My previous post took on the admittedly easy task of simply explaining Cloud Computing. I hope I adequately trounced the misconception that Cloud Computing is complex or confusing or difficult to understand. If so, we can move on to the far sexier topic of what Cloud Computing means to IT Governance and my favorite of governance processes, Project and Portfolio Management (PPM).

I'll get right to the point, I believe IT Governance, and particularly PPM, is even more critical with the advent of Cloud Computing. Before I substantiate this belief, I want to pause and ensure nobody interprets this as me saying, "IT Governance and PPM matter more with the advent of Cloud Computing." I make this distinction due to the aftermath of one of my last posts of 2008. The focus of the article was my contention that IT Governance and PPM are even more critical in a Down Economy. I insisted Enterprises could no longer afford to make the high rate of mistakes historically associated with technology investments. I suggested they did not have the thresholds for failure they have enjoyed in the past. I asserted Enterprises had better make darn sure they were getting optimal value from those few technology initiatives they could afford to undertake. This launched a lot of requests for me to talk about why IT Governance mattered more in a Down Economy.

I shun the contention that IT Governance or PPM matters more in a given situation or under a specific condition. If I do entertain the conversation I potentially open the door to the converse; when the situation changes or the condition no longer exists, then IT Governance matters less. I flatly refuse to engage in those discussions. IT Governance and PPM matter - period. IT Governance and PPM are critical - period. I will only admit that changes in situations or conditions simply influence whether being bad at IT Governance hurts you more or hurts you less.

Now to get back to my original soapbox, I believe that IT Governance and PPM are even more critical with the advent of Cloud Computing. Cloud Computing provides more technology provisioning options and faster provisioning of those options to the business. These attributes of Cloud Computing make it easier and more tempting for the business to bypass IT. A credit card and Internet access is all you need to make an investment in technology. The barriers to entry for new applications and systems are greatly diminished. Businesses will find it easier than ever to provision technology services without the involvement of IT.

Now some of you might be celebrating this, and many would be justified in doing so. But if you are one of those clapping your hands and licking your lips, I suggest you are doing so because your organizations have poor IT Governance.

Enterprises with good IT Governance (or more appropriately, Business Governance of IT) wouldn't even consider bypassing IT. Sound IT Governance fosters a great relationship between IT and the business and at its pinnacle could actually blur the distinction between the two organizations. These Enterprises have the constructs and processes in place to ensure they have the optimal IT Archetype, IT Architecture, IT Infrastructure Strategies, Business Applications and IT Investments. They wouldn't dream of bypassing IT because they depend on the role IT plays in the governance processes required to make, realize, and measure the result of their technology decisions.

Consider the following list of IT Governance processes with notations showing the contribution of each when it comes to making Cloud Computing-related decisions:

• Integrated Business & IT Planning - Needed to determine Cloud strategic fit
• Architecture Management - Needed to determine Cloud architectural fit
• IT Investment Assessment, Prioritization, Funding & Benefits Realization Accountability (PPM) - Needed to ensure Cloud Computing investment decisions are reasoned, rational and deliver appropriate value
• IT Financial & Resource Allocation - Needed to address and manage the myriad of Cloud-related financial and resource ramifications
• Project Execution & Decision-making (PMOs/PM) - Needed to manage Cloud-related projects
• Emerging Technology Evaluation & Adoption - Determines which Cloud service and deployment models to adopt and when to adopt them
• Client Relationship Management - Liaison between the Cloud User and Cloud Provider
• Building & Maintaining Applications & Infrastructure - Key in determining when to develop/deploy on premise vs. defer to the Cloud
• Provisioning of IT Services - Needed to facilitate and manage service provisioning in the Cloud
• Outsourcing Services - Needed to manage Cloud contracts and manage far more critical SLAs
• Audit & Risk Management - Needed to address and ensure security and compliance

Organizations adept at these processes know they are essential to making the decisions required to ensure:

• IT is aligned to the business
• technology investments deliver appropriate value to the business
• technology risks are appropriately managed
• technology resources are appropriately managed
• technology performance is appropriately managed

Of all the IT Governance processes I list above, Project and Portfolio Management (PPM) is the process I believe most contributes to meeting the above principles of IT Governance. PPM ensures all investments are identified, prioritized, authorized, managed, and controlled to achieve specific strategic business objectives. This includes investments in Cloud Computing.

The bad news is that in my visits to more than 100 companies around the world, I have found most organizations lack adequate PPM capabilities. Technology investment decisions are frequently undisciplined, mismanaged, and too often wrong (50% of the time according to almost every IT Project success rate study over the past 20 years). Poor PPM leaves a huge chasm between the business and IT and many Enterprises will view Cloud Computing as a panacea to this deficiency. They will now be able to go directly to Cloud Providers to make investments in technology. But will those technology investments be aligned with the business? Will they deliver appropriate value? Will they be too risky? Will they make the best use of resources? Will they perform as desired? Will those technology investments be the right decisions?

Enterprises with sound IT Governance and PPM will simply continue to ask and answer each of those critical questions because they have institutionalized processes such as PPM and they have fostered and enabled reasoned and rational decision-making. Cloud Computing becomes just another business technology investment option for the folks who are assigned technology investment decision rights and accountability.

Cloud Computing is in its infancy, but expect it to grow up fast. The potential of Cloud Computing is mind boggling and the technology and business options will increase exponentially. This will necessitate the need for Enterprises to make the right technology investment decisions faster, which will only be achieved through optimized decision-making constructs. For organizations lacking the stellar decision-making capability born of IT Governance and PPM, Cloud Computing could simply mean they'll make their flawed technology investment decisions faster and more frequently.

Enterprises with sound IT Governance will look to the Cloud and imagine one possibility after another. Those without it will likely have IT organizations viewing the Cloud as a tempest and will eventually discover they are ill prepared for the coming storm.

Steve Romero, IT Governance Evangelist