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How do business pressures and cloud disrupt the CIO role?

TerenceNgai

Whomovedmycheese.jpgTo paraphrase the Neil Young song, rust never sleeps, and neither do your competitors. An expanding global marketplace has generated more pressure on the business to create a competitive advantage, whether it’s to grow revenue, increase profit, or reduce internal costs. In turn, business leaders are asking the CIO to use technology to help them gain that advantage. The CIO’s new mantra is, how can I help drive the business forward?

 

The soaring popularity of cloud computing and a slew of new cloud offerings in recent years have coincided with the demand for a new way of delivering IT services to the business. These two mega trends are bound to disrupt the CIO role in several ways:

  • Managing service relationships rather than just IT components
  • Measuring IT metrics in terms of business ROI
  • Changing the leadership role to the rest of IT

 

Moving from servers to services

 

The CIO needs to shift from defining IT investment as components such as software and hardware, to thinking in terms of the services IT provides to the business and its customers, partners, and employees. In a hybrid IT model, some applications or services will be migrated to cloud, and funding for those services moves from up-front CAPEX to pay-as-you-go OPEX.

 

With public cloud or a third-party managed cloud or hosted cloud such as HP Helion Managed Virtual Private Cloud, you don’t need to own the capital equipment. You can outsource the complex task of setting up, managing, and upgrading the infrastructure and applications to someone else. For example, when you use a SaaS application, you don’t have to worry about buying and installing licenses, patches, and upgrades. They are all handled by the application service provider.

 

This disrupts the traditional way the CIO and IT operate. In a hybrid IT model, IT no longer needs to build and operate everything itself; rather, it can use an optimal mix of internal and external services. IT will act as both a broker of external services and a manager of internal IT infrastructure and applications.

 

However, if you use a managed or public cloud service, it does not mean you leave everything to the third-party service provider(s). You still need to manage the service level agreements and the relationships with the business and the service providers.

 

The responsibility of managing IT end to end still lies with the CIO: You have to devise a strategy that stipulates how cloud will integrate with your existing IT environment and processes. You also need to ensure that your data is secure, applications perform effectively, and services are delivered to the business per the service level agreement.

 

 

Using business ROI metrics

 

In their new and transformed role, CIOs need to speak the language of the business, expressing return on investment (ROI) of IT spend in terms that the CEO, CFO, and the board of directors can understand. The non-IT executives don’t necessarily relate to traditional IT metrics such as server utilization or network latency. They care about questions such as:

 

  • What is the cost of acquiring a new customer?
  • How fast can I deliver new products or services to the market?
  • How do I reduce or manage risks effectively?
  • How can IT help me save money or grow revenue?

 

The CIO needs to partner with business leaders to first define these business metrics, and then build into the system ways to measure the metrics. For example, if you’re providing cloud services to the engineering team in a financial services company, then your success metric may be how fast you can deliver a new app for selling mortgages, because it will mean more customers and revenue.

 

If the CIO continues to talk about servers and databases, the business leaders may feel that the CIO doesn’t understand the business, and they might bypass internal IT and employ external vendors to deliver the IT services they need. To prevent the danger of becoming irrelevant, the CIO needs to proactively say, I’m the one who can help you improve the business, not a third party.

 

 

Evangelizing the service manager role to IT

 

Not only does the CIO need to align with the business and move to a service model; he or she also needs to communicate, evangelize, and cascade the change to the entire IT organization. Everyone in IT, from the VP of Apps or VP of Ops, to the IT managers or administrators, down to the developers, should look to the CIO’s leadership to provide the vision and direction as to how the IT department should evolve.

 

No longer will IT need hundreds of server, network, or database administrators, because some of the traditional IT environment will move to the cloud. All IT staff under the CIO need to become relevant to the business. In my next post, I’ll talk about how IT’s role needs to change to meet business demand.

                                                                   

HP Helion can aid the CIO transformation to internal service provider and broker by leveraging a mix of internal and external services. HP Helion can help you reduce the complexity of IT operations and enable you to respond to the competitive pressures of today’s global marketplace.

  • HP Cloud
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About the Author

TerenceNgai

cloud SaaS hybrid IT

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