Read the Introduction first.
In coming posts I will address every essential characteristic of The Cloud as defined by NIST from a perspective of the Enterprise. Unlike most cases, I will post these within the next 7 days and I certainly do hope before coming weekend.
- On-demand self-service. When online services and core systems really seamlessly integrate.
- Broad network access. When customers, partners and users are distinct groups treated equal.
- Resource pooling. When synergy across value chains makes the difference.
- Measured services. When business resources are limited.
Rapid elasticity. When business is extremely unpredictable.
Very few organisations can say that year round they experience the same amount of business. Almost every organisation experiences something like a 'season'. There are always highs and lows in an organisation's load. This can be 'Black Friday/Cyber Monday' for retailers, tax-season for the IRS or its equivalent in your country, or for example hotels during the summer holidays.
But not only in sales, there are highs and lows, often very predictable, but in production companies there are peaks in order fulfilment.
In order to deal with these fluctuations in 'business load', organisations need to be elastic. The more elastic an organisation is, the better it will be able to handle the fluctuations. Mind, this is not the same as being agile. Being agile is being able to change direction as needed, in a timely manner. Being elastic is being able to change scale as needed. Also in a timely manner. Arguably, being elastic is more difficult to accomplish than being agile.
Elasticity is a matter of scaling up, and down. The more elastic an organisation can be, the more efficient it can do its business. Efficiency here is a matter of spending just enough. Another difference between elasticity and agility. The former being about efficient in using resources, the latter is about being effective in resource utilisation.
From the Cloud we know that elastic means scaling up, or down of the IT infrastructure in order to manage fluctuating load. Thus not having to worry about under-utilisation of IT infrastructure, thus paying for infrastructure that is not being used. And at the same time, not having to worry when load increases and the stability of the environment isn't compromised due to over-utilisation of that same infrastructure.
In the Cloud Native Enterprise, we project these traits onto the organisation itself. Onto the business.
Traditionally, scaling organisations are hard to accomplish. Extremely hard in fact. For one there is always the challenge of resource availability. Where resources are of course human resources. The most common way of addressing this is through contractors. The hiring and firing processes around contractors are far more flexible than for permanent employees. Thus bring some elasticity to the organisation. But getting the 'bodies in' is only part of the challenge. Getting the 'right bodies in' is another aspect. Adding personnel with the right skills is possibly even harder. First you need to find them, next you need to validate that you found them. The hiring process is cumbersome and the further you need to stretch the organisational elastic band, the harder it becomes. The amount of effort needed is not increasing linear, but almost exponential.
Organisations need to be able to scale up quickly. Which often also means that the HR department needs to be elastic as well. Again, the same challenge apply.
In an economy with an up-beat, there are more companies that are looking for the same scalability and resources become even more of a challenge to find.
I haven't mentioned the strain on the organisation itself due to growing too large. More management layers need to be introduced in order to be able to grow and manage this. And this is where scaling down becomes a problem. Adding more management layers in the hierarchy to handle the size of the workforce, is relatively easy compared to removing these layers again.
The more seasonal a market is, the more of a challenge elasticity becomes for an organisation. Tax-offices will be overloaded with calls to the help-desk as the deadline for submitting your tax-forms nears.
At one point I was involved in a court-case as one of the expert witnesses where my client succumbed at its own success. The client was in a business where 98% (!!!) of its revenue was generated in 5 consecutive days of the year. It couldn't handle the increased business as it couldn't predict what that load would be. Especially since in the months prior to their 'peak' they took over their largest competitor.
Organisations can't scale their workforce to the point where we can talk of elasticity. Scaling up and down is a matter of weeks. Where elasticity is the ability to scale up and down in a matter of days, hours or even minutes and less.
This is where the Cloud comes in. It is not so much the elasticity of Cloud infrastructure that plays a role, but the ability of an organisation to utilise the Cloud such that it can scale its business efficiently. Cloud infrastructure is an important part, where it comes to handle IT load. But the true business elasticity comes from handling at a business level the fluctuating load.
Extreme automation of business processes allows an organisation to reduce its dependence on specific business knowledge of its employees. Everybody can press a button or enter data when the 'system' does the heavy lifting in applying business rules and execute repetitive tasks. Understand that by following this paradigm, the reliance of the organisation on less-educated employees is reduced to a bare minimum, and it can focus its efforts towards attracting higher educated employees. Employees that require less managerial guidance which allows for a more flattened hierarchy. Flat hierarchies are more elastic.
Automated processes can in addition, benefit from the technological elasticity of the Cloud. Thus having a double edged sword.
Elastic organisations are not trivial. Far from it in fact. Main reason being that traditionally, organisations scale with their business by either increasing its workforce through short term contracts, i.e. contractors, which can be hired and fired as needed. Or by attracting permanent employees and assume a positive attitude towards the future. Or laying off personnel in advance when the future is perceived less positive. It is how organisations are used to manage the seasons.
The Cloud Native Enterprise on the other hand is far from traditional. At its core it will embrace technology resources not to replace human resources, but to complement them. It invests in senior, higher educated experts, to reduce the reliance on management. In effect, pay more to less, in order to reduce the need to scale the workforce.
But not only in sales, there are highs and lows, often very predictable, but in production companies there are peaks in order fulfilment.
In order to deal with these fluctuations in 'business load', organisations need to be elastic. The more elastic an organisation is, the better it will be able to handle the fluctuations. Mind, this is not the same as being agile. Being agile is being able to change direction as needed, in a timely manner. Being elastic is being able to change scale as needed. Also in a timely manner. Arguably, being elastic is more difficult to accomplish than being agile.
Elasticity is a matter of scaling up, and down. The more elastic an organisation can be, the more efficient it can do its business. Efficiency here is a matter of spending just enough. Another difference between elasticity and agility. The former being about efficient in using resources, the latter is about being effective in resource utilisation.
From the Cloud we know that elastic means scaling up, or down of the IT infrastructure in order to manage fluctuating load. Thus not having to worry about under-utilisation of IT infrastructure, thus paying for infrastructure that is not being used. And at the same time, not having to worry when load increases and the stability of the environment isn't compromised due to over-utilisation of that same infrastructure.
In the Cloud Native Enterprise, we project these traits onto the organisation itself. Onto the business.
Traditionally, scaling organisations are hard to accomplish. Extremely hard in fact. For one there is always the challenge of resource availability. Where resources are of course human resources. The most common way of addressing this is through contractors. The hiring and firing processes around contractors are far more flexible than for permanent employees. Thus bring some elasticity to the organisation. But getting the 'bodies in' is only part of the challenge. Getting the 'right bodies in' is another aspect. Adding personnel with the right skills is possibly even harder. First you need to find them, next you need to validate that you found them. The hiring process is cumbersome and the further you need to stretch the organisational elastic band, the harder it becomes. The amount of effort needed is not increasing linear, but almost exponential.
Organisations need to be able to scale up quickly. Which often also means that the HR department needs to be elastic as well. Again, the same challenge apply.
In an economy with an up-beat, there are more companies that are looking for the same scalability and resources become even more of a challenge to find.
I haven't mentioned the strain on the organisation itself due to growing too large. More management layers need to be introduced in order to be able to grow and manage this. And this is where scaling down becomes a problem. Adding more management layers in the hierarchy to handle the size of the workforce, is relatively easy compared to removing these layers again.
The more seasonal a market is, the more of a challenge elasticity becomes for an organisation. Tax-offices will be overloaded with calls to the help-desk as the deadline for submitting your tax-forms nears.
At one point I was involved in a court-case as one of the expert witnesses where my client succumbed at its own success. The client was in a business where 98% (!!!) of its revenue was generated in 5 consecutive days of the year. It couldn't handle the increased business as it couldn't predict what that load would be. Especially since in the months prior to their 'peak' they took over their largest competitor.
Organisations can't scale their workforce to the point where we can talk of elasticity. Scaling up and down is a matter of weeks. Where elasticity is the ability to scale up and down in a matter of days, hours or even minutes and less.
This is where the Cloud comes in. It is not so much the elasticity of Cloud infrastructure that plays a role, but the ability of an organisation to utilise the Cloud such that it can scale its business efficiently. Cloud infrastructure is an important part, where it comes to handle IT load. But the true business elasticity comes from handling at a business level the fluctuating load.
Extreme automation of business processes allows an organisation to reduce its dependence on specific business knowledge of its employees. Everybody can press a button or enter data when the 'system' does the heavy lifting in applying business rules and execute repetitive tasks. Understand that by following this paradigm, the reliance of the organisation on less-educated employees is reduced to a bare minimum, and it can focus its efforts towards attracting higher educated employees. Employees that require less managerial guidance which allows for a more flattened hierarchy. Flat hierarchies are more elastic.
Automated processes can in addition, benefit from the technological elasticity of the Cloud. Thus having a double edged sword.
Elastic organisations are not trivial. Far from it in fact. Main reason being that traditionally, organisations scale with their business by either increasing its workforce through short term contracts, i.e. contractors, which can be hired and fired as needed. Or by attracting permanent employees and assume a positive attitude towards the future. Or laying off personnel in advance when the future is perceived less positive. It is how organisations are used to manage the seasons.
The Cloud Native Enterprise on the other hand is far from traditional. At its core it will embrace technology resources not to replace human resources, but to complement them. It invests in senior, higher educated experts, to reduce the reliance on management. In effect, pay more to less, in order to reduce the need to scale the workforce.
Concluding
And so the Cloud Native Enterprise is the enterprise where IT is part of the business when it comes to delivering business products. Allowing a business to grow and shrink as needed, just ahead of time and with the flexibility of a rubber band.
Thanks once again for reading my blog. Please don't be reluctant to Tweet about it, put a link on Facebook or recommend this blog to your network on LinkedIn. Heck, send the link of my blog to all your Whatsapp friends and everybody in your contact-list. But if you really want to show your appreciation, drop a comment with your opinion on the topic, your experiences or anything else that is relevant.
Arc-E-Tect
The text very explicitly communicates my own personal views, experiences and practices. Any similarities with the views, experiences and practices of any of my previous or current clients, customers or employers are strictly coincidental. This post is therefore my own, and I am the sole author of it and am the sole copyright holder of it.
Thanks once again for reading my blog. Please don't be reluctant to Tweet about it, put a link on Facebook or recommend this blog to your network on LinkedIn. Heck, send the link of my blog to all your Whatsapp friends and everybody in your contact-list. But if you really want to show your appreciation, drop a comment with your opinion on the topic, your experiences or anything else that is relevant.
Arc-E-Tect
The text very explicitly communicates my own personal views, experiences and practices. Any similarities with the views, experiences and practices of any of my previous or current clients, customers or employers are strictly coincidental. This post is therefore my own, and I am the sole author of it and am the sole copyright holder of it.
