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How Businesses Can Mind the Cloud’s ‘Value’ Gap

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There is no doubt that cloud computing is increasingly helping CXOs in achieving their company’s growth and operational ambitions. But the bad news is, few companies are leveraging cloud to fully deliver on its exceptional promise. This gap between possibility and reality is clearly reflected in PwC’s recent Cloud Business Survey.

In the survey, business leaders agree that regardless of where they sit in the organization, cloud has become a unifying force for the entire C-suite – CEOs, strategy heads, and business unit and functional leaders. In other words, they believe that Cloud is a critical enabler for broader business transformation. For example, the majority of executives in the survey, 92%, say their companies are “all-in” on cloud or have adopted it in many parts of the business, such as improved resiliency and agility (34%), better decision-making (34%), and product and service innovation (33%). And that’s a positive development.

However, when asked whether they had realized substantial value in certain target areas, such as improving resilience and agility, decision-making, innovation in products and services, creating better customer and employee experiences, increasing profits, improving talent retention and recruitment, reducing costs and enhancing brand reputation, more than half the executives said they aren’t getting the value they’ve been hoping for.

Understanding the cloud value gap

The survey reveals disconnects in the C-suite when it comes to defining and quantifying cloud value. Among executives, there’s no dominant definition of value. About a quarter equate it with faster innovation, while slightly fewer measure it in improved resilience or increased revenue. By role, CIOs and board members are most focused on innovation (39% and 23%, respectively), and CFOs and COOs prize improved resilience (25% each).

Additionally, almost half of business leaders (49%) see the inability to measure value as a key barrier to achieving value, and almost as many CFOs (48%) say they lack confidence in their ability to measure the return on cloud investments.

Gap in cloud and business strategy

Many executives recognize that cloud is not just an infrastructure or technology play, but their company’s cloud strategy is not part of its business strategy. This requires making specific choices about how cloud will help you differentiate your business — what digital and technology capabilities you’ll develop, the customer problems you will solve, and the role your company plays in industry or other ecosystems. In short, how can you embed cloud capabilities to enable end-to-end digital transformation?

The CFO can play a leadership role here along with the CEO, scripting and sharing the company’s cloud value story, working with other business leaders to zero in on where cloud can best drive strategy and jointly developing an investment thesis.

At the same time, applying cloud to existing processes and structures will yield only limited gains. Business leaders should commit to rethinking how work is done. That applies to market-facing innovation as well as internal processes. For example, have you modernized your finance approach to technology for optimizing spends or are you merely replicating the approach used with on-premises systems?

The study also sees CFO and tax leaders in particular can be key players in the cloud conversation, working in step with the CIO, CFO and other executives. Take, for example, their insight around using cloud-related R&D tax credits to offset the cost of innovation funding. “We’ve seen companies achieve a significant cost reduction (typically ranging from 8% to 20%) when this is properly planned and accounted for — yet only 38% of CFOs say they’re very confident their company is taking advantage of R&D tax credits for cloud investments,” the study notes.

The cloud digital divide

Businesses today already face severe talent challenges that are a byproduct of digital transformation. The shift to cloud has only intensified things. Many business leaders are beginning to raise concerns in this area. In the survey, 52% of executives cite lack of tech talent — such as skills in cloud architecture, cybersecurity or DevOps — as a barrier to realizing cloud value. For COOs and CIOs, that number is even higher. Likewise, 47% CXOs worry about their ability to upskill people in line with the new ways of working that cloud demands. Here again, COOs and CIOs are even more concerned.

Upskilling, though a very effective technique, should not be limited to just the core tech team, but the research shows that upskilling your executive team and board members is also important. This includes a shared understanding of the company’s business goals, how cloud enables them through a new mindset and how value will be measured.

This is an area where CIOs often take the lead, working to build the knowledge and confidence of other business leaders. An executive-level upskilling program might also include sessions with external partners and cloud service providers.

Developing programs to cultivate cloud skills can also be effective for members. For example, you can start with cloud training that’s designed to work with a cloud vendor’s certification program. At the same time, continue to recruit experienced tech talent, including those well versed in AI and other emerging tech. You might also consider how third-party partners with deep technical experience can help with learning and development.

Key barriers to realizing cloud value

Bar chart - Talent concerns among key barriers to realizing cloud value

Source: PwC US Cloud Business Survey. June 15, 2021

 The trust issue gap

The study confirms that executives view cloud through the lens of “what it can do” for an organization, as opposed to simply the threats that it may introduce. Notwithstanding, 17% of respondents do define cloud as a security and business risk that needs to be addressed, and 50% see this risk as a significant barrier to realizing cloud value.

Needless to mention, companies are not always attuned to the full picture related to risk and cybersecurity and may be too slow in implementation to reap the full benefits and avoid extra costs.

Considering trust angles at the earliest stages of a cloud initiative can also be an opportunity to enhance trust with customers or differentiate products and services, it says.

The research further urges CXOs to find out, “does your internal controls team fully understand the shared responsibilities that are part of your cloud service provider’s agreement and how to assess compliance there?” “Does your team consider trust an ongoing effort because cloud service providers are continually updating their offerings and adding new functionality such as AI and other emerging technology?

There is no doubt that cloud will be the next competitive frontier. Today’s value gap and return shortfalls will likely be nothing compared to tomorrow’s missed opportunities. Whatever your title, you have an integral role to play alongside your C-suite peers in defining, shaping and realizing cloud’s promise. A cloud transformation mentality isn’t about technology — it’s characterized by customer centricity, agility and reimagining everything. Don’t just tie cloud to your business strategy; make it the change agent that can secure your future.

Key barriers to realizing cloud value

Bar chart - Talent concerns among key barriers to realizing cloud value

Source: PwC US Cloud Business Survey. June 15, 2021

The trust issue gap

The study confirms that executives view cloud through the lens of “what it can do” for an organization, as opposed to simply the threats that it may introduce. Notwithstanding, 17% of respondents do define cloud as a security and business risk that needs to be addressed, and 50% see this risk as a significant barrier to realizing cloud value.

Needless to mention, companies are not always attuned to the full picture related to risk and cybersecurity and may be too slow in implementation to reap the full benefits and avoid extra costs.

Considering trust angles at the earliest stages of a cloud initiative can also be an opportunity to enhance trust with customers or differentiate products and services, it says.

The research further urges CXOs to find out, “does your internal controls team fully understand the shared responsibilities that are part of your cloud service provider’s agreement and how to assess compliance there?” “Does your team consider trust an ongoing effort because cloud service providers are continually updating their offerings and adding new functionality such as AI and other emerging technology?

There is no doubt that cloud will be the next competitive frontier. As the study observes, today’s value gap and return shortfalls will likely be nothing compared to tomorrow’s missed opportunities. Whatever the title, CXOs have an integral role to play in defining, shaping and realizing cloud’s promise. A cloud transformation mentality isn’t about technology — it’s characterized by customer centricity, agility and reimagining everything, believe study researchers. The mantra is: Don’t just tie cloud to your business strategy; make it the change agent that can secure your future.

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