Boards and the CEO must own the move to cloud

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Boards and the CEO must own the move to cloud

A strong business strategy requires a clear cloud strategy and an engaged board needs to ask the right questions about aligning those strategies. Indeed, Boards must utilise all the tools available for business growth and that requires a sharply honed focus on the digital and cloud technologies that drive success today. 

It’s widely acknowledged and reported that COVID accelerated digital transformation by at least 3 - 4 years in just the first few challenging months of the pandemic. Although many organisations had commenced their digital journey, this unanticipated global event accelerated digital transformation and the transition to the cloud. 

For companies already on this journey it meant laser-like attention, a company-wide focus and grabbing a competitive edge.

For other businesses this period illustrated the need to start the transition, in many cases it was the “lights on” moment for leadership.  It was now time to focus on enabling a transition to the cloud by all  the CEO, the Board and the entire executive. This was no longer just the remit of the IT department.

The new normal

For many businesses, today the cloud delivers that inextricable link to strategy, operations and risk. Therefore it’s rightly the purview of the entire Board to understand the role it can play, assess it curiously and competently and not merely delegate decisions to management, tech teams or external specialists.

As this digital transformation becomes our new normal and boards upskill during this exciting time, big cloud vendors are no longer just presenting to the CIO, they’re presenting to the entire executive and the board. The implication for boards is that our decision making can’t just be financial, for example, ‘Does the business have the funding to invest in this transformation?’.

While this is one question the board needs to rigorously consider, it has to be viewed together with questions on business strategy, customer experience, supply chain, people and innovation. 

This Board involvement in the selection of vendors presents a two-fold issue:

  1. How do you determine what the right cloud solution is for the business and that you’ve approved the vendor best placed to deliver?
  2. Once the vendor is appointed, how can the board track the cloud transition to ensure it delivers on three critical board priorities: business strategy, risk management and people?

Vendor selection

According to McKinsey's 4 ways Boards can shape the Cloud agenda, directors across industries now recognise technology’s role in corporate strategy and business differentiation as a top agenda item. And in another recent McKinsey piece on the topic, the management consultants say Boards should be asking: “What is the strategy three to five years out and what are the critical enablers to it?” 

Some questions for the board to pose to itself, the executive and potential vendors are:

  • Do we understand what the business case and up-front investment in cloud will look like?
  • Does what’s being offered support the business strategy and how will we measure outcomes?
  • Does management have the financial resources available to meet the company’s cloud-adoption goals? Now and in three, five, seven years?
  • Will cloud have a significant effect on our financials over time and are we taking steps to adapt to such an impact and can we track and refine constantly?
  • How are we communicating our financial and strategic changes to our stakeholders?

Managing the transition

Approving the right vendor is just the start as the Board seeks to provide value and help its business track a cloud initiative’s relevance and impact. 

While digital transformation and the cloud are areas where NEDs have had to upskill rapidly, our role in ensuring a cloud transition delivers what it’s supposed to isn’t all that different to what we do for companies every day. 

When it comes to the cloud the role of our boards is:

  1. To keep the business focussed on how this transition is matching the business strategy.
  2. Ensuring effective risk management regarding cyber security, privacy and beyond.
  3. Managing talent to ensure the cloud supports operations, growth and business resilience.

A key facet of a successful governance model is to ensure, through continuous board education, that cloud doesn’t become a topic only for members with prior technology and cloud experience. In addition to knowledge-building workshops, enlightened boards have organised special sessions ahead of major decisions, convened external expert advisory boards, or invited independent technical advisors and outside speakers for guidance.

Depending on the role of technology in corporate strategy and the board’s capacity, certain boards may find that forming a technology committee can help keep focus while ensuring decisions remain a central element on the board agenda.

Some potential questions and actions for the board to consider are:

  • Do our discussions around corporate strategy incorporate digital aspirations and the role cloud could play?
  • Is cloud a solution to our organisation’s technological pain points or a source of product innovation? In other words, is it a symptom or a cure?
  • Do we understand how the cloud could help us efficiently and effectively secure our business optimisation goals?
  • Does the current cloud transformation fit into the business’s overall transformation and, if so, how?
  • How do we perform against our peers and global best practice in our sector, with regard to adopting and leveraging cloud solutions? 
  • What does the evidence tell us and who can we ask as a reference for the solution being proposed? 
  • Do our people have the requisite skills to deploy and manage this technology and its organisation-wide integration?

The Board, making it real

Cloud, as part of a comprehensive digital roadmap, needs to be woven into top-line strategic conversations rather than delegated to lower levels of the organisation.

Understanding how the cloud disrupts, transforms and accelerates business models will shape how companies navigate their next normal. Boards play an important role in this disruption by guiding discussions and ensuring their organisation benefits from the power of cloud.

When it comes to transitioning to the cloud, the opportunities offered to businesses not only include enhanced efficiency and cost savings but also present new revenue streams and a multitude of opportunities to innovate and automate. 

Businesses and Boards must take the leap now, manage oversight of the program and commit to a growth strategy focused on cloud solutions executed against their customer knowledge, their business strategy and their purpose, moving from the rhetoric to the real.

About the author: Cheryl Hayman is a non executive director with Beston Foods, Shriro Holdings, HGL and CAANZ

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