Cloud strategy: Agility, complexity, and business-aligned

A blog post by Diana Kearns-Manolatos, senior manager, Center for Integrated Research, Deloitte Services LP

While organizations were adopting cloud technologies prior to the pandemic, in 2020 much of the world went virtual showing a huge growth in cloud. This continued in 2021 and shows no signs of stopping. For organizations to gain the most strategic value from their cloud adoption journey, they can benefit from understanding what cloud strategy fundamentals are today, where organizations are moving to reduce cloud complexity, and how to use a common language to align strategy and technology. Done right, organizations can better enable their capacity to change and ability to win.

Cloud fundamentals today: Agility and complexity

COVID-19 made company leaders sit back, focus, and undertake long-term strategic thinking. They shifted their attention away from merely adopting cloud technologies and addressing security to completely rethinking how to deliver cloud services, improve reliability and resilience, and refresh overall operating models. In other words, the socioeconomic changes accelerated the need for cloud maturity, with industry leaders focused on one central question, “How do we become a high-performing digital company now?”

As organizations accelerated their movement to the cloud over the past two years, the de facto approach has been to embrace a multicloud strategy with 87% of organizations using hybrid (public/private) cloud infrastructures. This opened the door to agile data, infrastructure, and digital solutions but also a much more complex world than they may have anticipated. When processes were grounded in the data center, technical experts and engineers were confident about its capacity and capability. Then came cloud, and the people who were building software now also became responsible for considering how to operate and deliver services to end users. Today, the ability to balance optimizing operations with building applications will be a key objective for cloud-empowered enterprises.

Where we’re going: Cloud (un)complex

The most pressing future cloud need is to reduce complexity. One way is to level up cloud management platforms and tools to enable seamless multicloud deployments with consistent end-user experiences whether that is moving data from one provider to another or from cloud to the edge and back again. Additionally, after migrating the best architected and the most common systems that were built in the decade, organizations will have to strategize on how to migrate traditional and mainframe applications and systems as well as how to rewrite code to make it manageable in the cloud.

Organizations also need to determine how best to embrace security by design principles to develop controls and reduce risk without increasing complexity. One way could be to establish developers as the first line of defense for cloud operations. Another could be to add security and governance abstraction layers, which can help create the requisite centralized command and control infrastructure while maintaining a culture of innovation and agility.

Critically, organizations need a new operating model to navigate this complexity. They can embrace an engineering-led culture with pod teams that include cloud and cyber professionals to come together to design and implement more secure solutions through process and configurations: tool stacks bespoke to what operations need to be performed, what the platform requires, how access rights should be managed, and how the system or network should be run. Talent management has a critical role to play to enable this future. The ability to cultivate cross-skilling and cross-teaming across cloud, cyber, and data functions, as well as across tool sets, for example, could help allow for greater collaboration between system administration and development.

How to get there: It’s going to be a mix

A continuous cloud transformation journey requires a new operating model not just within core technology but across the organization and C-suite functions. The challenge is that until now, organizations have lacked a common language to join tech decisions with business strategy.

Our recent Deloitte Insights article, “A new language for digital transformation,” discusses how organizations can build a common language that is aligned to the enterprise strategy that allows business, technology, operations, and workforce C-suite leaders to communicate more strategically across functions. The five digital imperatives create a common framing around key themes: experience to optimize user interactions across all types of stakeholders; insights to assess the data needs; platforms with a focus on the flow of information across the organization or network; connectivity inclusive of platform and ecosystem models; and integrity to improve resilience, security, and trust.

A focus on lasting themes allows for a more modular, flexible technology core that is better able to deliver transformation and strategic value in three ways: developing an integrated business strategy that considers all five digital imperatives, aligning business/tech/ops and workforce for a single digital imperative, or taking a more matrixed approach across themes and businesses.

Our analysis of data from 2,860 global business and public sector leaders who responded to Deloitte’s 2021 Digital Transformation Executive survey found that as organizations become more mature in their ability to adopt and integrate these five digital imperatives, they measurably outperform their peers in terms of the strategic objectives, capacity to change, and ability to win.

• Digital all-rounders who implemented three or more digital imperatives made up approximately 13% of respondents. These organizations demonstrated a greater capacity to change. They had a 13% delta in their ability to achieve full-scale implementations vs. peers, and an additional 11% said their digital capabilities significantly helped them deal with the challenges of COVID-19. Digital all-rounders were able to better deliver on their enterprise strategy and enable their ability to win with revenue growth rates that are above industry average (74% vs. 65%) and with digital capabilities cited as a key differentiator (36% vs. 25%).
• Digitally developing organizations (defined as those that implemented fewer than three digital imperatives), however, still make up the majority of organizations. Approximately 87% of respondents have implemented fewer than three digital imperatives and about 67% have embraced just one. The reality is that most organizations are still digitally developing. Yet even these organizations saw greater value when they combined the imperatives in an integrated digital strategy, perhaps given their ability to tap into the multiplier impacts of aligned business and technology strategies or the unique value that different technologies can create when combined. (See our article, “Teach the world, feed the world, save the world: Use cases for social good,” for more on this topic and the multiplier impacts that can be achieved from combining connectivity and platform technologies).
  

Cloud clearly has an important role to play in enabling business strategies, innovation, and transformation today, tomorrow, and into the future. It is going to be IT’s responsibility to make key decisions about what moves, what doesn’t, and what remains on-premises. But, equally, IT needs to be working closely with the business to understand strategy, objectives, and success measures so that when data, applications, and infrastructures move to the cloud, organizations gain the greatest value possible.

To learn more about this topic, read the full article, “A new language for digital transformation” and listen to the recent On Cloud podcast, “Cloud: Where we are, where we’re going, and how to get there.”