The Future of Faster Enterprises
There’s a disturbing trend in business today of shorter and shorter company lifespans: the average tenure of an S&P company today is a mere 15 years, compared to 67 years in the 1920s.1 Moreover, in the last 20 years the number of domestic companies on the US Stock Exchange has dropped by half.2 While there are a variety of reasons why companies are not reaching their golden years, I suspect that this trajectory will continue.
In this turbulent environment, technology continues to play a major role in a company’s success (or failure), and the transformation toward digitization is ever more critical. Yet today, for most enterprises around two-thirds of their IT budget is still spent “keeping the lights on”—running the back-office systems like the corporate email and financial and HR systems. If we think of this like a traditional iceberg model, in an on-premise structure the majority of costs and resources are below the waterline—or rather below the value line—unseen and undifferentiated. This budget allocation challenge leaves IT leadership in the back-office with the aging technology, and this challenge is a significant contributing factor to what is holding many of these companies back from true transformation and innovation. With cloud, you can reduce costs of infrastructure management and other undifferentiated work, and, more importantly, pull more of your resource investments above the waterline, into more strategic and business value contributing efforts.
I joined AWS in July of 2017 as a Director of Enterprise Strategy and Evangelism. I am part of a team of former Enterprise CIOs, and it is our role to work with large enterprise technology executives globally to share experiences and strategies for how the cloud can help them increase speed and agility while devoting more of their resources to delivering value to their customers. There are a few common themes that we see in the enterprises that are moving quickly and successfully to the cloud and creating a culture and track record for innovation.
First, the CIO and other senior business leaders have the conviction to drive change, and they operate as a change coalition. Second, as a demonstration of that conviction, they set aggressive top-down goals and define a plan that doesn’t try to boil the ocean but creates the momentum needed to sustain change. Third they focus on creating a culture that is based on Agile methods and fund training and new skill development as a core to the strategy not an afterthought.
I recently recorded a video to talk more about the challenges that enterprises today face, and how to become a future-ready enterprise through differentiated IT. At Coca-Cola, like many organizations, this is what drove our transition to the cloud and a cloud-first strategy. As a CIO I knew the benefits of the cloud could counteract these challenges and create an environment that enables business value and growth.
The cloud offered us the agility, speed, and innovation necessary to deliver differentiated value to our customers and our shareholders. While Coke was committed to our full migration from on-premises datacenters to the cloud, it couldn’t happen in one day. We opted to start by migrating our over 600 digital properties, because we needed the elasticity to support customer demand. We then moved on to data and analytics, so we could optimize the customer experience.
Where you start may be different, but if you have a CEO like most, s/he’s first question is likely to be “Is it secure?” It’s what keeps many CEOs up at night. In fact, 66% of CEOs surveyed say they believe keeping their environment secure is the most important challenge today3. And while speed of innovation is vital in today’s competitive environment, it can’t be done without enhanced security. AWS provides self-service platforms that enable innovation in a secure environment, allowing access to an amazing array of robust tools that continue to be evolved and improved by listening to customers.
The pace of innovation at AWS in creating new capabilities and improving and evolving the security of the technology is what drew Coca-Cola into the partnership. Keeping up with technology is no small feat today, and having a partner like AWS, who understands and believes in their customer’s transformation journey, was critical in our transformation.
As a CIO, part of my job was educating senior business leadership on cloud security. AWS and our consulting partners were instrumental in demonstrating via customer references the fact that AWS invested many more resources in secure technology and had much greater breadth of experience given its customer base and requirements from Amazon.com. The leadership became convinced that we were never going to be able sustain, and should not continue to rely on, our own home-grown security technology. Like datacenter management, security technology development is not and should not be a core competency of a fast-moving consumer goods company like Coca-Cola.
For enterprises, the Holy Grail is to enable your organization to move fast and focus on your core competitive advantage while being secure. You’ll know you’re there when you have more resources spent developing and delivering innovative products and services, not running back-end systems.
Here are my five essentials to this goal which I outline in the video:
- Secure executive sponsorship: At Coke I had a partner and ally in our Chief Marketing Officer and Chief Technology (Science and R&D) Officer, both of whom were essential in enabling us to move fast and to clear roadblocks.
- Educate your team: They know your legacy environment. Teach them the cloud and they’ll be your best asset in the new world. Finding talent to fill skill gaps and developing the next era of leaders in your organization is always a good investment.
- Allow for experimentation: Give your people freedom to innovate by not just accepting but asking for failures. I like to say, “Fail forward fast,” and I’ve heard other leaders talk about failure as an necessary part of discovery and innovation too.
- Create a Cloud Center of Excellence: A mistake would be to take your infrastructure team and call it cloud. You must create a diverse team with app people and security people, and move people within the team to enhance the efficacy of those working on the cloud.
- Engage Partners: Free up your staff to work on the new by outsourcing the management of legacy infrastructure.
These are just five things you can do to accelerate your cloud adoption and become a leader in your industry for many years to come. I hope you’ll find these, and more of my insights in the video useful.
Source 1: Innosight
Source 2: Bloomberg
Source 3: Fortune