The race to the cloud: Attaining long-sought value

In short

• Cloud commitment has increased over the past two decades, with more 86% of companies reporting an increase on cloud initiatives in the last year.
• The tipping point is reached when all are committed to achieving full cloud value. Heavy adopters achieve the expected outcomes at a faster rate.
• Cloud migration is not over. Companies continue to harness the power of cloud.
• Companies are moving to more difficult, critical work. There are still many obstacles that remain.
• These five key principles can be used to help companies overcome any obstacles and achieve maximum value.

The next level of business opportunities

These past two years have seen a rapid transformation with COVID-19 being a pivotal point. As companies were under tremendous pressure to ensure their businesses thrived in a world of rapid change and remain competitive, cloud commitments soared. They were supported by economic prosperity and signed large deals with cloud providers. These agreements gave them the opportunity to set higher goals about how cloud could help their businesses grow, adapt, and be more efficient.

Companies are now at an inflection point. Companies are now at a new inflection point.

Total Enterprise Reinvention is possible only if there is a strong digital foundation, powered by the cloud. This will allow you to gain competitive advantage. Continuous commitment is required to reap the full benefits of cloud. To realize the expected outcomes and unlock the next level of innovation, organizations must shift their focus from “getting there” towards “getting value”.

 

To unlock the next level in innovation, organizations must shift their focus from “getting there” towards “getting value”, and then “operating within the Cloud Continuum”.

In our latest “state-of-the market” research, 800 IT and business leaders were surveyed around the world to find out how far they are in their cloud journeys and what value they see from cloud investments. Respondents were also asked to identify the biggest barriers to realizing that full value. This research builds on our 2018 and 2020 inquiries into the same topic.

Unprecedented commitment to cloud

A total 86% percent of the companies we surveyed reported an increase in their cloud initiatives from 2020. Those already in the cloud are jumping further. In the early 2021 ^[3], approximately 50% of workloads were committed to the public clouds, while 35% were in the private cloud. On average, 32% of workloads are transferred to private clouds (which includes both virtual and private models).

Data also suggests that multi-cloud and hybrid cloud are the new norm. Nearly all cloud users use hybrid cloud services (hybrid), and many others use multiple public cloud providers (multicloud).

The future holds the full value

Nine out of ten companies report that they have achieved significant cloud value. However, only 42% of them report that they have achieved their expectations on an average basis (just five percentage points more than 2020).

Figure 1. Percentage of respondents reporting that they have “fully achieved,” their cloud outcomes as compared to previous reports

The most successful outcome is, with 45% reporting that they have achieved the expected value. The greatest upside to business enablement is unlocking core digital capabilities and continuing innovation that are necessary for total enterprise reinvention.

Cost savings is still the most difficult outcome. Only 39% of respondents reported that they had met their expectations, a mere two percentage points increase from 2020. This is a frustrating result for many. However, cost effectiveness was a key selling point for cloud computing. Organizations must adopt modern architectures and operating models in order to reap the cost savings. To provide transparency and manage today’s complex IT environment, they should use FinOps.

It is not surprising that those who achieve greater results are those further along in cloud computing.

Figure 2. Percentage of respondents that say they have achieved all their expectations based on adoption level.

Heavy adopters are still achieving their goals more often than low (36%) and medium adopters (21%). Even among heavy adopters, however, the rate of fully achieved outcomes is not increasing as fast as expected. Only two percentage points have been seen over 2020, which indicates greater challenges and greater ambitions.

Higher achievement levels correlate with higher use of third-party managed services: Nearly half (45%), of companies that achieve their goals are using managed services to a great extent.

The Cloud Continuum: Awakening

Cloud is more than just a way to operate in a digital world. It’s also where innovation and reinvention happen. Cloud has become a dynamic continuum with powerful capabilities that spans the entire spectrum of public, edge, and everything in-between. Cloud Continuum is a powerful tool for maximizing the value of your cloud investments.

We asked companies to share their current cloud journeys in order to gauge how they approach cloud. Nearly 7 out 10 respondents (68%) still view their cloud journeys as incomplete. 32% of respondents consider their cloud journeys complete and feel satisfied with their ability to achieve their business goals. 41 percent of respondents acknowledge that their cloud journeys continue and evolve to meet changing business requirements.

Figure 3. How respondents best describe their current cloud journey

It appears that those who are satisfied with their cloud journeys are more successful than those who continue to improve. We believe companies are missing greater value opportunities by closing their cloud journeys. Technological innovation is changing the landscape. The “completed” group reported spending 40% less on innovation and business reinvention than those in the “continually evolving” group (44% vs. 40%).

Enterprise reinvention is a strategy that allows companies to grow, adapt, learn, and change as new opportunities or risks present themselves. In a changing market environment, companies that remain still are left behind. Many companies consider their journeys over and are putting themselves at risk by not realizing the value they bring to the table.

Navigating through a series of stubborn obstacles

Companies that are committed to the cloud will be closer to their full potential, but there is still much to do. Why isn’t value rising with so many companies increasing their cloud efforts? The answer may be simple: greater complexity brings greater challenges. Many companies have already figured out the low-hanging fruits and are now moving to more complex, business-critical systems and applications.

One thing is certain, they don’t have a single obstacle that holds them back. All of the problems companies have had to deal with over the years continue.

Figure 4 – Top Barriers to Realizing Expected Cloud Outcomes

” Security risks and ” complexity in business and operational change” were cited as the top barriers this year. 41% ranked them among their top three overall. The third barrier is “Legacy app modernization”, which 39% of respondents listed as their top three. Although “lackof cloud skills” may not be the biggest barrier to value, 39% of companies rate it as a top three concern. This is unchanged since 2020.

Comparatively to previous reports, complexity and security continue to be the most frequently cited barriers. As in our 2020 report, only 10% of all barriers were reported from top to bottom.

 

Although some obstacles have been reduced incrementally, none has fallen below 30%. None have reached the definitive front-runner position.

This is a common occurrence in major transformations: If you have to deal with multiple obstacles simultaneously, if you do not solve for all of them, it can lead to diminished returns. Companies making steady progress against this formidable array of obstacles shines a positive light on the data.

How to crack the value code

Companies who had invested significant resources and effort over the past two year to the cloud were in the right place at the right time. Today we are entering an era of greater uncertainty and economic abundance. Every dollar, cloud or not, must be qualified.

Companies must “crack” the code to cloud value. Identify specific use cases to help them focus their efforts. Technology was once the disruptive force. Technology is now the enabler, a guarantee in turbulent times. It is essential to show strong commitment and embrace reinvention as a strategy for achieving real business agility, efficiency, and growth in cloud computing. These are the five practices that companies should adopt to unlock future opportunities and maximize their potential.

5 practices to maximize cloud value:

source https://www.accenture.com/us-en/insights/cloud/cloud-outcomes-perspective