Cloud computing is the key to business success. But unlocking its benefits is hard work
Our reliance on cloud computing is only going to increase. Now firmly in place as the underlying infrastructure of most organisations, cloud is going to play an even bigger role in supporting how enterprises operate and transform during the next few years.
Organisations are currently 17 times more likely to increase their cloud spend than to reduce it, says analyst firm Gartner, which reports that spending on the cloud will total $474 billion in 2022, up from $408 billion in 2021.
As demands for digital transformation also continues to rise, the tech analyst says that cloud is going to become so important during the next five years that it will become the key enabler of the things that enterprises and their boards want to achieve.
"There is no business strategy without a cloud strategy, and there is no real cloud strategy without paying close attention to the business outcomes that you're trying to accomplish," says Gartner analyst David Smith.
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That's something that resonates with Michael Cole, CTO of the European Tour and Ryder Cup. His organisation is now 100% cloud-based, with all business and tournament services delivered through the cloud.
Cole says that moving to the cloud offers his business more flexibility and allows the IT department to meet their demands in an agile manner.
"I think agility in our technology, and how we embrace innovation now and into the future, will continue to be one of the key determinants for our long-term success," he says.
Cole isn't the only CIO to recognise that the cloud provides a strategic platform for successful business transformation.
Most organisations (85%) will establish a cloud-first principle during the next five years, says Gartner, which means they'll start by assuming that any new application will run in the cloud and work backwards from that hypothesis.
But CIOs shouldn't assume that the adoption of the cloud is always going to be straightforward. IT leaders who want to take advantage of the cloud will need to ensure their organisations are ready -- and that's going to take some effort.
While pushing services to the cloud can help organisations reduce their reliance on internal IT operations, tech chiefs must also keep a tight grip on certain key elements.
Gartner says it's very important -- regardless of what happens with your cloud adoption -- to retain four competencies in-house: strategy, architecture, security, and procurement.
"They are too important to completely outsource. It doesn't mean you can't use third parties to help you with it. But you don't want to outsource them," says Smith, who spoke at Gartner's recent European cloud conference.
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Global recruiter Harvey Nash also notes that CIOs must be careful to ensure things don't get out of hand as reliance on the cloud increases: "Steps are clearly needed to prevent a descent into chaos," warns Harvey Nash's 2021 global leadership survey.
Smart digital leaders are acting now. They're using their knowledge and experience to ensure that any use of the cloud comes with clear objectives and rules that are established alongside their line-of-business counterparts.
Take Michael Voegele, chief digital and information officer (CDIO) at Philip Morris International (PMI), who says his IT organisation works closely with the rest of the business to establish which systems can be moved and run online.
PMI aims to have decommissioned its data centres and be 100% cloud-based by the end of 2022. Out of 2,600 legacy applications, the company has already decommissioned more than 500 applications and has started to shift more than 200 applications into the cloud.
"We have created what we call internally our landing zone in the cloud," says Voegele. "We are now moving over our ERP environments to the cloud, which is -- I think -- a key milestone to show that things can happen with big systems that we rely on at the backend."
PMI is also thinking carefully about how it works with the business on new cloud-based applications. Any IT projects must be delivered in time, in budget and to scope -- and they will also be measured on the benefits they bring to the organisation.
Once again, the key to success is establishing a strong bond with the rest of the business, with strong frameworks and capabilities to support the use of on-demand IT.
PMI is using the public cloud, building application programming interfaces to help its tools interact, and honing internal development capability.
"We now have a team of more than 80 software engineers that are embedded into building differentiating capabilities for the business at the global but also at the market level," says Voegele.
The moves that PMI is making illustrate how businesses making the most of on-demand IT treat it like a team sport: people from across the organisation work together to develop a cloud-based business strategy.
This close intertwinement of IT and business is also a sign of the maturity of on-demand IT. Gartner suggests that while cloud was once seen as a technology disrupter, it will be more usefully viewed in the future as a platform from which to disrupt business.
"Cloud is going to create new business models, new opportunities, new revenue streams, and help it move from being more of a cost centre to an enabler of digital business," says Smith.
To help his organisation identify these fresh opportunities, Nationwide CIO Gary Delooze has created a series of digital hubs, which bring together teams of people from across IT and other lines of business to map out digital journeys for the building society's members.
Those journeys are typically focused on sales. A member of the public, for example, might want to buy a product from Nationwide. A digital hub is then tasked with considering the steps individuals would need to take online to register their interest and buy the product.
Delooze's leadership team has spent a lot of time building and honing the agile capability that powers these digital hubs. But to make the effort successful, they also knew they'd need a flexible platforms for change -- and that's where the cloud plays its part.
"We had to think about how we could stand those journeys up quickly. So, what we did was that for every new piece of demand that came into the team, we created a new cloud platform to host that work. We could create a feature team to focus on that journey," he says.
"And then we could very quickly work with the business to say, 'right, let's prototype that journey with that feature team; run a series of sprints, to build it on the cloud platform', and that then gets us very quickly to an outcome that you want to deliver as a business."