Searching for the Target Operating Model for Business Cloud

The number of organizations embarking on the journey into the As-a-Service Economy is accelerating. Of the eight ideals of this economy, business cloud appears to be the most accessible, as the industry has evangelized on cloud for many a year. This is also borne out by our research that shows business cloud is likely the strongest ideal to make progress over the next two years (see: https://www.hfsresearch.com/beware-of-the-smoke–your-platform-is-burning). Yet as HfS is launching its first Business Cloud Management Blueprint Primer, many of the service providers we spoke with appear to have difficulties aligning the topic across their organizational structures. These difficulties appear to be a reference point both for the maturity of the approach to business cloud as well as for the pace of transformation.

If we understand business cloud as a blended, plug-and-play story of software and business process As-a-Service, the emphasis needs to shift toward the outcome, while the tools and technologies underpinning it become secondary. However, how do we progress on this journey toward outcomes if organizational models are still largely siloed and if target operating models (TOM) are treating cloud just like any other IT service? As such, organizational models predicated on technology could turn into stovepipes. Similarly, TOMs suggesting cloud services are just part of a traditional towers, run the risk of not harnessing the potential of business cloud.

Innovative service providers are building out capabilities around cloud brokerage, business cloud marketplaces and Business process as-a-stack, among other things. The crucial point is how to leverage these approaches in brownfield scenarios where legacy applications continue to act as a millstone around the neck of organizations? Many reference cases are rather focused on greenfield scenarios. Similarly, how do we move from the beacon clients that tend to be early adopters to “plain vanilla” organizations that represent the bulk of the addressable market?

Put in other words, both the supply as well as the buy side have to transform in order to progress on the journey into the As-a-Service Economy. Strong change management capabilities that drive both cultural and behavioral issues is an essential company on that journey. HfS is excited to research the progress of moving toward this outcome-based culture.