Using Business Agility to Unlock Business Value while Migrating to AWS
In a recent article by McKinsey, ” Unlocking value: Four lessons in cloud sourcing and consumption”, enterprises estimate that around 30% of their cloud spend is wasted. Furthermore, approximately 80% of enterprises consider managing cloud spend a challenge. Even though over 70% of enterprises cite optimizing cloud spend as a major goal, it remains an elusive concept measured in terms of cost savings. The McKinsey article linked above explores some of the challenges in realizing value in cloud migrations from a process view, and we agree to McKinsey’s four lessons. But there’s more to it, unlocking value is a mindset shift, for which companies need to be agile. In this blog, we provide recommended steps to assist change leaders with the information and questions they need to ask to help move their company into the cloud-enabled digital age.
Before we get to the steps, let’s establish what Value and Business Agility mean, and how they unlock value from migrations. Business Agility is the ability to compete and thrive in the digital age by quickly responding to market changes and emerging opportunities with innovative, digitally-enabled business solutions. Business Agility requires that everyone involved in delivering solutions continually deliver innovative, high-quality products and services faster than the competition. To stay laser-focused on customer outcomes, Amazon uses the Working Backwards process of discovery and invention that delivers customer delight. This mechanism is used for big and small inventions alike that deliver customer value and elevate Business Agility. Cross-functional teams collaboratively work backward to identify key objectives on the critical migration path to the moment that the product, service, or experience is in a customer’s hands. The value delivered from Business Agility has different KPIs than economic spend. For example, the National Bank of Canada used AWS to reduce the execution time for trade analytics from hours to the real-time pricing of assets. This resulted in the bank’s quant team being able to course correct and analyze the business faster during business hours, as well as provide that insight to front-office teams.¹
Why is it hard to connect business value to migrations? Organizations must first move to an agile-centric mindset, where change is welcome, and the need for frequent pivots influences Portfolio Management. Enterprises must adopt the processes and best practices of the cloud world. These are different from on-premises data center world best practices. For example, demand sensing versus capacity forecasting, value stream funding versus siloed cost centers, products versus projects, as well as annual continuous decision-making versus annual planning exercises. Organizations should involve business stakeholders in prioritization and planning, thereby creating an agile environment where the business takes the product owner seat and guides the migration into AWS.
How are enterprises optimizing to realize business value? Top-performing enterprises lay the foundation for cloud adoption/migration by including new roles and responsibilities capable of leveraging the power of the cloud. They start with a focus on defining value for the organization in terms of: 1. Economics, 2. Agility and time-to-market with product experimentation, 3. Increasing agility within operations budgets and release schedules, and 4. Including security and compliance in every step of the value creation process.
So how do you build agility into your organization’s cloud migration capabilities to address this at the foundation?
Step 1: Review existing methods of identifying initiatives and funding them to eliminate bottlenecks and reduce delays in delivering value to the end customer.
AWS approach: Work backward from the needs of the customer/business.
Step 2: Develop and design leaner processes for intake demand; be ready for frequent pivots until the product strategy emerges and stabilizes.
AWS approach: Cloud value framework for your organization to be defined that guides intake and products.
Step 3: Organize skills and resources around value or a solution, not around tasks. Teams should own the Why? What? How?
AWS approach: Cloud Operating Model.
Step 4: Change funding models to focus on the life of the product or solution rather than traditional cost center funding approaches.
AWS approach: AWS Cost Management Best Practices.
Step 5: Continuously improve the value delivery flow by measuring and making periodic adjustments to streamline intake, funding, and delivery.
AWS approach: Deploy success metrics to measure how far away from target. Use cloud operations for value realization and benefits management.
Step 6: Hire, develop and retain the best talent to understand and strengthen the alignment and visibility of business outcomes that drive customer success.
AWS approach: Skills Guild to help people with adoption and change management.
Cloud economics and continuously deriving business value from cloud capabilities is complex due to existing organizational constructs that aren’t oriented to fully capture the opportunity at stake. Top-performing enterprises are deliberate about bringing together technical and financial talent into a cross-functional cloud financial operations team to manage cloud sourcing and consumption. Importantly, these enterprises implement lean methods of portfolio management that enable and influence business, finance, and enterprise operations that drive the strategic growth of the organization and fund cloud spend. They build expertise to influence portfolio management by forecasting the needs of the business, thereby creating space for experimentation and measuring success from the eyes of the customer.