How can cloud power operational innovation?
March 2, 2022
When I talk to my clients about cloud and operations, the conversation feels different from a year or two ago.
We’re no longer talking about whether and why when it comes to cloud.
That discussion is now over.
Because while many organizations were already on the road to cloud pre-pandemic, the last two years have laid bare the power and agility of cloud. Consider that a number of organizations created virtual contact centers in days, using cloud solutions with built-in security, thereby enabling homeworking agents to start work right away.
What we’ve witnessed is a compression of the cloud journey, and a new understanding that cloud at scale is essential for operations maturity, and ultimately, value.
Recent Accenture research confirms our experience, indicating that 90% of future-ready organizations apply cloud at scale, compared with 76% of those less advanced on the operations maturity journey.
The writing is on the wall. But clients often ask me: how do I do cloud ‘the right way’? Is more always better? The truth is, cloud is a continuum, not an end game.
Here are some reflections from the conversations I’m having, and three nuggets to bear in mind on the journey to operations maturity with cloud.
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#1: Avoid the cloud washing trap
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Cloud washing is about attaching the ‘cloud’ label to established solutions and services to make them seem future-forward—often without the full suite of cloud capabilities.
With the cloud buzzword everywhere, it pays to really look at what’s on offer.
When applied judiciously, cloud can generate huge value as our research indicates. But that doesn’t mean it’s a blanket approach for everything. As the saying goes, to a person who carries a hammer, everything looks like a nail!
Plus, cloud is not ‘one thing’; rather, it’s a continuum of capabilities and services, comprising multiple technologies under different cohorts (cloud, real-time data capture & analysis, AI & automation, security & Internet-of-Things).
Our research shows there is an elite group squeezing real value from cloud—the Continuum competitors. In particular, they do two things differently: 1) they choose the right types of cloud and cloud-based services to align with their strategy and ambitions and 2) they evolve their operating models to get value from those technologies.
Why does that matter? Because the high performers reimagine and reinvent their business using cloud, rather than shifting workloads to the cloud and stopping there.
Here’s an example: cloud enables you to experiment with new ways of doing things in an agile way, and fail or succeed fast, with little downside. For instance, experimenting with changes to stakeholder experiences. If you use that capability to the max, it means you can operate differently by changing your innovation model to be more agile. For a real world example, one healthcare provider we collaborated with is using cloud to combine its finance and HR operations into an integrated system to improve operations, provide greater transparency and enhance the employee experience.
It takes courage to embrace the full value of cloud, with 42% of organizations in our research saying the complexity of business and operational change is a major barrier to progressing along the cloud continuum.
But the benefits are tangible for those ready to commit to permanent reinvention through cloud.
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#2: Think data when you think cloud
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Every organization needs a strong data foundation—think AI-assisted data governance and data engineering. And what my clients are understanding is that this data foundation can be built anywhere but is best suited to a cloud environment.
Why? Because cloud-based architecture and platforms enable diverse data to come together in one place and new capabilities (e.g., AI, analytics) are constantly being added by the cloud service providers to extract insights that improve decision making and drive value.
And getting your head around the integral role of data is a determinant of cloud success. Our research identifies four levers for operational maturity—technology, process, data and talent. And tellingly, of all the levers, data has the biggest multiplier effect, with organizations that improve their data capabilities 4.2X more likely to make the leap from predictive to future-ready, and 2.5X more likely to move from stable to efficient.
A practical example: a bank deployed a cloud-based commercial lending origination system, 60 automation tools, AI-assisted assets and predictive analytics on loan pre-closure propensity so employees could work more efficiently. The bank saw a 48% increase in productivity and a 26% improvement in approval time—it can now approve loans of less than US$350,000 three times faster than before.
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#3: Build a connected cloud ecosystem
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We believe over the next three to five years, more than two-thirds of workloads will move to the cloud. This outcome-based approach would enable organization’s to have greater flexibility based on their cloud consumption and prevent high levels of technical debt – a big leap forward.
With shifts this big on the horizon, it’s essential to know what kind of cloud options you want to choose (private cloud, public cloud, hybrid and so on) and whom to play with.
And bear in mind you might want to engage with a range of cloud providers for different purposes. For cloud providers, it’s all about what they can offer ‘in’ the cloud. For example, contracts are increasingly moving towards an outcome-based approach in which the client wants flexibility based on the consumption of services. Consider how a European insurance network is using a cloud platform to reinvent claims handling. Analytics and easy-to-use dashboards put customer and performance insights at their fingertips—and a spare parts marketplace, mobile inspections app and AI-enabled damage estimator help deliver better customer service while speeding up the claims process.
And cloud must evolve with the business. For instance, as automation releases employees up from repetitive tasks, their headspace for value added activities increases. And as resource is freed up, this provides an opportunity for cloud players to dig deeper and offer a wider portfolio of services.
In short
Cloud is not a panacea, but used judiciously, it can deliver huge value and be harnessed as a source of innovation.
Continuum competitors make choices that capitalize on cloud to reimagine their operating models and drive business change. Those that grasp the cloud opportunity beyond the ‘lift and shift’ to a reimagined business architecture will be those that truly thrive. Maximizing business outcomes will take creating a connected ecosystem of hybrid cloud solutions with integrated data to generate differentiated insights and scaling at pace with top talent with a cloud first and transformation-led mindset.
The delta is big: while technology leaders were growing revenue at 2X that of Laggards in the years before the pandemic, they have grown at 5X that of Laggards in the past three years. It’s a compelling picture.
Where are you on the Cloud Continuum for operational maturity? Contact me to talk more.
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