Why establishing a Cloud Operating Model underpins a successful digital transformation

Digital transformation is an overused and poorly defined term.  According to Gartner this term can be used for a range of activities from IT modernisation to digital optimisation, to putting services online.  None of these represent a ‘digital business transformation’. Gartner say digital transformation is the process of exploiting digital technologies and supporting capabilities to create a robust new business model. The key point is supporting capabilities which is crucial to success. Merely adopting new tech, is insufficient for true digital transformation.

Cloud has been, and continues to be, pivotal to driving digital transformation in organisations. According to a recently published KPMG global technology report, 79 percent of UK respondents said they are migrating strategic workloads to the Cloud, and 52 percent say customer and user experience is a key focus in the coming 12 months.

Consumers now expect a good digital experience. This drives organisations to adopt the latest technology to provide outcomes to their citizens. For the Government and public services, the primary driver is providing efficient services in a cost-effective, secure and resilient manner. However, unless organisations transform their operating model they will struggle to deliver at the required pace to their meet citizens expectations.

Having citizens use digital services will optimise the provision of government and public services, as will digitisation of its internal operations. Where most organisations (public and private sector, Government departments) have undergone some form of digital transformation they are failing to realize maximum value as they have not transformed the people and processes.

Cloud provides a superior platform to scale more quickly, deploy apps rapidly, use advance capabilities like AI, Quantum computing and better analytic capabilities. It provides the basis for innovation and helps organisations provide that next generation digital experience to consumers. Aligning the next latest technology to a legacy operating model will not totally yield the benefits of adopting new tech.

The increasing pace of change of customer digital demands calls for speedier adoption of technology. More importantly, it calls for businesses to have the ability to respond rapidly to changing needs. This is crucial to the success of new tech adoption. A cloud operating model can help deliver this flexibility. It will help break down silos between functions, introduce processes and approaches which enable collaboration and agility, and it increases the speed and scale of delivery to the end consumer.

To fully reap the benefits of Cloud and exploit the opportunity it presents, an organisation needs to align and optimise their operating model to the Cloud. The alignment needs to happen across the organisation – governance, sourcing, people & skills, processes (including managing risks and failures), roles and capabilities. The change needs to be driven top-down; from vision and principles to operational activities to harness the tech capabilities offered by Cloud.

Having the right cloud operating model converts the opportunities and potential which Cloud as a technology offers to reality. Underpinned by the right skills, processes, governance and business capabilities, it will initiate a shift towards a culture of delivering value to the end customer. This includes how it produces its digital products, its finance model and its ongoing service delivery. In the public sector this comes across as an alignment of people and operations to increasingly support the digitisation of services to the end customer; a move that will underpin the success of the digital transformation.  

Having the right operating model, will change the value Cloud offers to organisations. Rather than a platform technology where IT systems are migrated to, it will be an innovative platform right at the centre of successful business outcomes that will continuously deliver the next generation of digital experience to the customer.

KPMG has a comprehensive tool kit and framework to support organisations through an end-to-end Cloud transformation journey.

Our business led tech-enabled approach and our six-dimension framework looks at different aspects of the organisation including People & Culture, Capabilities & processes, governance, tools, sourcing and delivery models; help build a tailored approach and target operating model suitable to your current and future organisation needs.

For your Cloud Transformation needs, please get in touch.

Cloud Transformation and Advisory: KPMG is a leader in Cloud consulting: we are recognised by Forrester as the leading independent Cloud advisory consultancy. We offer a collaborative and objective approach to transform your IT infrastructure and help improve the strategic value of your technology investments.