Why should you care about cloud?
March 23, 2021
You hear a lot about cloud these days. It sometimes feels like every other person you meet is talking about it, investing in it or explaining the latest cloud innovation in fine technical detail.
But how much of this registers with anyone outside the IT function? The reality is that much of it flies under the radar of company leadership, especially CEOs.
When you also consider the recent history of fragile cloud business cases, messy transitions and missed timelines, it contributes to a growing sense of disappointment among chief executives about cloud’s potential—and that’s a problem.
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Cloud needs the full attention of the entire C-suite including, most importantly, the CEO.
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A central driver of business growth
Cloud matters to these leaders, and the industry needs to get past the technical jargon and the hyperbole. There is now clear evidence that cloud is a critical enabler for modern businesses, helping to accelerate innovation at scale, disrupt incumbents, expand into adjacent markets, reduce carbon footprints and more.
In fact, cloud technology is now a central driver of business growth. Our analysis shows that companies that have identified cloud as a strategic focus area can grow at double or even triple the rate of their peers who aren’t approaching cloud in this way (see figure below).
The COVID-19 pandemic has brought even more urgency to cloud. We all saw how some companies—like a global retailer or the food-service business, who both had the foresight to build robust cloud-based ecommerce capabilities before the pandemic struck—were able to adapt and even accelerate their businesses during the crisis, tripling online revenue in one case.
We also saw how many companies struggled to keep pace with radically different and rapidly changing patterns of supply and demand. They simply lacked the agility that cloud-based capabilities would have provided.
That experience shows why cloud is too important to be treated as just another IT program–or even to be thought of as an “IT program” at all. It’s a foundational part of the business strategy. It’s a platform for innovation and reinvention, as well as responsiveness and resilience.
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Figure 1: Companies with the most cloud-focused strategies can grow 2x-3x in profit and revenue vs their least cloud-focused peers.
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More than just the CIO’s responsibility
So if you’re looking at cloud purely as a source of more cost-effective IT infrastructure, you’re missing the point, and missing out on the full value it can provide to the business—by several orders of magnitude. For companies of scale, our analysis estimates cloud can create $1b+ in value from new digital businesses and the resulting growth that cloud can enable. In its current state however, the gap between opportunity and reality is stark with nearly two-thirds of companies failing to capture the expected value from their cloud initiatives. To avoid that, your approach to cloud needs to be multidimensional, focusing on growth, innovation, and operational efficiency, not just the cost of IT ownership.
Cloud also needs to be more than just the CIO’s responsibility. In fact, it needs the full attention of the entire C-suite including, most importantly, the CEO. This lack of alignment is one of the main reasons cloud transformation programs go off the rails.
That’s why CEOs need start with a clear articulation of the company’s fundamental purpose—and how cloud enables it. It means going back to first principles, articulating the core value the business aspires to provide, and explaining how cloud will help the whole organization do that better, faster and more efficiently.
It also means being willing to realign the company culture and operating model with the goal of using cloud as a route to future business innovation, reinvention and growth.
All of us should care about cloud—especially CEOs.
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