Queensland University of Technology CRICOS No. 00213J ON GOVERNANCE STRUCTURES FOR CLOUD RESOURCES AND ASSESSING THEIR EFFECTIVENESS Acklesh Prasad QUT

Queensland University of Technology

CRICOS No. 00213J

ON GOVERNANCE STRUCTURES FOR CLOUD RESOURCES AND ASSESSING THEIR

EFFECTIVENESS

Acklesh PrasadQUT Business School – Queensland University of Technology, Brisbane, Queensland,

Australia

Peter GreenJon Heales

UQ Business School – University of Queensland Brisbane, Queensland, Australia

CRICOS No. 00213Ja university for the worldrealR

Presentation Outline

• Motivation/Introduction • Research Question• Theory• Hypotheses Development• Research Design• Results • Discussion• Contributions and Limitations• Conclusion


Introduction

• Cloud resources provide opportunities and challenges to businesses.

• However, acquiring IT resources as a utility from the cloud is gaining momentum.

• Cloud presents better and more economical ways to continue to embed modern

IT resources in information systems (IS).

• Overall, organizations interest in cloud resources will continue to increase.

– Gartner (2012)…. “Cloud computing to be a $206.6 billion business by 2016.”

– Fratto (2012)… “Cloud computing is coming to your organization, like it or not.”


Introduction

• The resource is the same (IT), but nature of commitment, relationship management, and expectation from the resource is different.

• Marston et al., (2011) “CIOs and CTOs should proactively develop an overall “cloud strategy” in order to determine a time-based plan about which of their applications they can move to the cloud, and the timeframes associated with each of them.”

• Governance structures for IT resources require consideration.

• Fratto (2012) “A governance plan gives the cloud IT the proactive control needed to proceed safely”

• Eventually, it has to embed into organizations overall IT governance structures.


Introduction

• The current position on cloud governance:

– Practice-based conceptual deliberations on the benefits of cloud services and the surrounding technologies (for example, KPMG and Gartner resources).

– Academic contribution is starting to focus on business-related issues surrounding cloud computing (see for example, Brumec and Vrček, 2013; Marston et al., 2011; Misra and Mondal, 2011; Sultan, 2010).

• Our effort - to blend these thoughts and suggest appropriate IT governance structures for cloud resources.


Research Question

What are the appropriate IT governance structures for managing

cloud resources to achieve cloud-related business objectives?


Conceptually…..

• Cloud-based business objectives - achieving outcomes relating to improved agility, better creativity and innovation, and simplicity of IT systems

• Cloud-related financial objectives - better returns on investment in IT, improvement in total IT lifecycle costs, and better response to economic conditions.

Cloud-Related IT Governance Structures

Cloud-Related IT Governance Structures

Cloud-Related Business Objectives

Cloud-Related Business Objectives

Cloud-Related Financial Objectives

Cloud-Related Financial Objectives


What should be the Nature of Cloud Governance Structures?

• Cloud resources will be dynamic.• To source “new” value:

– Governance structures would need to be dynamic – Ability to build capacity to continue to leverage “new” value from the cloud resources.

• Resource-Centric View and Dynamic Capabilities Framework

– New players with continuous commitment and engagement. Governance structures would have a relational component. Shared governance.

• Relational view of the firm


Research Design

• A Triangulation approach– Theoretical Underpinnings – Conceptual Deliberations

• Practice and Academic

– Interpretive Field Investigation

• A set of possible IT governance structures for managing cloud resources.

• Subsequent – Validation of the (model) with a field survey.


The Model of Cloud Governance

Chief Cloud Officer

Chief Cloud Officer

Cloud Management Committee

Cloud Management Committee

Cloud Service Facilitation

Cloud Service Facilitation

Cloud-Related Business

Objectives

Cloud-Related Business

Objectives

Cloud Relationship

Centre

Cloud Relationship

Centre

Cloud-Related Financial

Objectives

Cloud-Related Financial

ObjectivesH5

Fig. 2 Research ModelFig. 2 Research Model


The Model of Cloud Governance

• Chief Cloud Officer - expertise, initiator, the dynamic component, local expertise, proactive.

• Cloud Management Committee – overall cloud direction, strategy, steering role.

• Cloud Service Facilitation - issue resolution center, develop and administer performance monitoring, manage change facilitation, and consider tactical decisions relating to cloud services economics of cloud, (cloud provider risk assessment, and enterprise agreements.)

• Cloud Relationship Centre - relationship management, cloud service gateway, dynamic and continuous relationship between corporate IT and business units, communication of cloud related security, architecture standards, and integration requirements, and business unit compliance, security in cloud, the possibility of changing business models quickly.


Field Assessment

• A survey Approach• Measurement Item Development and Validation• Sampling Frame Construction• Pilot test• 136 valid responses

– 26 actual cloud adopters– 110 from prospective cloud adopters

• Diagnostic Analysis– No issues identified


Survey Data Quality Table 4.Factor Loadings, Loading Descriptive, and Cross Loadings

Factor Loading

Mean Std Dev T-Stat CBO CCO CFO CMC CRC CSF

CBO1 CBO 0.799 0.801 0.029 27.39 0.799 0.435 0.547 0.302 0.524 0.326

CBO2CBO 0.866 0.864 0.025 34.80 0.866 0.281 0.452 0.498 0.485 0.303

CBO3CBO 0.857 0.857 0.022 38.43 0.857 0.351 0.432 0.486 0.500 0.408

CCO1CCO 0.904 0.900 0.026 35.14 0.296 0.904 0.313 0.155 0.159 0.400

CCO2 CCO 0.953 0.952 0.010 99.91 0.395 0.953 0.380 0.192 0.291 0.305

CCO3 CCO 0.932 0.934 0.012 75.77 0.455 0.932 0.427 0.173 0.349 0.333

CFO1 CFO 0.967 0.967 0.006 153.26 0.336 0.366 0.967 0.283 0.422 0.362

CFO2 CFO 0.943 0.944 0.013 72.81 0.377 0.377 0.943 0.312 0.423 0.391

CFO3 CFO 0.894 0.895 0.022 41.35 0.463 0.410 0.894 0.317 0.355 0.358

CMC1CMC 0.880 0.880 0.018 50.30 0.491 0.137 0.370 0.880 0.497 0.189

CMC2CMC 0.796 0.792 0.034 23.13 0.466 0.075 0.221 0.796 0.439 0.115

CMC3CMC 0.798 0.796 0.044 18.19 0.401 0.270 0.197 0.798 0.338 0.212

CRC1CRC 0.874 0.874 0.017 52.04 0.352 0.193 0.283 0.425 0.874 0.200

CRC2CRC 0.860 0.857 0.030 28.61 0.485 0.308 0.460 0.406 0.860 0.296

CRC3CRC 0.715 0.714 0.054 13.29 0.424 0.246 0.322 0.456 0.715 0.211

CSF1CSF 0.933 0.933 0.009 109.40 0.453 0.430 0.379 0.267 0.303 0.933

CSF2CSF 0.845 0.844 0.025 34.10 0.296 0.476 0.281 0.115 0.169 0.845

CSF3CSF 0.839 0.834 0.039 21.29 0.293 0.392 0.373 0.117 0.257 0.839

Note: CCO – Chief Cloud Officer; CMC – Cloud Management Committee; CSF – Cloud Service Facilitation; CRC – Cloud Relationship Committee, CBO – Cloud-Related Business Objectives; CFO – Cloud-Related Financial Objectives


Survey Data Quality

Table 5.Measurement Properties

AVE CA CBO CCO CFO CMC CRC CSF

CBO 0.708 0.793 0.841

CCO 0.865 0.923 0.422 0.930

CFO 0.875 0.928 0.565 0.409 0.935

CMC 0.682 0.766 0.551 0.188 0.324 0.826

CRC 0.672 0.752 0.520 0.300 0.430 0.520 0.820

CSF 0.763 0.847 0.412 0.567 0.396 0.206 0.286 0.873

Note: CCO – Chief Cloud Officer; CMC – Cloud Management Committee; CSF – Cloud Service Facilitation; CRC – Cloud Relationship Committee, CBO – Cloud-Related Business Objectives; CFO – Cloud-Related Financial Objectives; AVE – Average Variance Extracted; CA – Cronbach’s Alpha


Cloud Governance Structures and Business Objectives

Table 6. Cloud Governance Structures Cloud-Related Business Objectives - Hypotheses 1-4

Relationship Path Coefficient p-value sig.

Chief Cloud Officer Cloud-Related Business Objectives

0.136 2.737 *

Cloud Management Committee Cloud-Related Business Objectives

0.228 5.284 ***

Cloud Service Facilitation Cloud-Related Business Objectives

0.110 2.601 *

Cloud Relationship Management Cloud-Related Business Objectives

0.535 11.266 ***

Explained Variance (R2) 0.609* p<0.05, ** p<0.01, *** p<0.001


Cloud Governance Structures and Business Objectives

Table 7.Cloud-Related Business Objectives Cloud Related Financial Objectives - Hypothesis 5

RelationshipPath

Coefficient

p-valu

esig.

Cloud-Related Business Objectives Cloud-Related Financial Objectives

0.5669.97

5***

Explained Variance (R2) 0.319

* p<0.05, ** p<0.01, *** p<0.001


Discussion

• The impetus to seek cloud services is gaining momentum.• A proactive approach to governance of cloud resources is

desirable.• We suggest four cloud governance structures that focus on

initiation decision making fit relationship management.• Overall - continuous and careful thought, perceived good fit

of the prospective cloud resources, and subsequent actual implementation of the services into the business processes.

• Value Trajectory - cloud-related business objectives cloud-related financial objectives.


Contributions

• Formal thought on and validation of possible cloud governance structures.

• Consideration on the element of dynamics in cloud governance structures possible with the suggested four structures.

• The importance of managing relations with key stakeholders yet, owning cloud governance.

• Ways to determine whether path to the cloud is still feasible.


Limitations

• Model validation – Response rate – Actual cloud adopters – Overall – 136 valid responses.

• A generic set of structures– Not specific on a particular business environment or a

cloud provider

• Perceptive measures


Conclusion

• Cloud computing is gaining momentum, and is here to stay. • Utility approach is not new, but the thought of sourcing IT resources as a

utility is presenting excellent opportunities to organizations to manage their IT cost, and have modern IT resources to facilitate innovation.

• Organizations responsibility of appropriately managing their resources remain

• Our triangulation approach has suggested four possible IT governance structures for cloud computing. These structures relate to having a strategic thought on cloud resources, the importance of having a cloud expert, cloud service polices, and manage and integrate cloud in organizations.

• We hope our effort will increase understanding on ways to approach the adoption of cloud technologies by establishing procedures at the outset to ensure the acquired IT resources contribute to the strategic intent of organizations, and swiftly fit into their existing business processes.

Queensland University of Technology

CRICOS No. 00213J

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Queensland University of Technology CRICOS No. 00213J ON GOVERNANCE STRUCTURES FOR CLOUD RESOURCES AND ASSESSING THEIR EFFECTIVENESS Acklesh Prasad QUT