled” multi-enterprise processes



10

Challenges to realizing the competitive benefits of cloud

Data security concerns

Legal/regulatory compliance

Immaturity and instability of vendors

Service reliability and business continuity

Weak contracts, SLAs, and consequences for non-performance

Integration and interoperability with on-premise systems

Vendor lock-in and ambiguous data portability

Loss of control

Limited transparency

Limited expertise, understanding, exemplars, and trust

Long-term cost uncertainties

Resistance: “SHeBeNoBiF”



11

Key question:

What are the effective management practices

associated with realizing business value

from cloud computing,

while mitigating its challenges and potential risks?



12

Embrace the Inevitable! Six Imperatives to

Prepare for Cloud Computing

http://cisr.mit.edu/blog/documents/2012/10/18/2012_1001_embraceinevitable_mooneyrossphipps.pdf/



13

Imperative #1: Re-define the IT value proposition

Beyond business efficiency

to

business agility

For the IT Unit,

beyond efficient provider of IT resources

to

agile provisioning of business capabilities and services



14

Imperative #2: Re-focus Enterprise Architecture

From tightly-integrated enterprise-wide platforms

to

a hybrid of minimal core “on-premise” platform augmented by

loosely-coupled, modular, “on-demand” cloud services

From technology artifacts

to

service interfaces

Enabling experimentation at the edges and

consolidation at the core



15

Imperative #3: Re-allocate funding

From CapEx

to

OpEx

From Managing Technology Investments

to

Managing Value Realization



16

Imperative #4: Re-structure IT Governance

Shift IT decision rights from centralized

to

distributed (including vendors)

Ensure access to

(rather ownership of)

appropriate services and business capabilities



17

Imperative #5: Re-think the purpose of IT

Beyond standardization for enterprise efficiency

to

accommodating user needs, personal work-styles

and technology preferences for empowerment and creativity



18

Imperative #6: Re-engineer the IT Organization

From a dominant focus on “build and run”

to

brokering services,

integrating data,

and exploiting value



19

Implications for IT Professionals

“Adapt,

or become obsolete”

Announcing a new MBA degree in Digital Innovation and Information Systems (“DIIS”)

at Pepperdine University’s Graziadio School

Launching in Fall 2013

DI-IS Curriculum Design

• Standard MBA core plus six designated DIIS electives:

– Digital Innovation and Strategic Transformation

– Business Analytics and Intelligence

– DIIS Portfolio and Project Management

– Business Process Analysis and Innovation

– Enterprise Architecture and Infrastructure Management

– Managing DIIS Security, Privacy, and Ethics

• Students may request to replace up to two of the above with electives in managing teams, leadership, change management, creativity, marketing, negotiation, quantitative analysis or an applied research project.

23

Thank you!

oc cio roundtable mooney management imperatives for realizing value from cloud computing 2013 06 12

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