Cloud Operating Model: What Is It and How to Enable It

In the ever-evolving landscape of cloud computing, the right cloud operating model can make all the difference. As organizations increasingly transition to the cloud, understanding the importance of cloud operating models, as well as the different types, becomes paramount.Throughout this post, we’ll discuss the cloud operating model – what it is, how it’s different from a traditional IT model, different types of models, and how to use it for your business.

What is a Cloud Operating Model?

A cloud operating model outlines the processes and procedures that an organization will take to make the most out of cloud services. It should include the roles and responsibilities that different people will have, as well as any necessary governance structures for IT resources and operations in a cloud computing environment.

When creating a cloud operating model, a business might think beyond the daily operations to include plans for their overall cloud strategy. How the cloud will be managed in terms of compliance, risk management, and security? What will be the design of the cloud architecture?

How is a Cloud Operating Model Different?

The operational plan an organization is currently running in an on-premises environment may need to be slightly or substantially altered when migrating to the cloud. A cloud operating model will take this plan and shift it to the cloud. While the same people and processes need to be considered, the higher-level operations may need to change to fit the new environment.

Cloud operating models are different from traditional IT operating models mostly thanks to the nature of the cloud computing environment itself. There’s a greater focus on innovation and agility because cloud computing makes it easier for organizations to deploy new applications quickly and scale on demand.

There’s also a more shared responsibility that needs to be factored into a cloud operating model – instead of the IT infrastructure being managed solely by the organization, there are responsibilities held by the cloud provider regarding cloud infrastructure management, which will vary based on the services a business chooses to outsource.

Pricing models also differ as, according to Microsoft Azure, “The cloud shifts your focus upstream to operating systems, applications, and data digital assets.” When companies run their own data centers, they’re operating on a capital expenditures (CapEx) model – there’s a high upfront investment in hardware, software, and facility costs. Moving to the cloud will shift a business to an operating expenditures (OpEx) model, where more items are pay-as-you-go or subscription-based.

How to Define Your Cloud Operating Model

Cloud operating models are inherently complex, and it’s important to have the proper IT skills on-hand to ensure successful adoption while determining your model. Before implementing your cloud architecture based on principles learned from either Microsoft Azure’s Well-Architected Framework or Amazon Web Service’s (AWS) Well-Architected Framework, it’s important to clarify how you intend to operate within the cloud.

To collectively define your cloud operating approach, you must understand your organization’s:

• Overall strategy
• Organizational considerations
• Governance, risk, and compliance requirements

As you begin developing a cloud operating model that best fits your organization, study Azure’s Cloud Adoption Framework or the AWS Cloud Adoption Framework. These methodologies (Azure) and capabilities/perspectives (AWS) break down different aspects of the cloud operating model into digestable sections, and offer actionable exercises and best practices to help design and manage your cloud transformation and future operations.

Azure CAF Methodologies to Use

The following four methodologies within Azure’s CAF can be especially helpful when developing a cloud operating model.

• Manage: Ensure that your ongoing processes are in sync with the management of technology.
• Govern: Stay in line with governance and compliance needs and maintain consistency throughout your adoption efforts.
• Security strategy: Develop your cloud security strategy.
• Organize: Specify the functions your business requires and establish organizational approaches to achieve your business goals with your team.

AWS CAF Capabilities/Perspectives to Use

AWS recommends reviewing the six capabilities and perspectives within their CAF when shaping a cloud operating model:

• Business Perspective: Align cloud adoption with strategic business goals and budget considerations.
• People Perspective: Focus on aligning roles, responsibilities, and culture changes to support cloud initiatives.
• Governance Perspective: Develop solid governance policies and mechanisms to ensure compliance, risk mitigation, and resource allocation.
• Platform Perspective: Delve into architectural decisions, infrastructure setup, and the cloud environment to meet your specific requirements.
• Security Perspective: Prioritize security by addressing identity, data protection, and compliance concerns.
• Operations Perspective: Establish cloud management practices, including cost optimization, performance monitoring, and resource management.
• Compliance Perspective: Ensure your cloud adoption aligns with industry-specific and regulatory compliance requirements.
• Foundation Perspective: Create a strong foundation by optimizing the use of AWS services and features to suit your organization’s needs.

4 Cloud Operating Model Examples

As with cloud environments, different cloud operating models cater to different organizational needs and objectives. The following four common examples offer unique insights into how businesses can optimize their cloud strategies.

1. Decentralized Operations

Decentralized operations is a cloud operating model that grants individual teams or business units a high degree of autonomy in managing their cloud resources. In this model, each team is responsible for provisioning, monitoring, and maintaining their cloud services independently.

This approach empowers teams to move quickly, experiment, and innovate while promoting agility and responsiveness to the unique needs of each team or project. However, decentralized operations require robust governance, cost management, and security policies to ensure that cloud resources are used efficiently and securely across the organization.

This cloud operating model is often favored by organizations that prioritize agility and innovation at the team level while maintaining overall control and compliance standards.

2. Central Operations

Central operations (or “centralized operations”) is characterized by the centralization of cloud resource management within a dedicated team or department. In this approach, a centralized team oversees the provisioning, monitoring, and optimization of cloud services for the entire organization.

This cloud operating model promotes standardized practices, unified governance, and cost efficiency by consolidating cloud resource management under a single umbrella. Central operations often implements well-defined policies and processes to ensure security, compliance, and cost control across the organization. While it provides strong governance and cost oversight, it may be perceived as less agile compared to a decentralized model.

3. Enterprise Operations

The enterprise operations cloud operating model combines elements of both centralization and decentralization to strike a balance between governance and autonomy. In enterprise operations, individual business units or departments often have some level of autonomy over their cloud resources while adhering to overarching corporate guidelines.

This model allows business units to innovate and respond to specific needs while benefiting from shared services, centralized governance, and standardized practices provided by a centralized cloud team.

Enterprise operations prioritizes scalability, cost control, and security, making it well-suited for organizations seeking to balance innovation and standardization in their cloud strategies. Why? It fosters collaboration between business units and the central cloud team to achieve organizational goals effectively.

4. Distributed Operations

Distributed operations emphasizes autonomy and independence for various business units or geographic regions within an organization. In this model, different units have substantial control over their cloud environments, including resource provisioning, configuration, and management. 

This model is particularly useful for organizations with a highly diversified business structure or global presence. Distributed operations allows individual units to tailor their cloud solutions to their unique requirements, promoting agility and responsiveness. However, it also presents challenges related to governance and coordination. 

This approach to cloud management is often implemented to ensure compliance, security, and cost control across the organization while allowing units to operate independently. This model encourages innovation at the local level while still benefiting from shared best practices and support from a central cloud team when needed.

How to Deliver a Cloud Operating Model?

Adopting

Right before the adoption phase, a business will likely evaluate a few different cloud providers to determine which one meets their requirements. Each cloud provider comes with strengths and weaknesses, but once these factors are weighed, cloud adoption begins.

Adopting cloud computing might look like moving all IT resources over to the cloud at once, or taking a more incremental approach to cloud migration. Businesses may also want to adopt a hybrid cloud strategy – combining on-premises and cloud frameworks.

By starting small and scaling over time, organizations can reduce risk and disruption to their business processes, but it also means that cloud migration will take longer. A cloud migration strategy will feed into the cloud operating model that comes next.

Standardizing

Once a business has partially or completely adopted cloud computing, it’s time to standardize. You’ll need to decide how your cloud environment will be managed and configured and document a set of standards for how you want things to run. By standardizing the cloud environment, you can keep compliance, efficiency, and security top of mind.

A cloud management platform can help with standardization by automating and managing many tasks associated with running a cloud environment. You might also want to create a cloud governance framework to ensure the cloud is being used in a way that is compliant and secure.

Scaling

As your business grows, your cloud environment can grow with you. Cloud computing makes it much easier to scale to meet your evolving needs. Automation, cloud monitoring tools, and cloud-native applications can also lend a helping hand in scaling the cloud.

Make Your Cloud Transformation Easy by Filling Skills Gaps

Cloud transformation, like all digital transformation projects, provides unique opportunities for innovation and new directions for your business to grow. However, it also requires a varied set of skills to pull off properly. TierPoint can help you address any cloud skill gaps, provide managed services, or offer consulting to your business as you embark on growing in the cloud and establishing your cloud operating model.

Wondering what skills you should have on your team to ensure a successful cloud migration? Download our eBook to discover the types of technical skills and resources you need during your journey to the cloud.