Four tips to build a sound cloud architecture


The industry cloud opportunity

State of Cloud: Trends & Predictions

A blog post by Brian Campbell, principal, Deloitte Consulting, Nicholas Merizzi, principal, Cloud Strategy, and Diana Kearns-Manolatos, senior manager, Deloitte Center for Integrated Research.

What do a 100-year-old organization and a digital native have in common? Both can have insufficient digital processes in place and are constantly needing to innovate, grow, change, and adapt. Organizations today, irrespective of their legacy, need 21st-century digital blueprints—whether they are replacing traditional technology or creating a new solution. They need modular capabilities and architectures to slowly shift from the monolithic systems of the past and to empower them to change more flexibly and incrementally. They need to rethink methods to maximize industry solutions and partner with ecosystem players who may advance and accelerate their respective unique and differentiated strategies. Industry clouds are fast gaining traction and adoption to help organizations of all shapes, sizes, and industries accelerate their digital transformations while enabling their ability to win.

The industry cloud opportunity

Industry clouds: What are they, and why do they matter?

Industry clouds are industry sector-level, modular digital solutions that serve as high-tech building blocks to accelerate 360-degree digital development from a single-user journey to new enterprise capability. Cloud providers are heavily investing in industry clouds to bring in increasingly sophisticated and integrated AI, IoT, 5G, cyber, blockchain, augmented and virtual reality, digital twin, and other capabilities to help organizations accelerate their digital journeys.

In our new Deloitte Insights research, “Reimagining digital transformation with industry clouds,” we estimate that as much as 64% of the US $1 trillion cloud market (as expected by 2024) could benefit from industry clouds, making it a $640 billion potential market. Industry clouds are becoming a cornerstone for digital-first business models as organizations embrace this business-as-a-service (BaaS) model that brings together cloud providers, system integrators, and internal developers with a new buy-build equation.

Effective steps to make the most of the industry cloud opportunity

Start with strategy. Start with your enterprise strategy as the North Star and use strategy to define your organization’s top digital use cases. This will help you focus on driving forward digital capabilities that will help your organization to grow, compete, and win in the market. It can also give your organization clear guidelines and guardrails when determining what should be built in-house that is differentiated and proprietary and where to take advantage of external partner resources. Don’t start by reviewing an inventory of industry clouds that may or may not be valuable to your business.

Your business strategy team should partner with technology leadership to set the competitive strategy for digital, identify opportunities for industry clouds, and define where internal build resources would be best deployed. Internal talent can be tasked to focus on the 20% of capabilities that deliver the organization’s competitive advantage. Examples can be as wide as customization of an AI model to create a unique personalized experience for a retail customer or integrating an API capability into your proprietary asset management system for institutional clients.

What comes after strategy?

Implementing industry clouds requires a new operating model, and our research has shown several approaches for marketplace and organizational change. 

To advance collaborative marketplace and co-creation strategies, many organizations are embracing platform and ecosystem business models that enable competitors and collaborators to solve shared industry problems and monetize their solutions. In these cases, first-movers stand to gain the greatest advantage.

At a more granular level, this shared services/BaaS operating model requires enhanced demarcation between internal and external team responsibilities. While an internal team may be responsible for setting its strategy and developing the differentiated “secret sauce” technology capabilities, external technology partners, on the other hand, might focus on adapting and integrating the industry cloud solution and/or integrating multiple systems together with a focus on interoperability and evolving capabilities.

And at the most granular level, engineering pods that bring together business and technology leaders as product owners (not process drivers) with shared objectives and key results (OKRs) can enable strategists and engineers to work together to redesign the enterprise with better integrated, agile innovation teams.

How can organizations benefit? 

In a world where the capacity to change is a leading indicator for exponential enterprises—which Deloitte’s analysis has shown for more valued and less volatile organizations—industry clouds can hypercharge an organization’s capacity to change. Their preconfigured capabilities kick-start the digital build, and continuous innovation-led investment from ecosystem partners allows users to achieve greater nimbleness, scalability, stability, and optionality. While not every industry has an equal number of industry clouds at the same level of maturity, effectively partnering externally can be beneficial for transforming your organization and the industry. Industry clouds allow organizations to focus internal time, energy, and resources on the most critical and strategic tasks in a highly competitive tech talent environment.

What next?

In a constantly shifting business environment, it is imperative to plan well so that organizations can focus internal resources and capabilities in areas where such resources can contribute toward building solutions that can help differentiate from competitors. As your organization taps into the full potential of an industry cloud, consider where you plan to compete and win. In addition, using strategy as the North Star, embracing an engineering mindset, and working in a partnership model that can drive customer success can help harness the full potential of industry clouds.

For more on this topic and specific industry examples and use cases, read our research: Reimagining digital transformation with industry clouds.

Please visit our cloud services webpage and discover a full suite of service offerings and capabilities available to accompany you throughout your Cloud journey.

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