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What’s behind the trend to formalize the cloud center of excellence?

Article 27 Apr. 2023 Read time: min
By Sandipan Chakraborti

As companies worldwide continue to drive ambitious digitalization and modernization agendas, the river of investments in cloud keeps gushing.

According to a Gartner® report, “ . . . by 2026, 75% of organizations will adopt a digital transformation model predicated on cloud as the fundamental underlying platform.”1

Reflecting the macro trend, many of the companies I meet with are starting efforts to formalize a cloud center of excellence. The initiative promises desirable and significant benefits.

Companies that create a cloud CoE can more adeptly build upon and unify aspects of application, platform engineering, strategy and architecture, and modern IT operations. This all leads to accelerated application migration and modernization to cloud—which we know is a key strategy for enterprises under pressure to shift IT investment into cloud-native capabilities.

Companies that have formalized a cloud CoE report substantial benefits in areas of efficiency, accountability, security, governance, as well as better visibility and cost forecasting.1  We can agree that the reasons are compelling.

What changes with a cloud CoE?

The establishment of a cloud CoE brings exciting changes for your technology, new ways of working for your teams, and highly-coveted culture changes.

  1. Pace of innovation. The cloud CoE is able to drive and evangelize innovations. These entities typically are composed of senior executive architects who help to drive standardization of architectural designs, industry reference architecture, and blueprints. The enterprise compiles and adopts innovations into day-to-day project execution methodologies.
  2. Cost management. Budget and resource management improves for cloud cost allocation, cloud resources tagging, and cost charge-backs and show-backs to business units to ensure complete cost management transparency. This enables different roles within the businesses to help manage and report cost and resource utilization.
  3. More cross-functional teams. Products, application development, and platforms engineering teams are able to co-create solutions more efficiently. Notably, this starts to reduce enterprise technical debt by bringing in faster and more agile solutions.
  4. Sharing of best practices. Better security, risk and compliance capabilities improve management of cloud infrastructure threats. These practices eventually determine the extent of enterprise security maturity in provisioning and managing cloud infrastructure.
  5. Improved cloud operations. More automation improves cloud operations across the organization, with better observability, monitoring, proactive remediation techniques, disaster recovery management, and operational resilience.
Products, application development, and platforms engineering teams are able to co-create solutions more efficiently.

What is the typical cloud CoE model?

The cloud CoE works as a specialized team that provides advisory and guidance to leadership. Just as there is no one-size-fits all T-shirt, there is no one-size-fits-all cloud CoE. However, there are common building blocks that make good starting points:

  • Enterprise architecture and governance: Individuals in this role often are the primary agents for any centralized cloud adoption strategy, reporting directly into the chief strategy officer. In large enterprises, cloud CoE adoption often is owned and driven by the chief strategy officer or the chief enterprise architect.
  • Product and platform engineering: This will form the core of the cloud engineering and innovation aspects of a cloud CoE. Typically, these teams enable smarter and more efficient ways to adopt cloud-native technologies and solutions for higher performance and scale. Management of in-product and platform products lead to innovations and faster go-to-market strategies.
  • Modern cloud operations and sustainability: There are numerous benefits of automation and productivity in cloud operations. These can be realized through implementation of a cloud CoE. The majority of the changes happen by bringing forward innovative methods including releasing and managing software products and services which are inherent to the cloud-native technology stack and single-click.
  • Change management: The introduction of a cloud CoE can create resistance to processes and technology changes. Training, communication of the benefits, and enablement are vital and can help orchestrate activities within cross-functional teams.
  • Security, risk and compliance management: CISOs and their reports continuously explore what proactive measures can be taken to manage security threats and vulnerabilities. The solutions can be found by establishing security posture guardrails at the cloud CoE level and conducting periodic unannounced compliance audits.
  • Sourcing and vendor management: In today’s cloud economy, large enterprises thrive on a multi-sourcing and multi-vendor strategy. The cloud CoE can help facilitate an ecosystem that induces healthy competition amongst suppliers and partners leading to win-win on all sides.
What competencies do we need to start a CoE?

Establishing a cloud CoE involves building and unifying several enterprise domains. Large and medium-sized enterprises tend to have a good mix of technology and business competencies in their workforce. Some organizations will overcome IT complexity with the help of a cloud managed services provider. Most organizations can get started by internally building the competencies required to run the cloud CoEs.

For example:

  • DevSecOps engineering
  • Infrastructure-as-code
  • Cloud-native application development
  • Product and platform engineering
  • FinOps
  • Security and threat modeling
  • IoT and big data analytics

Of course, starting up a cloud CoE will be a process of change management for all involved. Best bet is to begin with a proof of concept, rather than go for a big bang approach. Define and measure enterprise performance indicators on productivity, time to ship, and global scalability.

Sandipan Chakraborti is an associate director of hybrid cloud consulting for Kyndryl.

1 Gartner, Predicts 2023: The Continuous Rising Tide of Cloud Lifts All Boats, 9 March 2023.

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