Cloud Transformation and Modernization Are Not Business Transformation

by Betsy Burton

This week I attended Google Cloud’s analyst briefing as part of GoogleNext 2019. What struck me is that end-users and technology providers seem to conflate business transformation and cloud transformation. I view that there are three overall approaches, including, 1) moving IT systems and solutions to cloud, 2) modernizing IT systems and solutions, and 3) supporting true business transformation.

This blog will clarify how these investment opportunities can be related but are different, and provide actionable advice on how organizations ensure that they are making the right business investment decision.

Cloud Transformation: Moving IT Infrastructure to Cloud

Shifting IT resources to cloud is sometimes called “cloud transformation,” but the reality is that it in most cases it is IT “lift and shift.” This approach takes existing IT solutions, including data, applications, tools, etc. and moves them to cloud.

The good news is that beyond the costs of moving to and leveraging cloud infrastructure, it means little business model, process, information, or organizational change. The organization fundamentally continues to operate the same, just using cloud-based solutions and infrastructure.

Cloud transformation alone is not business transformation; organizations are not reinventing or rethinking their business model, strategy, or operations.

Modernization: Adopting Modern Solutions

IT modernization is the process of organizations taking the opportunity of moving to cloud to adopt more modern applications and solutions. For example, an organization going through IT modernization may adopt new workforce collaboration, productivity, and content management solutions.

The advantage of modernization is that organizations can take the process of moving to cloud to adopt new solutions that improve the way they work (efficiency, impact, quality) which may mean some work or business process change management. The disadvantage is that organizations are not rethinking or reinventing their business to support digital business (see our note on Debunking 5 Common Myths About Digital Business); it is therefore not business transformation.

Business Transformation Requires Defining and Adopting New Business Models

Business transformation is the process of specifically designing new business strategies, models, and operations to support new business models (such as digital business) and changing existing solutions, systems, processes, and information to support new business models.

The benefit of this approach is that it positions the organization to be able to take advantage of digital business opportunities. The cost of this approach is that it requires a specific investment in the strategic planning and execution planning efforts needed to support new business models, and to enable people and cultural change management investment.

Bottom Line

Organizations must ensure that they are making the right investment decisions by identifying what approach—or combination of approaches—is needed to meet their business objectives.

We believe that the majority of organizations are doing “lift and shift” and modernization versus true business transformation. While both of these approaches can provide improved efficiency, security, reliability and flexibility, neither of these approaches will address the need for your business support to digital business.

Unless your organization is willing to invest in defining, creating, and deploying new digital business models, then chances are you are remediating and evolving your existing business—not enabling or supporting business transformation.