For a long time (relatively speaking), the cloud was viewed as a way for an organization’s technology team to reduce technical debt and dependency on resource-intensive data centers. That strategy offered limited benefits in a small number of specific use cases, such as employee-facing applications and non-core workloads. Today, the cloud is increasingly recognized as a critical enabler of overall business strategy.

Consider incumbent financial institutions, which used to think challenger banks were simply placing a stronger emphasis on customer experience. The reality is that these smaller startups are fundamentally changing the cost-to-income ratio of banking by an order of magnitude that was unthinkable even a few years ago. It’s a similar story in the telecom sector, where 5G adoption isn’t just the next phase; it’s reshaping the business model.

As enterprises strive to lead this evolution, it will take a refresh of the technology stack in alignment with the business strategy that puts cloud capabilities — including edge computing and IoT — at the center to meet emerging business goals.

Unlocking Capabilities With the Cloud

There’s no question that technology is integral to business strategy, which is why the alignment of an enterprise’s cloud transformation journey and business modernization road map is crucial. Without this alignment, organizations risk patchy and inefficient adoption that drives a wedge between business and IT, not to mention a lack of buy-in on the business side that sabotages cloud adoption initiatives before they’ve even begun. In either case, organizations are left with an increasing total cost of ownership (TCO) and investments that fail to produce a return in the form of new capabilities.

The good news is that alignment efforts have a good chance of success if they’re included from the beginning — and if they come from the top. If the top of the house can encourage the organizational leadership team to develop and infuse technology-led interventions in their business strategy, then magic can begin to happen. Risk and compliance, finance, and digital strategy departments must be part of the effort from the outset to create better-quality solutions and increase the velocity of the cloud initiative.

Once the right players are on the field, alignment is a matter of three key steps.

1. Ask business-line owners to define the business strategy

Digital transformation is an apt descriptor because cloud adoption is much more than a simple shifting of IT workloads. It has vast, transformative potential, and reaching that potential requires business-line owners to clearly define the future of their function and the funding associated with shifting to this new future. Only then can technology owners build on the back of that strategy to align business value creation and technology execution.

2. Establish a formal transformation organization

To take full advantage of the cloud, a formal transformation organization sponsored from the top down must drive capability creation and adoption strategy from the outset. The transformation organization will help develop the enterprise’s new operating model. This allows it to create new business value, align business and IT, embed agility into the enterprise, and shift technology spend from business-as-usual functions to those driving change and innovation.

3. Strike a balance between centralization and decentralization

Change adoption is inevitably a tricky balance between centralized capability building and decentralized adoption. Often, teams want to build capabilities for themselves, resulting in local optimization. Federalization is the ideal balance, but achieving it is easier said than done. In our experience, it’s important to define a business-aligned strategy, plan the business case, and conduct change execution and adoption in a federated manner — while building foundational and enterprise capabilities in a centralized manner.

Alignment in Action

A client of ours has taken the alignment of business strategy and cloud strategy a step further by recognizing that its entire ecosystem of partners needs to adopt the cloud. By establishing a retail competency hub, the company will help develop capabilities and create innovative retail solutions that leverage the power of the cloud. These capabilities include solutions that will be co-created with its ecosystem of partners. It’s an ambitious plan for a company with businesses spanning 25 countries, but it’s an excellent example of how viewing the cloud as a critical enabler translates to the nuts and bolts of business strategy.

However, not all cloud strategies need to go this far. Maintaining a focus on the three basic ingredients above will help ensure that the results of a digital transformation exceed expectations. To learn more about accelerating a successful digital transformation for your organization, download my company’s free ebook about outcome-oriented cloud transformations.