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Expert: cloud strategies need to start with the board of directors

The real cloud story, says one expert, is not about cost savings but about enabling organizations to do things that were not possible before.

Jeff Rowe | Oct 18, 2017 04:17 pm

Cloud computing is both old and new. 

That’s according to Pat McConnell, longtime IT consultant and lecturer, who points out in a recent piece that “the availability of on-demand computing power is as old as the ‘time-sharing’ concept of the 1970s and ‘remote data storage’ that was developed in the 1980s.”

Despite that pedigree, McConnell notes that “in the last decade, the emergence of faster and smaller computers, high-density data storage and very fast and ubiquitous fiber optic networks has changed the economic equation that governed the placement of computer capabilities in the past.”

And for that reason, he believes decisions concerning where and how to take advantage of the cloud needs to be driven by a board-level management strategy.

“The vision of cloud computing is extremely enticing for accountants and IT managers,” McConnell says. “Just move all of our expensive hardware to the cloud, they say, and we will be able to get rid of our huge, expensive data centers and, with a bit of luck, some of our costly staff as well.”

While there’s some truth to that vision, McConnell says organizations, including in healthcare, need to be mindful of both the previously unavailable opportunities the cloud brings and the new types of business risks that are created by adopting cloud computing. 

And in both cases, oversight and strategy needs to begin at the board level. 

As McConnell explains, “Traditionally, because computers were large, expensive and had to be housed in special data centers, IT purchase decisions were somewhat disconnected from business strategy. Purchases of computers and data centers were considered capital expenses, the costs of which had to be recovered from business savings over a prolonged period (typically 3-5 years). In that process, the chief information officer had to guesstimate what might be needed in the future and propose some very expensive IT purchases ahead of time. But more importantly, for directors, IT has been considered an afterthought—a detail left to be sorted out by technicians.”

Those days are over, however. “Directors in (the) future must have a deep understanding of technology capabilities to make better (even adequate) strategic decisions,” McConnell insists. “If directors do not realize that they are operating in a new paradigm, then their strategies will fail to achieve their business objectives as nimbler competitors will beat them to market, again and again. This is known as strategic technology governance risk, or a failure to put in place the correct governance structures to manage the strategic impacts of technology.”

In short, “the risks and opportunities of cloud computing are so new and potentially so large that decisions can only be made at the strategic level and cannot be outsourced to technologists or third-party providers. Boards will have to step up to the plate to drive cloud strategy, or competitors will.”