Posted: 13 Oct. 2022 10 min. read

Industry cloud benefits and challenges

How sentiments about industry clouds differ among leaders

A blog post by Diana Kearns-Manolatos, senior manager, Center for Integrated Research, Deloitte Services LP; Brian Campbell, principal, Deloitte Consulting LLP; Nicholas Merizzi, principal, Deloitte Consulting LLP; David Linthicum, chief cloud strategy officer, Cloud Services, Deloitte Consulting LLP

 

Industry clouds are popular, and their use is growing. In fact, a recent Deloitte analysis found industry clouds could become a $640 billion market by 2024.1 Industry clouds provide tangible benefits to help organizations accelerate innovation and engineer advantage. However, sentiment about industry clouds can vary depending on where an organization is on its digital and business transformation journey.

An industry cloud is a portfolio of sector-specific business capabilities activated through services, hybrid businesses, and custom software solutions. In other words, industry clouds are composable building blocks—cloud services, applications, and other tools like workflows and data models—that are built for strategic use cases in specific industries. They create a new model to help organizations reimagine their future and accelerate digital and business transformation to engineer advantage and achieve competitive differentiation.

Leading organizations2—those seeing the most strategic and innovation value from cloud—understand this perhaps better than others when the differences are clear.

Industry cloud sentiment differs among cloud value Leaders 

Deloitte’s recent US Future of Cloud Survey Report surveyed cloud decision-makers across a wide range of industries and cloud-related issues, including perceived value of industry clouds. It found that how much organizations value industry clouds varies and increases in positivity the more mature organizations become in their cloud strategies. Seventy-four percent of Leaders (versus 60% of Drivers, 39% of Moderates, and just 35% of Hopefuls) agreed that industry clouds are a catalyst for transformation.

Differences in how Leaders feel about industry clouds can also be put in context based on how they feel about cloud technology more broadly. Leaders overall appeared to have more positive emotions about the future of cloud, including greater confidence, whereas Hopefuls seemed more enthusiastic. The lack of confidence among Hopefuls might be because they are more likely to be struggling with legacy systems—creating an opportunity for industry clouds and their many benefits.  

Organizations are seeing benefits from industry clouds 

According to Deloitte’s latest thinking on industry clouds, industry clouds are so powerful because they enable organizations to:

  • Use industry-proven, advanced components and solutions to focus on and achieve faster, more reliable business outcomes or accelerate the capacity to change (become more agile);
  • Free up internal resources to focus on achieving competitive differentiation instead of commoditized activities or ease the way for migration of industry-specific legacy solutions to the cloud; and 
  • Realize a faster time to market for new products, services, business capabilities, and use cases.

Overall, our survey respondents agreed—with the top three benefits of industry cloud cited by respondents as faster innovation/time to market for business capabilities and use cases (56%), accelerating the capacity to change (agility) (49%), and easing the way for migration of industry-specific legacy solutions to the cloud (38%). Indeed, faster innovation/time to market is perhaps industry clouds’ greatest “superpower,” according to survey respondents.

Where we see differences is in which benefits Leaders (versus Hopefuls) gravitate toward. Leaders focused more on industry clouds’ ability to ease the way for migration of industry-specific legacy solutions to the cloud (44%) as well as benefiting from the most current digital business process blueprints (43%)—more than 10 percentage points above Hopefuls for both priorities. Hopefuls—somewhat surprisingly—rated industry clouds higher than average (58% vs. 49% for Leaders) for agility. This might indicate that Hopefuls are lagging behind and hope that leveraging industry clouds will help them quickly catch up.

Challenges abound, but industry clouds provide great opportunity

Even though most organizations surveyed recognize the value of industry cloud, many have concerns about implementation. Some of the top challenges we saw that also align with our client experience are control over data and insights, vendor lock-in, and integration. While Leaders have fewer concerns overall when it comes to industry clouds, data control is still a top concern for them. Hopefuls are especially concerned about having the right skills needed to implement industry cloud strategies, making data and talent/ecosystem strategies a key priority area for organizations to focus on to ensure their success.

These concerns make constructing the right operating model when implementing industry clouds important in order to create the necessary control over data ownership and the flow of information across the solution, platform, or ecosystem. A strategy-first approach to deciding where, when, and how to use industry clouds and how to balance buy and build architectures can help address these challenges.

Unlock the industry cloud opportunity 

If companies work to overcome these roadblocks, industry clouds can help organizations reimagine their future and accelerate digital and business transformation to engineer advantage and achieve competitive differentiation. To do so, it’s essential to understand whether you’re a Leader, Hopeful, or someone in between. You can then see the sentiments and perceptions related to the approach you may need to address through education, which benefits are most appropriate based on your maturity level, and what more advanced organizations are doing to address challenges—and seize the opportunity industry clouds provide to think in new and innovative ways.

 

1 Brian Campbell et al., “Reimagining digital transformation with industry clouds,Deloitte Insights, November 23, 2021.

2 Deloitte surveyed 500 US cloud decision-makers and classified participants into four organizational profiles (Leaders, Drivers, Moderates, and Hopefuls). Leaders were the top 29% of respondents who achieved the greatest strategy and innovation value from their cloud investments.

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Diana Kearns-Manolatos

Diana Kearns-Manolatos

Senior Manager | Center for Integrated Research

Diana is a senior manager in the Deloitte Center for Integrated Research where she analyzes market shifts and emerging trends across industries. She leads Deloitte’s global digital transformation research and focuses on topics including digital strategy, cloud, AI, cyber, blockchain, IoT, experiential technologies, and the future of workforce. Additionally, She draws on more than 15 years of award-winning marketing communications expertise to align insights with business strategy. She speaks on technology and women in leadership and holds a bachelor’s and master’s degrees from Fordham University.

Brian Campbell

Brian Campbell

Principal | Deloitte Consulting LLP

Brian is a principal in Deloitte Consulting’s Strategy practice. Brian specializes in growth strategy, go-to-market strategy, business model transformation, and digital transformation with a focus on high-tech. He spends a significant amount of his time working with the cloud hyperscalers and other technology leaders to drive growth, innovation, and both top and bottom line improvement for clients across industries. He co-leads Deloitte's Technology-Powered Business Transformation offering.  Brian’s functional experience spans strategy, sales, marketing, finance, IT, HR, and operations. When he’s not working, Brian loves to ski, bike, and play golf. A proud Canadian, he is also an avid traveler and visits family and friends all over the globe whenever he gets the chance. His greatest passion is being a Dad to his two young kids and husband to wife Ally.

Nicholas Merizzi

Nicholas Merizzi

Principal | Deloitte Consulting LLP

A principal in the Deloitte Consulting LLP's Cloud Strategy offering, Nicholas works with global organizations to help them achieve their cloud strategies at enterprise scale. He is skilled at helping clients to map a path for transformation, modernize complex distributed systems, and explore emerging technologies that enable business strategies. Nicholas brings more than 15 years of experience in technology across the financial services industry to his position. Before joining Deloitte, Nicholas held technical leadership positions at a global technology company and worked as an engineer for a major bank. He holds both an undergraduate and graduate degree in computer science as well as an MBA focused on strategy and finance. He now leverages this combined experience with cloud at the epicenter to help clients push through new frontiers and re-imagine business opportunities.