Background for the paper included reviews of published materials in case studies, reports and interviews with stakeholders at companies including Partner's Healthcare and Merck.
The report, released by SIM's Advanced Practices Council of senior IT executives, concludes that while cloud computing does present risks in the form of data security, regulatory and compliance barriers, CIOs cannot afford to wait for every uncertainty to be resolved before examining and pursuing cloud business models. The report finds that cloud strategies also mitigate other kinds of risks including fluctuating demand and waste through overcapacity; inefficiencies of owning or scaling processes; and stifled innovation in the face of time and cost to ramp projects.
Recommended initiatives to facilitate cloud strategy (paraphrased here) include:
- Initiate fast, strategic experiments by identifying new technologies worthy of consideration with employee engagement, proposals, voting and deliberation. Match innovation to needs and conduct short, agile scientific experiments.
- Establish a cloud community strategy with the help of user-driven communities to minimize demand and inefficiency risk. Have users pose and answer questions on user boards offered at services like Amazon Web Services. Allow users to build status through these interactions.
- Pay attention to architectural capacity as companies build a mix of traditional and cloud solutions. Where traditional applications present interoperability problems, organizations should develop an understanding of architecture that accesses information and products from inside and outside the organization's boundaries.
- Understand the role of the business architect, and the newer context of the extended enterprise where “every product or service has an informational component to it.” This shifts the role of IT from capturing information for decision-making to building an infrastructure for innovation and experimentation. SIM calls the new challenge “business architecture.”
- Consider the economics of networks, clouds and platforms in business networks of global connections, two-sided markets and collaboration. Incorporate this economic perspective into the development of the business architecture.
- Define an architecture control strategy that is feasible and defensible, which in the context of business architecture, the report calls “the 21st Century cash register within the fabric of the business network solution.”
- Finally, the report calls for organizations adapting to cloud technologies to redefine the core systems of the firm to exploit network economics. Use core systems as a stable base from which innovation and experimentation can scale and enable “plug and play” processes and services efficiently and effectively.
SIM’s 30-page report was authored by Bala Iyer, an associate professor at Babson College, and John C. Henderson, Richard C. Shipley Professor of Management at Boston University’s School of Management. For more information, visit https://simnet.site-ym.com/store/default.asp.