Cloud Investments Are Slow To Deliver ‘Substantial’ Benefits To Many Businesses, Study Finds
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C-suite business leaders see the role of the cloud in realizing their company’s growth ambitions, and they have high expectations. But few organizations are positioned for the cloud to fully deliver on its promises, according to research firm PricewaterhouseCoopers. PwC’s inaugural US cloud survey of more than 500 executives found that more than half (53%) of companies are not getting substantial value from their cloud investments. And this despite the fact that 56% of them see the cloud as a platform for innovation and growth.
The PwC report suggests that a new digital talent divide is emerging, affecting both technology and business roles. Forty-seven percent of those surveyed see lack of development as a barrier to the value of the cloud. This is consistent with a recent survey conducted by 451 Research, which found that 90% of organizations are experiencing cloud skills shortages.
“After a decade of experience in the cloud, organizations are facing a talent shortage for all cloud-related skills,” Forrester mentionned in a March 2020 report. “While legacy skills translate well into new cloud technologies, the culture leap to assess, select, and leverage productivity, system-level efficiency, and solving load-specific problems of work turns out to be a challenge. Attempts by companies to hire and train talent are constantly plagued by poaching by cloud providers themselves. “
Other obstacles prevent the successful implementation of cloud technology. According to PwC, trust considerations such as the impact of a cloud on customer engagements or regulatory compliance are considered either too late or not all. Only 17% of risk managers who responded to the company’s survey said they were involved early in cloud projects. And 55% of human resources managers see changes in processes and work methods as significant issues when it comes to the cloud.
Unsurprisingly, given the hurdles, only 52% of CFOs say they are confident they can measure cloud return on investment (ROI). Those who have this confidence have a significant advantage. According to a Unisys company investigation, organizations that perform in-depth ROI analysis before embarking on cloud migration are 44% more successful in meeting their savings expectations than those that do not.
“Without a doubt, we find ourselves in the midst of an accelerated cloud shift in the wake of a pandemic, which has raised awareness that any position of power can be fragile, and organizations that operate with a greater degree of resilience and agility can thrive in the future. Our recently conducted [survey] confirmed it, ”Jenny Koehler, deputy advisory director of PwC US, told VentureBeat via email. “Some of the most promising areas include improved resilience and agility, improved decision making through improved data and analytical capabilities, and the ability to innovate in products and services. Despite this widespread adoption, however, there is a substantial value gap that persists. “
Despite failures in cloud adoption, executives who responded to PwC’s survey said they are prioritizing cloud capabilities for next year. Companies invest specifically in cybersecurity (48%); AI and machine learning (39%); hybrid cloud (39%); analytical (37%); and business applications (28%). Beyond that, 33% of executives say their companies are using the cloud to advance environmental, social, and governance strategy, such as automating reporting and advancing green goals.
The rise of the pandemic has defined 2020 for almost every industry, and cloud computing is no exception. Gartner estimates that $ 257.9 billion will be spent on public cloud services in 2020, up 6.3% from 2019. And according to At Statista, the global public cloud computing market will reach approximately $ 397 billion in 2022.
“Thinking about these [survey] results, [the] the value gap can be symptomatic that many companies have not fundamentally aligned their cloud investments with their underlying business strategy or, in some cases, have defined business value in terms that are too abstract or too broad, such as “revenue growth” or “cost reduction,” Koehler continued. “On top of that, the cloud itself fundamentally introduces new capabilities into a business. And, as with any new capability, it needs to be nurtured in the context of new operating models and a mindset of continuous improvement, customer focus and innovation – all. made possible by end users who have been perfected not only on an IT level. side, but also on the business.
It’s no surprise that C-Suite members are more involved in cloud adoption efforts than ever before, given the amount of capital at stake. More than 70% of respondents told PwC that ‘they were helping to make cloud strategy decisions as well as cloud talent and skills improvement decisions.
“Steps can be taken to [challenges], including the introduction of holistic digital development programs, mentoring programs in areas where greater cloud depth is required, as well as partnerships with external third parties for long-term success, ”said Koehler. “Even in the midst of this value gap, right now, we [at PricewaterhouseCoopers] remain optimistic about the possibility of closing it, with the right alignment with the underlying business strategy and a shared responsibility among the entire C suite. ”
Cloud providers are reaping the windfall benefits. In its latest earnings report, Google said its cloud division achieved revenue of $ 4.047 billion for the first quarter of 2021, up 46% from the previous year. Amazon Web Services (AWS) from Amazon reported a record profit of $ 13.5 billion for 2020. And Azure, Microsoft’s cloud business, saw revenue growth of 50% in the third quarter of 2021 , exceeding analysts’ expectations.
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