Companies have steadily marched toward the cloud for years, with adoption doubling every two years. But when it turned into a sprint in 2020, the benefits were not distributed equally.
Remote working, cost cutting, and increased resilience were cloud enabled survival mechanisms. However, companies that focused more on these defensive, or maintenance, initiatives missed out on the broader, more valuable benefits of the cloud, according to Infosys’ Cloud Radar survey. Those organizations that used the cloud as a more offensive, or progressive, tool reaped the greatest benefits.
About the author
Umashankar Lakshmipathy is Senior VP and Regional Head for EMEA Cloud, Infrastructure and Security Services, at Infosys Ltd.
The data came from Infosys’ survey of more than 2,500 business and IT executives across five countries and 12 industries. Respondents were contacted between November 2020 and January 2021. The research focused on companies’ cloud adoption, performance, priorities and profitability.
This isn’t to say that defensive efforts have little value. Moving business processes to the cloud and helping employees work from home were critical early steps. And every company today is seeking to become more resilient. The survey, however, found that the highest performing companies had implemented those cloud strategies before the pandemic. They were already on their toes, leaning forward while others were still back on their heels.
These lessons from the pandemic’s first year provide signs of both caution and hope. These defensive efforts are important but don’t necessarily provide the big-bang impact many organizations expect from new technology initiatives. Once companies move past the basics and focus on offensive capabilities, the benefits grow dramatically. And just as importantly, the payoff is more evident to the company leaders who hold the purse strings.
Using the cloud to boost profits
The goal is more than migrating to the cloud; it’s knowing why you want to go there and what you plan to do when you arrive. The exceptional performers (top 16%) have passed the cost cutting stage and now use cloud to actually boost profits.
Two specific cloud performance areas showed the strongest connection to boosting profits:
- Speed – Using cloud for faster software development, new software functionality, and expanded processing capacity.
- Capabilities – Using cloud to foster collaboration, unlock value from data through artificial intelligence (AI), automate processes, and find new revenue sources.
But these benefits of the cloud only manifest when an enterprise has moved 60% or more of it systems into the cloud. Companies that stop short improve defensive priorities, but this doesn’t fuel company growth.
Analysis of the data found that companies (in the regions surveyed) could increase profits by US $414 billion with effective cloud usage. This was based on a review of sector profits and how companies were using cloud technology, with a particular emphasis on offensive versus defensive strategies.
The exceptional performers in the Cloud Radar survey listed speeding up deployment and improving digital capabilities as the two top priorities now. The minimally effective respondents (bottom one-third) also listed speed as their most important cloud strategy. However, enabling remote working was second, suggesting that this group was still trying to get the basics right. Meanwhile, their higher performing competitors were investing time and money into boosting digital capabilities.
Despite these differences, companies at the top and bottom of the scale appear to see the direction of the future. Both groups have listed the three offensive strategies as their top priorities two years from now.
Cloud technology is a multidimensional tool – part of a business strategy in addition to an IT solution. Using it to shore up the foundation is not a bad move for business. But the data shows that slowing or stopping there can be a costly mistake.