The noise levels in cloud discussions can be confusing at the best of times. Yet, the results of our recent cloud transformation research paint a stark picture: 65% of organizations have made strategic investments in cloud, but only 32% are achieving their ambitions. There appears to be a fundamental disconnect between the supply side and buy side when discussing driving business transformation through cloud.
The author Don Marquis cogitated, “Every cloud has its silver lining, but it is sometimes a little difficult to get it to the mint.” In the context of today’s discussions on all things cloud transformation, that reflection appears to be an immense understatement. Organizations struggle to deal with the costs of their cloud migrations and, ultimately, with capturing business value from their investments. Without a clear understanding of the business objectives for those investments, it is difficult to justify moving workloads to the cloud and even more difficult to justify aiming for business transformation.
To avoid chasing blurry and, at times, empty goals when moving to the cloud, enterprise leaders need clarity on business objectives, desired outcomes, and effective strategies for achieving and maintaining cloud transformation. At the same time, the market noise—with its often over-simplifying marketing messages—adds to the headwinds for many organizations. Against that context, what can we learn from organizations’ insights and perceptions of their cloud initiatives?
To better understand where organizations are on their cloud transformation journey and the perceptions about challenges and opportunities, HFS Research, in collaboration with EYGS LLP (EY), in Q4 2022 and Q1 2023, surveyed 508 senior executives spanning Global 2000 enterprises. This was supplemented by deep-dive interviews with a cross-section of EY customers and discussions with the EY cloud leadership team.
The mission for cloud-native transformation (CNT) is to drive success in the anywhere economy. Enabling working from anywhere, accessing information from anywhere, and using new business models to find new sources of value are the top three reasons for investing in CNT.
Sixty-five percent (65%) of organizations claim CNT is a strategic initiative for their company, and organizations have made significant progress on their CNT journeys. Establishing a cloud-first strategy is top of mind today, where formulating a cloud strategy was about two years ago.
Nearly half of enterprises leverage cloud to drive functional and business transformations to initiate more effective collaboration, digital business models, and faster speed to market.
Only 32% of enterprises are realizing their CNT ambitions. Satisfaction with senior management and business stakeholders is even worse.
The biggest challenge in capturing value from investments in CNT lies predominantly in aligning technology and business priorities to develop a coherent strategy.
Retrofitting cloud innovation into existing operating models is failing to capture value. Success with CNT is underpinned by a new cloud target operating model requiring aligning business outcomes and driving cultural change.
The call to action is clear: Your cloud transformation will fail if it is not grounded in business objectives. To help envision and articulate the outcomes for CNT, we have identified six vectors to help shape the discussions on cloud more effectively:
Get the data to win in your market Organizations must move beyond focusing on decentralized work and efficiency gains by elevating data-centric strategies. Make data the centerpiece of the discussions by focusing on business outcomes.
Embrace product-centric experimentation To support those data-centric outcomes, delivery is shifting from a project focus toward a product focus, where you no longer have clearly defined starting and endpoints.
Encourage and manage continuous goals To deal with the new operational complexity of cloud-native, development and operations teams must increasingly collaborate in a highly fluid environment.
Drive talent transformation As with all transformations, cloud-native is about people, processes, and culture more than technology. To enable a cloud-native organization, you must drive effective change management to move to a product-centric mindset, scale, and achieve outcomes such as higher velocity and faster time to market.
Enable velocity What all too often gets lost in translation is that cloud-native is about working and collaborating fundamentally differently. To get to the desired velocity and, ultimately, time to value, automation becomes a crucial enabler.
Turbo-charge time to value Lastly, since the pandemic shock, organizations have been looking for tangible outcomes in narrowly defined time windows. Simultaneously, many transformations fail because technology objectives don’t align with business objectives. Here, the discussion on cloud transformation kicks in.
The bottom line is equally clear: Cloud is no longer just a technology discussion. Cloud must enable a broader and deeper business transformation.
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