Cloud transformation

How can cloud transformation support your growth?

Authors

5 minute read 16 Feb 2023

To get the most out of cloud demands a new way of running your organization – with a singular focus on outcomes.

In brief

  • Are you actually transforming with cloud?
  • Are you aligning cloud with business intimacy?
  • Does your organization have the human skills, both technical and “soft”, to realize the benefits of cloud? 

To get the most out of cloud demands a new way of running your organization – with a singular focus on outcomes.

Over the last few years, organizations the world over have been working to move to the cloud. In 2022, 49% of respondents to EY Tech Horizon survey said cloud would have the biggest share of their investment over the next two years – and deliver the most value, in both cases second only to data and analytics.

There is a lot of talk about “living in the cloud” in terms of app management, services and applications. But that way of living is not compatible with legacy ways of running things. Because many organizations have found that, now they’re in the cloud, it still looks very much like being in a warehouse – just someone else’s. 

Living in the cloud means needing to continuously extend, reconfigure and evolve your architecture as well as your processes. And that requires some serious adaptation of your organization. Because to harness the cloud fully, you need to embed awareness of your business objectives and purpose deep within your technology teams, and then operationalize those objectives through the tech.  

Destination or journey?

Getting to the cloud, being in hybrid cloud or deploying cloud services – each of these are generally just the first step on the journey to business transformation enabled by cloud but are you actually transforming? Looking a bit closer still, cloud migration, modernization and implementation are in many cases not even the first step in a business transformation. They’re just putting the right shoes on.

Living in the cloud necessitates a transformation of your business. Managing business services in the cloud is not about solving tickets. Traditional operating models and matrices can’t respond fast enough in a digital world, where feedback comes in by the second. 

Many clients have adopted new platforms and capabilities, but not seen any benefits. This could be because outdated corporate structures inhibit growth and increase organizational resistance to change. And the siloed structure of some organizations obscures wider visibility. Take for example, a large telecommunications company that had a new cloud platform. For the engineers, everything looked fine in the control room. But out in the world, their streaming service was down – and they were due to broad cast a major football match. In thousands of pubs, fans were erupting with frustration. And the company was blissfully unaware until fans started to Tweet about it.

The lack of benefits is as much a human problem as it is a structural one though. EYTech Horizon survey 2022 found that 83% of respondents had a lack of resources and expertise in cloud, and Gartner has stated that “the cloud skills gap has reachedcrisis level in many organizations”  – identifying a shortage of not only technical cloud skills but “associated ‘soft skills’ and mindset.”

Develop business intimacy

In a 2022 survey by Flexera , 59% of respondents said optimizing the costs of their existing cloud was their top priority. But simply running technology economically is not an overarching objective for any organization. It’s not even the purpose of application management. 

What is the tech actually for? That’s a question that should trigger a drive for deeper business awareness in your teams – a deeper understanding of the outcomes that you, as a business, are reaching for. 

This is what we call “business intimacy”. Getting the business teams and technology teams aligned on a single objective. From there, you can kick-start cloud evolution on a daily basis and develop new and more skills around it. And those skills are critical – linking purpose to business strategy to business capabilities to strategic backlog, all within constrained investment cycles, is something the business teams and technology teams will need to master.

There’s also the question of governance structure. Tech teams are often free to make many decisions – but do they have real choice over vendors? Do they have a common view of the business case? Do they set the right objectives and KPIs for new investments? Do they track what’s been delivered? In DevOps and Agile, business owners are required to be intimately involved with the tech team. It should be the same with cloud.

How EY can help

Understand what’s really possible

 

To live effectively in the cloud, you also have to know what resources you’re dealing with, and how to deploy them. 

 

In 2022, HFS Research found that almost a quarter of companies do not have a company-wide cloud strategy . So, to continuously evolve your cloud environment an external point of view can really help. You need to know what the current tech landscape looks like – across hyperautomation, engineering, data, services, architecture and beyond. Who in your ecosystem can you call on? Do they give you full access to the marketplace? Or do you risk being locked in? Also how do you optimize costs? This is a fundamental skillset. As is end-to-end testing with a business case lens.

 

You should also start viewing your ecosystem as partners rather than suppliers. Partners can help you deliver business outcomes. Suppliers only deal in outputs, such as ticket response KPIs. This outcome-based outsourcing approach has to be incentivized for both parties if it’s to work effectively, and this requires continuous contract optimization.

 

There’s also the human consideration. What’s the capacity of your talent? Where are there gaps in skills and knowledge, and how can you fill them? Even more importantly, have you put humans at the center of your transformation? Drivers such as care, leadership and empowerment can make the difference between high-performing transformations and inertia that leads to failure.

 

The costs of not acting

 

Cloud is ubiquitous now. Every organization is either in it or heading toward it. Your organization needs to be one of the few who successfully live in it – or your competitors will. But this is only the start. In the future, you will need to align the design of new applications with the cloud, transform your entire portfolio through the cloud, and both grow and extend your business agility by adopting the latest tech.

 

If you can build up a set of capabilities in the back end now, you can manage this ongoing change – rather than having to radically and urgently transform. Starting the right way now gives you the opportunity to test and learn new capabilities continuously, which will help your organization adapt to whatever the future holds. For example, an organization we’ve worked with has had to transform from a rail track operator to a customer service-led model. Only living in the cloud can make that possible.

 

In the short term, ineffective cloud adoption will hurt your core business, by impeding its ability to grow and adapt. The window of business-as-usual is rapidly closing. It’s time to get out, go up, and live in the cloud – or risk being stuck on the ground forever.

Summary

Many organizations are in the cloud, but not truly living there. That’s usually because their cloud transformation isn’t aligned with business objectives, is not human-centered, and the organizational structure is preventing the true potential of cloud being unlocked.

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