For mid-sized companies facing growing competition—or disruption from digital startups—embracing the cloud is a growing imperative as they strive to keep abreast of developments and retain market share. Moreover, companies can boost their business performance by using the cloud since it helps to drive revenue growth and cost savings and also reaps a host of other strategic and operational benefits.
In September-October of 2022, ThoughtLab conducted a survey of 300 senior technology executives at mid-sized North American companies for SoftwareONE. It revealed that despite a slow start, mid-sized enterprises are accelerating cloud adoption to ensure they are not left behind. Most of the companies studied started their cloud migration within the last 2-4 years, but now 37% of their applications operate in the cloud. Organizations plan to take that percentage to 48% within two years.
We also found that as mid-size firms advance in their cloud journeys, their cloud investment costs fall, while their revenue and cost efficiencies rise. Organizations just starting out in cloud migration—cloud beginners—spend 1.3% of their revenue on the cloud, while those well advanced—cloud leaders—spend 1.1%. And while beginners report a 19% decrease in overall business costs thanks to cloud usage, that savings grows to 25% as they become cloud leaders.
Revenue follows a similar upward trajectory. One-quarter of cloud beginners enjoy a bounce in revenue, and that percentage leaps to 48% as companies morph into cloud leaders. Other benefits related to cloud usage include greater ability to scale their businesses, increased resilience and agility, improved market competitiveness, and better customer retention.
In two years, as they advance in cloud usage, the percentage of mid-sized companies garnering these benefits is expected to climb: 56% expect to increase revenue; 53%, to reduce costs; 49%, to scale their business; 47%, to improve resilience and agility; and 46%, to improve competitiveness.
But transitioning to the cloud can be complex and often presents a maze of technology and business barriers that executives need to navigate. The most common challenges are ensuring data security and privacy, selecting the right providers and tools, and maintaining service during cloud migration. Other pain points are coping with technical debt, tracking and controlling costs, and lack of a proper organizational foundation.
A cloud action plan
To overcome these impediments and optimize cloud results, companies will want to consider six best practices uncovered by the research:
Step 1: Actively manage cloud costs using practices and tools such as FinOps to create a culture of accountability.
Step 2: Focus on business goals rather than the technology side of cloud transformation to ensure that decisions are made for the right reasons and produce the desired results.
Step 3: Take a structured approach to decisions about shifting and modernizing applications that focuses on business imperatives and sets the correct priorities.
Step 4: Develop the culture and talent to succeed in the cloud, creating a cloud center of excellence to provide training and advice; ensure proper cloud governance and standard processes; and foster wide adoption of cloud best practices.
Step 5: Select the right tools and partners, using a variety of cloud service models and turning to a range of cloud technology partners to bridge the skills gap as needed.
Step 6: Put cybersecurity at the center of cloud migration plans, assessing and improving app cybersecurity before migration, and ensuring that the technology team has the needed cloud security expertise.
To download the full report, go to: https://thoughtlabgroup.com/softwareone-cloud-outlook/
