Maximizing value with a holistic approach to cloud and agile transformations
Both cloud and agile transformations create a variety of potential benefits for companies. But to maximize the value created, they need to be orchestrated together.
In today’s business environment, many companies are transforming their organizations to compete in an environment where the rate of change continuously accelerates. Survival no longer depends on how big you are but on your adaptability. To keep up with the pace, businesses are making radical changes by carrying out two types of transformations.
- Cloud transformations empower businesses to scale up and down their IT infrastructure as needed and provide access to the latest technologies. This enables companies to grow without upfront investment in IT equipment.
- Agile transformations help companies adapt quickly to constantly changing customer requirements and deliver value earlier.
Both transformations represent journeys that evolve through different stages of maturity.
Cloud transformation
Cloud transformations often start with “like-for-like migrations” (often called Lift & Shift migrations) to the cloud. Further down the road, they typically increase complexity when migrating from legacy monolithic systems to more modular microservice or cloud-native architectures. Once completed, the software deployment process is much more flexible, and with modern modular architectures, companies such as Amazon or Netflix can deploy software over 1000 times a day. With cloud-native technology in place, the third phase focuses on re-inventing the organization’s business model. Harnessing technologies such as AI, Big Data, IoT, and Edge, enables the rapid launch of new products and services, which would have previously taken much longer.
Despite the advantages that cloud transformations can deliver, many organizations fail to reap targeted benefits. Frequently, cloud transformations are technologically driven — and organizational aspects, such as training new roles or ways of working, are not equally considered. For instance, leveraging new technologies to reinvent business models is difficult without holistically rethinking the business. Without covering technical and organizational needs, companies fail to take full advantage of what cloud computing offers.
Agile transformation
Like cloud transformations, an agile transformation goes through various phases of maturity. During the last 20 years, agile transformations have progressed from the introduction of Scrum & Kanban frameworks in IT organizations to the implementation of scaled agile principles, not just in IT but across all parts of an organization, which is often referred to as enterprise or business agility.
During such agile transformations, the traditional functional organization is reorganized around value so that teams are more cross-functional and product-focused rather than expertise orientated. For many years, organizations have used projects to deliver a unique product or service. Projects temporarily borrow team members from a functional organization and then return them once the project is completed, which may result in discontinuity and loss of knowledge. The idea of building product-orientated teams is to create a more stable team and governance environment. Removing the need for the stop-and-start nature of project gatings and temporary team building, and instead introducing a more stable budgeting planning and approval process, helps to retain expertise and knowledge within the teams.
However, one of the significant challenges with building teams around value is that managing the transition is challenging. Organizing around value, also known as Value Stream Identification, implies that the organization must be completely reorganized to ensure that the focus shifts from functions & components to the product. This reorganization requires a simultaneous refactoring process of the underlying IT architecture so that the organizational structure and the IT landscape are aligned.
Simultaneous transformation
In 1962, a computer programmer named Melvin E. Conway stated, “Any organization that designs a system will produce a design whose structure is a copy of the organization’s communication structure”. This adage, known as Conway’s law, provides us with a holistic guiding principle that links our agile and cloud transformation in an intertwined and inseparable manner. The organization's communication structure manifests itself in the technological architecture it creates. Hence, to create a modular cloud-native microservice architecture, an equivalent product and value-orientated organization must create it.
Furthermore, and practically, it is paramount to minimize both organizational and technical dependencies to gain maximum agility. Dependencies constitute a significant impediment to team flow and agility, and much effort is spent minimizing and mitigating dependency-related risks. Therefore, the more an organization can eliminate dependencies between teams and systems, the more agile it will become.
To summarise, in order to maximize the value from both Cloud and Agile transformations technical architecture and team organizational refactoring must be done in a coordinated manner. As the existing monolithic architecture gradually transforms towards an autonomous modular architecture, so to must the siloed functional organization grow into cross- functional, product-oriented, and agile teams.
