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Mounting evidence proves that use of the cloud can drive significant value to businesses, yet a McKinsey study found that only 13 percent of the boards were actively thinking about and taking part in cloud solutions. 

Four practices were found to be the most useful in helping boards in effectively engaging with their management on cloud transformations. These practices apply to boards across all industries, albeit there may be minor nuances to consider based on the size and maturity of the organization. 

1. Link Cloud to the Overall Strategy Discussion

Instead of debating “Should we be in cloud?”, boards should discuss “How and when can we be in cloud?”. 

The board can help management and leadership teams think about how cloud can drive the business strategy.  

For example, the cloud’s flexibility and speed allow businesses to quickly test and iterate on target use cases such as personalizing customer experiences, scaling services, and capturing market opportunities. 

2. Incorporate Cloud into Risk and Compliance Discussions 

Several boards have begun to include cloud into their risk-assessment frameworks and risk decision-making. 

While corporate executives have been traditionally hesitant to go to the cloud due to security concerns, the fact is that cloud service providers (CSPs) have invested significant resources in building best-in-class security that frequently outperforms what many companies can do. 

Boards can add value by pushing management to update security training as part of a larger effort to unlock the risk advantages of cloud computing. Product strategy, DevOps culture, and technology development should all be integrated with security.  

Directors should also make sure that management has well-thought-out risk-mitigation plans in place so that the board can approve cloud-related strategies with reassurance. 

3. Support the Development of Cloud Capabilities Throughout the Organization 

A company can reap the full benefits of cloud only when IT and the business transform their operating models to be faster, more collaborative, and more agile.  

To do this, the organization should prioritize upgrading skills and improving ways of working throughout the firm. There should also be clarity on how the changes fit into the overarching digital transformation. 

The board can push management to make sure that strategies are in place to hire the right new cloud talent such as cloud architects and DevOps engineers. It is also important to provide appropriate training and upskilling for current employees. 

Executives should understand how cloud computing drives new value and enhances the business’ priorities. 

The best way to track progress is for the board to ask management to ensure cloud talent development is an explicit component of the broader transformation program through frequent updates and key performance indicators such as the number of cloud certifications. 

Another helpful method boards can do is to create a technology committee.  

Remember, cloud strategy doesn’t live in isolation. It’s an important part of a company’s overall technology and digital transformation. 

Cloud shouldn’t only be a topic assigned for only members with previous technology and cloud experience. Instead of being assigned to IT or lower levels of the organization, cloud should be weaved into top-line strategy conversations as part of a complete digital transformation. 

Having a technology committee can focus attention on asking management the right questions while keeping technology choices front and center on the broader board agenda. 

4. Oversee and Communicate Cloud’s Financial Impact 

Although cloud technology can provide significant value, the transition requires a lot of money up front.   

Cloud also needs a shift from a capital-expenditure-heavy (e.g., servers and data centers) to an operational-expenditure-heavy operating model (CSP costs). 

As a result, board members must collaborate with management from the beginning to establish a clear cloud business case that explicitly accounts for the trade-offs between up-front expenditures and operating-expenditure shifts required in the future. 

Final Thoughts 

Cloud technology has revolutionized the way businesses operate and has proven to have significant value to companies who use it.  

If your company is thinking about undergoing a digital transformation, it’s important to remember that cloud strategy doesn’t live in isolation. It’s an important part of a company’s overall technology and digital transformation. 

The power of the cloud is not a panacea, but it can help boards to become more efficient, adaptable, and keep up with the latest trends and developments in their industries. 

By implementing the four practices above, boards can benefit from the cloud’s capabilities in terms of cost savings, agility, and flexibility.