Cloud computing adds value well beyond agility, efficiency: Deloitte

Dive Brief:

Companies advanced in cloud computing have seized on benefits well beyond greater agility and efficiency, using the on-demand technology to expand their products and services, achieve differentiation with competitors, improve customer experience and reduce regulatory risk, Deloitte found in a survey.
Cloud is now the “default platform” for innovations such as cybersecurity, Internet of Things, artificial intelligence and machine learning, Deloitte said, describing results of a survey of 500 “senior cloud decision-makers” across a range of U.S. industries.
Still, “many organizations are not getting nearly as much value from their cloud investments as they could be and are lagging behind in terms of managing cloud capabilities in a way that drives business performance, strategic outcomes and innovation success,” Deloitte said.

Dive Insight:

CFOs spending more on a move from on-premises computing to the cloud face rising budgetary and competitive risks should their companies botch the transition.

Worldwide spending on public cloud services will surge 20% this year to $495 billion and 21% next year to $600 billion, according to Gartner. Cloud application services is the biggest segment, with total outlays likely to hit a record $110 billion this year and $136 billion in 2023.

Nearly nine out of 10 (87%) survey respondents said their companies plan to increase cloud investment by 6% during the next 12 to 24 months, with many aiming to push up spending by more than 20%, Deloitte said.

Respondents see a return on investment in the cloud across nine areas, with 83% seeing a reduction in business and regulatory risk, 80% generating revenue from new products and services, 74% expanding into new markets and 72% achieving greater environmental sustainability, Deloitte said.

“Organizations are increasingly using cloud investments to boost business performance, drive strategic outcomes and enable breakthrough innovation — not just to deliver IT services in a more flexible and efficient way,” Deloitte said.

Leading companies do not spend much more on cloud platforms and services than their rivals and work with three or four cloud providers rather than only one or two, Deloitte said. The “multi-cloud” approach offers more choice in cloud services, enables greater scalability in applications and data processing, and increases leverage in negotiation.

The leaders are embracing through the cloud artificial intelligence and machine learning, and taking a “cloud native” approach, or scaling back their on-premises computing infrastructure and moving all their applications to the cloud, Deloitte said. They are also increasing their use of “edge computing,” moving computing and data storage closer to the sources of data.

Such gains in strategy and innovation exceed the “table stakes” in cloud services, including data analysis used by 86% of respondents, Deloitte said. Other standard options, such as cloud-based software engineering and cybersecurity, are used by 83% and 82% of respondents, respectively.