Though companies have been quietly embracing cloud computing for years, 2023 proved emphatically to boards and C-suites just how vital the cloud is to survival and the pursuit of new opportunities.
Few companies are harnessing the full power of the cloud to catalyze innovation and digital transformation. Business leaders can change the game by paying careful attention to seven mission-critical factors.
Contrary to its marketing buzz, the cloud is not a single technology or one-stop money-saving solution, but rather a collection of computing software and data services that can be accessed via the internet instead of residing on a desktop or internal servers.
These services include applications as simple as email or as complex as customer relationship management software, and afford companies massive amounts of computing power needed to develop and test new proprietary applications.
The cloud computing platforms
Because cloud computing platforms are “always on,” they are ideal test beds for experimenting with and deploying new technology solutions, incorporating advanced analytics, automation, blockchain, quantum computing, augmented and virtual reality, and 3D printing. This makes the cloud a powerful strategic tool—not just a tactic.
Yet despite the acceleration of cloud adoption across the business landscape, most companies are barely scratching the surface of the cloud’s vast potential.
According to a PwC survey of C-level leaders in the United States 53% of companies have yet to reap substantial value from their cloud investments.
This unrealized value is significant, but it only begins to speak to the cloud’s untapped potential to propel digital business strategies. As 2022 showed, the cloud isn’t a one-and-done IT project.
When the COVID-19 pandemic shuttered economies, businesses quickly discovered that they needed the cloud’s Web-based computing services to enable employees to work remotely, to shore up fractured supply chains, and to provide new digital services to consumers who couldn’t leave their homes.
Just as operations and strategy need to be agile and adaptive, so does your cloud blueprint. Staking out this new ground requires a well-defined, value-oriented strategy that links technology and business teams in a common pursuit of bold outcomes.
Cloud computing is the delivery of computing services
Simply put, cloud computing is the delivery of computing services — including servers, storage, databases, networking, software, analytics, and intelligence — over the Internet (“the cloud”) to offer faster innovation, flexible resources, and economies of scale. You typically pay only for cloud services you use, helping you lower your operating costs, run your infrastructure more efficiently, and scale as your business needs change.
For many organizations, a cloud transformation creates the urge to “lift and shift” data and applications from legacy IT systems to cloud platforms merely for the cost-saving benefits. But this approach leaves an enormous amount of value on the table, and could even derail a cloud transformation.
In moving to the cloud, a midsized energy-services company initially sought to simplify its IT and make systems more efficient but soon homed in on a modest opportunity: automating the data-input process for creating customer invoices.
Investment in cloud technology
Prior to making an investment in cloud technology, the company’s invoices had been riddled with errors, causing dissatisfaction and churn. The problem resulted from suppliers manually inputting data. So, the IT team automated the input process with scanners and used machine learning and AI to flag and correct outliers. With errors greatly reduced, the company began thinking more boldly.
One major element of the company’s operating cost was expensive oil- and gas-pipeline routing, which involved deploying sizable groups of on-the-ground surveyors and engineers.
Operations and IT teams decided to test whether drones might be used to gather data over a much bigger territory expanse, and whether analytics and historical data could be harnessed to optimize route choices. The experiment worked, and the savings flowed through to margins, improving the company’s ability to match aggressive pricing by its rivals.
Essentially, cloud computing means having the ability to store and access data and programs over the internet instead of on a hard drive. This means businesses of any size can harness powerful software and IT infrastructure to become bigger, leaner, and more agile, as well as compete with much larger companies.
Unlike with traditional hardware and software, cloud computing helps businesses stay at the forefront of technology without having to make large investments in purchasing, maintaining, and servicing equipment themselves.
IT systems to move at the speed of business
Consider the cautionary tale of one European consumer-products company, which had lifted and shifted heaps of data pertaining to customers, distributors, the supply chain, and employees to a cloud vendor—only to discover that much of the data needed considerable cleaning and repurposing.
Executives want their IT systems to move at the speed of business—to be flexible, responsive, and adaptive as the business changes. But they often wrongly assume the cloud is a quick fix for long-lingering problems with the company’s IT systems and data.
According to the company’s CIO, the data could not support any of the desired use cases afforded by the cloud platform, namely making the data available for sharing across the enterprise. Unfortunately, the company was forced to maintain its legacy systems while working on a new solution.
Other companies have managed to avoid this trap. At another consumer-products company, the finance department decided to create shareable data sets to improve the accounting and funding operations for several other functions, including sales. The system, though simple in design, proved to be a surprisingly good model for reforming data practices across the organization prior to the company’s undertaking of a cloud migration.
Ensuring compliance with security and privacy regulations
Ensuring compliance with security and privacy regulations for data stored in the cloud raises myriad issues for companies. The volume of data at stake is massive, for one.
Many companies have uploaded more data than they can reasonably use, adding security complexity and compliance costs. Access is another issue. The cloud enables and encourages more people to access data. And then there is the increasing number of devices supported by cloud platforms, which can become a security risk.
Despite this, we have seen many companies underinvest in cloud security services. When confronted with a cloud breach, organizations tend to bolster security in that area of weakness only. But that tack can be costly and generally offers a lower-level safeguard than if higher levels of security had been integrated with system architecture at the time of design.
One financial institution, after winning board approval for its cloud migration, was surprised when its security team came back the next year with a sizable change in its operating budget. The team needed to engage a security and compliance advisor after a breach as well as rethink security for a vendor interface that was riddled with entry points for hackers. The lesson: cloud data isn’t a big trunk that you lock up once and for all. Cloud systems, like the business model itself, are finely tuned machines that need ongoing security and compliance.
Even when your security and compliance are in the hands of a trusted vendor, there’s an important area of shared responsibility that needs to be kept top of mind.
Vendors need to be in the loop when there are day-to-day changes regarding who has access to sensitive data, when information flows to business partners, and when tools for funneling new data to the enterprise are selected.
Not all clouds are the same and not one type of cloud computing is right for everyone. Several different models, types, and services have evolved to help offer the right solution for your needs.
First, you need to determine the type of cloud deployment, or cloud computing architecture, that your cloud services will be implemented on. There are three different ways to deploy cloud services: on a public cloud, private cloud, or hybrid cloud.
Edited by Oleg Parashchak – Editor-in-Chief Beinsure Media, CEO Finance Media Holding.