Azure: CAF - 3

cloud adoption strategy

  • Define and document your motivations: Meet with key stakeholders and executives to document the motivations behind cloud adoption.

  • Document business outcomes: Engage motivated stakeholders and executives to document specific business outcomes.

  • Develop a business case: Develop a business case to validate the financial model that supports your motivations and outcomes.

  • Choose the right first project: Your first cloud adoption project will help align motivations with technical effort. This article can help you choose your first project wisely.

Motivation-driven strategies

Business transformations that are supported by cloud adoption can be driven by various motivations.

Migration

  • Cost savings.
  • Reduction in vendor or technical complexity.
  • Optimization of internal operations.
  • Increasing business agility.
  • Preparing for new technical capabilities.
  • Scaling to meet market demands.
  • Scaling to meet geographic demands.

Innovation

  • Increasing business agility.
  • Preparing for new technical capabilities.
  • Building new technical capabilities.
  • Scaling to meet market demands.
  • Scaling to meet geographic demands.
  • Improving customer experiences and engagements.
  • Transforming products or services.

Business Outcomes

  • Fiscal outcomes -Financial or fiscal performance is the cleanest business outcome for many business leaders, but not the only one.

  • Agility outcomes - Today’s fast-changing business environment places a premium on time. The ability to respond to and drive market change quickly is the fundamental measure of business agility.

  • Reach outcomes - In a constantly shrinking market, global reach (ability to support global customers and users) can be measured by compliance in geographies that are relevant to the business.

  • Customer engagement outcomes - Social marketplaces are redefining winners and losers at an unheard-of pace. Responding to user needs is a key measure of customer engagement.

  • Performance outcomes - Performance and reliability are assumed. When either falters, reputation damage can be painful and long-lasting.

Business Justification

On a basic level, the business justification focuses on the return on investment (ROI) associated with the proposed technical change. The generic formula for ROI is:

ROI (Return of Investment) = (Gain from Investment - Investment) / Investment

When the ROI is below 20%, consider a digital estate planning exercise, paying specific attention to rationalization.

Calculating the gain from investment often requires a second formula that’s specific to the business outcomes and associated technical changes. Calculating earnings is harder than calculating cost reductions.

Gain from Investment = Revenue deltas - Cost deltas

Revenue deltas

Revenue deltas should be forecast in partnership with business stakeholders.

Cost deltas

Cost deltas are the amount of increase or decrease that will be caused by the transformation.