Are you looking to accelerate your career either as a Cloud Architect, Enterprise Architect,
or an Account Manager? If so, this video is for you. Hi, my name is Michael Gibbs and
I'm the founder and CEO of GoCloud Architects. And we're an organization dedicated towards
building high performance cloud computing and tech careers. I've been working in technology
for over 25 years and I've been mentoring or coaching others for two decades now. Today,
we're going to talk about business acumen skills for technology professionals.
See if you're a Cloud Architect or an Enterprise Architect or a Sales Rep, you are going to
be constantly dealing with customers. You're going to have to consult with them. You're
going to have to ask their business, their legal, their technical requirements, and you're
going to have to design a solution for them. And then you're going to have to convince
that customer that solution is in their best interest. And this will be completely impossible
if you don't speak the same language as the executive team, as well as the engineering
team. See these architecture positions are consultative and they're a hybrid between
an executive and an engineer. So you have to speak both languages. So today, when we
talk about cloud architect business acumen or enterprise architect business acumen, and
even account manager business acumen, it's to help you succeed in these jobs. So we're
going to begin with the CEO and what is the CEO's job?
The CEO or the Chief Executive Officer, is the person that's responsible for running
the organization. Now, if it's a publicly traded company, meaning they're available
on the stock market, the CEO's primary job is to increase shareholder value. What does
that mean? It means make the stock price go up. And how does an organization make the
stock price grow up? They increase profitability, which means either increasing sales or decreasing
expenses. Pretty much that's how an organization makes the stock price go up. Or they could
pay dividends, but that's another story by increasing the financial profitability returns
that are given to the investors, people who hold the stock. So the CEO is responsible
for increasing shareholder value. So what does that all mean? They're responsible for
growing the business. This means increasing sales or revenue. And it also means when possible,
to decrease expenses, because that's how you promote profitability.
The CEO creates the vision and the strategy for the organization and the CEO leverages
all the people in the team, as well as their partners, which could be technology partners,
it could be organizations, it could be lots of different organizations to execute on their
mission. That is the CEO's job. Set the strategy, grow the business. Now you know what the CEO
does. Let's talk about the CFO. The Chief Financial Officer manages all financial aspects
of the company. So basically they work for the CEO and they help them plan, budget, and
forecast revenue expenses, and anything that would be part of the organization's financial
performance. That's what the CFO's do. The CFO's are the gateway to money. So if you're
in a sales process, the CFO is going to be involved somewhere along the lines. You must
be able to speak business acumen, ROI modeling, and other things necessary for both the CEO
and the CFO. And we'll teach you later how to do that.
Now let's talk about the Chief Information Officer. So if you're a Cloud Architect or
you're an Enterprise Architect, or even an Account Manager, you're going to be spending
a lot of time with the Chief Information Officer. The Chief Information Officer works for the
CEO and they help the CEO execute their strategy through the use of information technology.
So basically, this is going to be your peer that you're going to be working with in the
organization. So you're going to spend a lot of time with the CIO. So what does the CIO
care about? They care about helping the CEO execute their mission through IT. So you're
going to be a strategic advisor. You're going to be working with the CIO to let them know
of new emerging technologies that can improve their business. You're going to let them know
of new offerings that you have. And you're going to show them how technology can help
them meet their goals, to make the CEO happy by executing the CEO's vision.
So now you kind of know the main things that the CIO, CEO and CFO do, which is a CXO relevance.
You've got to be able to speak to them in their language. Now let's talk about some
more fun business acumen for Cloud Architects or Enterprise Architects. Let's talk about
how organizations become profitable. You can increase your sales, it's like getting a raise
at work. Now, if you get a raise at work, but your expenses go up, you have less money.
Well, same thing for the organization. If they spend a lot of money to sell, they might
actually sell more but lose money. So the way organizations become profitable is they
grow their sales, they decrease their ongoing expenses like operational expenses, or they
decrease the things they purchase.
They reduce the amount of travel people do. Ding, ding, ding you're in tech. You can probably
reduce travel and still increase communication collaboration skills, and lots of other things.
So in tech, you have a lot of ability to kind of help these things. And that's what makes
you such a great strategic adviser. Remember the Cloud Architect, Enterprise Architect,
even the Account Manager are a strategic advisor. And with that, you must know business acumen.
Because you need to know business acumen, and you're going to meet with clients, you
have to understand their business. Now your clients will tell you a lot about their business
if you ask them, but you can find out a lot on your own before you get there. For organizations
that are publicly traded, and many of these organizations that are going to be looking
for these big cloud migrations are publicly traded, they have public financial statements,
so go read them.
And this way, when you meet with the clients, you're going to be very prepared. But how
do you read them? Well, let's talk briefly, I can give you the five minute overview of
how to review a financial statement. When you look at a financial statement, there's
a few things that are really important for you to see these are important metrics. The
first is revenue. What is revenue? Total sales. You're going to see it at the top line. It's
the total sales of all goods and services, that's revenue. But revenue is not profit.
So we're going to look at a couple of kinds of profit. The first profit we're going to
look at is gross profit, which is really just total sales minus the cost of goods sold.
That's your gross profit, but that's not full profit, that's gross profit.
So next, we'll talk about operating profits. So what is operating profit? You take the
gross profit and you just subtract the operating expenses. And then lastly, we'll talk about
what true profit is or net profit. And this is basically where you take the operating
income, subtract out the expenses, taxes and interest, and that's your real profit or net
income. So let's briefly talk about it one more time. Revenue, total sales. Gross profit,
total sales minus the cost of the goods that you sold. Operating profit, gross profit minus
operating expenses. And net profit is your operating income minus your operating expenses,
minus your taxes and interest. As architects, we're going to be designing systems and we're
going to have to show organizations that it's worth purchasing or investing in these systems.
Businesses have two kinds of expenses. They have capital expenses and operational expenses.
Capital expenses are things that our organization purchases, plant, property, equipment, servers,
routers, switches, firewalls, tech stuff. Operational expenses are ongoing monthly expenses
like employees, travel, leases, electric bills, that kind of thing. So let's look what happens
in technology. It used to be that when an organization would invest in technology, they
would spend a lot on servers, hardware, and network gear, security gear, but all that
changed with the cloud. So this big capital expenses that organizations have in a traditional
environment get shifted to operational expenses or ongoing expenses. Is that better for the
organization? Maybe, maybe not. It's you as the Cloud Architect to work with the organization
to help them do the ROI modeling, to determine what the best solution is. But for argument's
sake, let's say the cloud is cheaper. And let's say the cloud is cheaper, we're going
to be thrilled with that solution and work with it for right now.
But when it comes to reality, you're going to have to do this ROI modeling or someone
from your team is for the customer. Now that you understand these components, let's talk
about why organizations invest in tech. They're not like us. As Cloud Architects, we love
tech, oh, this is cool. This is cool. This is cool. They don't buy tech because they
want tech. In fact, organizations buy tech for the following reasons, it can provide
a competitive advantage. It can improve employee productivity, meaning employees can do more
than they could without the tech. It can enable a business to have new service offerings.
It can help their people collaborate better to design better things, or spend less money
on travel. Tech can really reduce costs in a lot of ways, it can get you closer to your
customers, which is really important. And with data science and analytics tools, tech
can help businesses make better decisions, which can increase their sales or reduce their
expenses.
So organizations invest in tech for a competitive advantage, not because they like tech. So
when you're presenting your solutions as a Cloud Architect, Enterprise Architect, or
an Account Manager, you must show the organization how your tech is going to solve these problems.
Typically speaking, we'll give you the non-technical way to deal with the customers and then the
technical way, meaning the business acumen way. First and foremost, organizations typically
invest in tech for the following reasons. Tech can make them better, faster or cheaper.
If you can make an organization better, faster, or cheaper with tech all with a single thing,
the customer will almost always adopt your solution. Now, if you can get your customer
two out of the three better, faster, or cheaper things, they will in most cases actually adopt
your solution. And the only time an organization is ever going to adopt your solution if it
only has one of those things, is if it's a disruptive solution, some kind of solution
that changes life as the way we know it.
In that, any one of those ways will actually work. But as a rule, your solution or your
architecture will work if it makes things better, faster, and cheaper, always, the customer
will always want that. If it does two out of the three things, most of the time, your
customer will want it. And if it only does one out of those three things, they will only
want it unless it gives your customer some special competitive advantage. Because of
this, you're going to have to actually show the organization with some type of financial
metrics that you're making an impact on their business. And how are you going to do this?
You're going to do ROI modeling, or return on investment modeling. You're going to have
to show the organization that the time they spend here and the money they spend here is
worth it.
Because remember, organizations can invest their money in multiple places and they need
to invest their money in the place that's going to give them the best return. Look at
it this way. Let's say for example, I invest a hundred million dollars in technology and
it produces a billion dollars of benefit for the organization. That sounds good. But what
if that a hundred million dollars invested in technology could be invested somewhere
else and create $10 billion in sales? Well, an organization's not going to invest in tech,
they're going to invest in something else. And you have to understand that and be able
to show that to the organization. And that's why Cloud Architect business acumen or Enterprise
Architect business acumen, or Account Manager business acumen is so critical. So now that
you understand that, let's talk about calculating the ROI modeling. First and foremost, you're
going to need to do some good ROI modeling.
You're going to have to look at the problem your solution is solving. Does it save people
hours? And if so, how many hours is this going to save? Does it increase sales by providing
a new channel? What does that equate to? So you have to make some estimates based on some
things that you'll plan, and you'll have to share your assumptions with the customers
on how you came to these calculations. The next thing you need to do is you need to look
at the chances of your project actually being successful. So let's say you've got a $10
million project and it's supposed to produce a $10 million opportunity for the customer,
and it only costs one million of tech. But it's a $10 million product that should provide
an organization $10 million of the value if it works. But you think there's only a three
quarter chance of this actually working.
So the way you calculate the expected value of an opportunity is, you would take three
quarters or 75% chance of the $10 million solution working. And you would net out seven
and a half a million. So now you know. Now if the cost of technology is one million and
the net result based on those 75% profitability of the $10 million outcome occurring, gives
you seven and a half million, it looks like a great investment in technology. It looks
like it's going to return 7.5 times. Now what is the organization going to do? They're going
to say, "Well, if I invested this money elsewhere, this $1 million will I get more return than
seven and a half million or less return?" Now, if they would get more return, the organization
will not invest in technology unless they have to, if it's critical to the business,
or it's required by a regulatory environment.
Now, if your technology solution produces a better value than another investment, your
customers will constantly adopt it. And that's why as a Cloud Architect or an Enterprise
Architect, or even an Account Manager, you must be able to show the value of your solution.
Nobody's going to buy your solution because it's a solution. They're going to buy your
solution because it's going to solve a problem. And how do you show them that it's going to
solve a problem? You present it to them with ROI modeling. The other part of the ROI modeling
is it's, how does an organization buy tech? Typically speaking, they don't usually pay
cash. They actually finance it. So now in the cloud, there's not much to purchase. They're
going to be just operational expenses. But if you're an architect like an Enterprise
Architect or a Cloud Architect, what if your solution involves purchasing a thing for the
data center and then the cloud? Well, there's financing involved.
So when you actually do your ROI modeling, you're doing it a little bit differently.
You're looking at the weighted average cost of capital, which is how much an organization
actually pays in terms of interest in financing for something, compared to the benefit that's
received. So same process as before, but let's say a solution, the solution is $50 million
a month, but it saves the customer $200 million a month. If that's the case, it's probably
a good investment for the customer, especially with finance debt. And that way, well you
understand how these things work. So let's talk about what we talked today. We talked
about business acumen for the Cloud Architect community for the Enterprise Architect community
and for the Account Manager community. Why is it so essential if you're going to speak
to the CEO, the CFO, the CIO, you've got to be relevant and you've got to communicate
to them in their language. You now know what the CEO, CFO, CIO care about. You now know
how to communicate with them. You now know how to perform ROI modeling, and now you've
increased your business acumen.
Thank you so much for watching this video on business acumen for technology professionals
like Cloud Architects, Enterprise Architects, and Account Managers. Let me tell you about
some things we do for the Cloud Architect community. On every Monday and every Friday,
we have a completely free how to get your first Cloud Architect job webinar. And on
this webinar, we tell you everything you need to do to get hired. Come join us. It's completely
free. We do it on Monday on Thursday. Now every Tuesday, we have this really fun Cloud
Architect experience challenge, and we invite people from all over around the world to join
us on Zoom.
The students that will come in will basically interview me and I will present a business
situation and a challenge. And the students after their interviewing, will design a cloud
architecture for at least two clouds, and it will be to solve all of my business problems.
It'll be a chance to see if you're ready to get hired. And if not, you're going to know
exactly what you need to do to be done, and ready and get hired, because getting hired
is essential. The next thing that we try and do is every Wednesday, we try to do a free,
completely live Cloud Architect career question and answer session, where I come on for one
to three hours as much time as I have. And you ask any cloud architecture questions you
have, and we answer them for you real time, because we want to make sure that you get
to your career goals. Now we provide free AWS certification training. I'll leave the
links in the description below.
We have a completely free AWS Certified Solution Architect Associate e-book and course completely
free. We have a completely free AWS Certified Solution Architect Professional course. Again,
I'll leave the link in the description below. And we have filmed a live, completely free
AWS Advanced Networking course. We're actually doing this on the week of July 13th. And after
this, it will be available on YouTube. Again, I'll leave the link in the description below.
It's taught by me. I've been working in networking for over 25 years. I'm one of the first Cisco
certified internet experts and I love discussing networking. So I'll leave the link for that
free AWS Advanced Networking course below. Thank you so much for watching this video.
I'm so flattered and honored to be part of this Cloud Architect community and be able
to present videos to you every week and to answer people's questions. And I'm so grateful
for this. I will see you very soon.