Cloud is a powerful tool that can enable a business to undergo a digital transformation and innovate for competitive advantage.
Underestimating the cloud journey, or viewing it as a one-time IT project, will slow progress and leave enormous amounts of value on the table.
Paying attention to key mission-critical factors can close the cloud potential gap.
Though companies have been quietly embracing cloud computing for years, 2020 proved emphatically to boards and C-suites just how vital it is to survival and the pursuit of new opportunities. When the COVID-19 pandemic shuttered economies, businesses quickly discovered that they needed cloud’s web-based computing services to enable employees to work remotely, to shore up fractured supply chains, and to provide new digital services to consumers who couldn’t leave their homes.
Contrary to its marketing buzz, cloud is not a single technology or one-stop money-saving solution, but rather a collection of computing software and data services that can be accessed via the internet instead of residing on a desktop or internal servers. These services include applications as simple as email or as complex as customer relationship management software, and afford companies massive amounts of computing power needed to develop and test new proprietary applications.
Because cloud computing platforms are ‘always on,’ they are ideal test beds for experimenting with and deploying new technology solutions, incorporating advanced analytics, automation, blockchain, quantum computing, augmented and virtual reality, and 3D printing. This makes cloud systems a powerful strategic tool—not just a tactic.
Yet despite the acceleration of adoption across the business landscape, most companies are barely scratching the surface of cloud’s vast potential. Many find that progress after ‘moving to the cloud’ comes either slowly or not at all, and find the need to reset. We call this the ‘cloud hump’—a significant ramping up of cloud spending followed by a forced pause to figure out a new path forward.
Making the pivot from tactical to strategic is not easy. We’ve identified seven mission-critical factors for closing cloud’s potential gap:
For many organisations, a cloud transformation creates the urge to ‘lift and shift’ data and applications from legacy IT systems to cloud platforms merely for the cost-saving benefits. But this approach leaves an enormous amount of value on the table, and could even derail a cloud transformation. Avoid the temptation to see cloud only as a cost-saving, operational IT project—and view it as a catalyst for business value creation instead.
Along those same lines, another pitfall is seeing business challenges through a “pre-cloud” lens which risks defining the opportunity of cloud too narrowly. For example, while cloud might be a way for a company to ensure regulatory compliance (such as in open banking), that same technology viewed more broadly is the beginnings of an entirely new revenue stream (as in the opportunity to play in an entirely new fintech ecosystem).
For technology investments to pay off, humans and machines must work together in harmony. In our analysis of cloud migrations, we found that efforts often get derailed when leaders try to push employees to embrace what cloud offers rather than including them in part of the broader strategic change. When employees don’t believe that the technology they feel is being forced upon them is fit for purpose they will take evasive action and develop their own systems and vendor relationships.
Executives want their IT systems to move at the speed of business—to be flexible, responsive, and adaptive as the business changes. But they often wrongly assume cloud is a quick fix for long-lingering problems with the company’s IT systems and data. For example, uploading a company’s data to a cloud system, only to find that it has not been cleaned or repurposed and cannot support any of the desired use cases. One key to success lies in reconciling underlying data and IT issues before investing heavily in cloud technologies.
Ensuring compliance with security and privacy regulations for data stored in cloud servers raises myriad issues for companies. Many companies have uploaded more data than they need, adding security complexity and compliance costs. Additionally, cloud technology enables and encourages more people to access data and allows the connection of an increasing number of devices, and thus attack surfaces. Despite this, many companies underinvest in cloud security services. When confronted with a breach, organisations tend to bolster security in that area of weakness only. But that tack can be costly and generally offers a lower-level safeguard than if higher levels of security had been integrated with system architecture at the time of design.
Companies want to see a meaningful and measurable return on their tech investments. As a result, many tend to focus on notching quick wins, such as digitising a sales channel or making an internal process more efficient. But this only begins to get at the potential value at stake. In contrast, the most adept cloud operators constantly experiment and measure results in real time, move forward, and shift to other areas without regret, creating the agility that feeds innovation.
Most executives understand the transformative power of cloud technologies, but many focus their attention and capital spending in the first year of the launch, assuming their work is all but done. In reality, cloud technology requires continuous updating, refining, and revisiting agreed-upon paths to determine if better options are available. If it proves critical to a company's operating model, demands will likely arise throughout the value chain. The key here is that cloud is not a one-off technology project; it requires ongoing evaluation of additional investment requirements, attention, and reassessment of strategies and tactics.
Most business leaders speak optimistically about cloud, and for good reason. Cloud puts technologies like AI and advanced analytics into the hands of innovators across the company. The ultimate prize is a new terrain of business opportunities. But there are pitfalls that will prevent companies from realising cloud’s full potential.
Cloud isn’t a one-and-done IT project. Just as operations and strategy need to be agile and adaptive, so does your cloud blueprint. Staking out this new ground requires a well-defined, value-oriented strategy that links technology and business teams in a common pursuit of bold outcomes.
© 2017 - 2021 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. Liability limited by a scheme approved under Professional Standards Legislation.