Purposeful—Not Greater—Investments Set Cloud Innovation Leaders Apart | Deloitte US has been saved
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Cloud investments remain on every company’s agenda as global IT spend is projected to reach $4.5 trillion by the end of this year.1 In a rush to be virtual, many are spending millions, if not billions, on cloud technology to enable analytics and to digitally transform. However, cloud migration alone isn’t enough to achieve the many business and technology benefits cloud promises. A strong investment is a critical start, yet spend alone is not what sets apart cloud Leaders2—those gaining the most business and innovation value from cloud.
Deloitte analyzed survey responses from 500 US cloud decision-makers and identified four categories based on who achieved the greatest strategy and innovation value from their cloud investments. Leaders were the top 29%, Drivers 22%, Moderates 35%, and Hopefuls 14% of respondents. Leaders tend to spend only slightly more on cloud as a normalized percentage of their revenues with 34% of Leaders in the 70th percentile of spenders compared with 28% of Hopefuls. What does make a difference is purposeful investments.
Deloitte’s new US Future of Cloud Survey Report found four actions that set Leaders apart from other respondents.
One: Build more mature cloud architectures with multi-cloud and without on-prem
While most survey respondents say they are using multi-cloud solutions (79%), Leaders’ multi-cloud strategies differ in three ways.
First, they recognize the importance of benefits like “building full-stack capabilities” (95% Leaders vs. 63% Hopefuls) and “application and data process scalability” (97% Leaders vs. 70% Hopefuls).
Second, they’ve found the right multi-cloud mix. Most Leaders use three to four cloud service providers while most Hopefuls use one to two. That’s not to say that more is always better. Close to the same percentage of Leaders and Hopefuls use five or more providers. Perhaps for Leaders this is intentional and a sign of more mature ecosystems, and for Hopefuls it’s a sign of experimentation across providers. In any case, Leaders have found their “goldilocks zone”—not too few and not too many providers—to create integrated strategies and data, across a handful of vendors, with a focus on full-stack capabilities.
Third, Leaders say that only 19% of their workloads remain on-premise, while Hopefuls still have 32% there. Their ability to break the tie with legacy infrastructures and move more work into the cloud sets them apart. In turn, this sets them apart to enable greater efficiency and agility and scalability—whether expanding into new markets or expanding existing products or revenue.
Two: Embrace more advanced cloud services
Data analytics, software engineering, and cloud cyber are the top cloud services respondents say they use overall. However, Leaders use artificial intelligence and machine learning (AI/ML), cloud native, and edge computing services in greater numbers than any other category. For example, while 85% of Leaders say they are using edge and IoT (Internet of Things) services, only 56% of Hopefuls are.
Interestingly, Drivers and Moderates lag behind Hopefuls in their use of all three cloud services. This could mean that Hopefuls are experimenting with these technologies to leapfrog others and improve their innovation standing. But Drivers, Moderates, and Hopefuls are not seeing the value yet. Leaders are gaining more value across all 10 cloud services that appeared in the survey. They can achieve 10 times more value from blockchain, 5 times more value from augmented reality (AR) and virtual reality (VR), 3.5 times more value from containers, and 2.9 times more value from cloud native, to name a few.
Three: View industry clouds as an enabler and catalyst for transformation
Industry clouds—a set of cloud-native applications, code, and services—are gaining traction across industries so as to accelerate digital transformation in a strategy-led way. They allow companies to tap into innovation and resources inside and outside the organization. Unsurprisingly, 95% of respondents agree or completely agree that industry clouds will be the enabler/catalyst for transformation and automation of industry-specific business processes. Leaders see their potential more than others.
Our survey found 74% of Leaders “completely” agree industry clouds will be the enabler/catalyst for transformation and automation of industry-specific business processes versus 60% of Drivers, 39% of Moderates, and 35% of Hopefuls.
Four: Focus on building a software engineering culture
A strong software engineering culture was important for all cloud decision-makers. Most respondents (85%) are focused on building a strong software engineering culture including agile pods, continuous learning, and business/technology product teams. Consistent with that vision, 83% of organizations said they are already using software engineering processes/services, and of those using software engineering processes/services, 75% said they saw value.
However, Leaders were more mature on their execution of talent and teaming strategies required to achieve this strong software engineering culture. In fact, 65% of Leaders said that they have a mature software engineering culture and/or plan to invest further in this area as compared to Hopefuls (43%). Moreover, 49% of Hopefuls say they are just starting to think about strengthening their software engineering culture as compared with only 12% of Leaders. Software engineering is a focus for all respondents, but Leaders are clearly ahead on execution.
Become a cloud Leader
These four actions set Leaders apart. Organizations that want to become more strategic and innovative with their cloud spend can learn from Leaders to gain the greatest possible value from their cloud investments. Read more in our US Future of Cloud Survey Report.
1 Gartner, “Gartner forecasts worldwide IT spending to exceed $4 trillion in 2022,” press release, October 20, 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. Drivers comprised 22% of respondents, Moderates 35% of respondents, and Hopefuls 14% of respondents.
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.
As chief operating officer of Deloitte’s Cloud business—and most recently the managing director who was instrumental in standing up Deloitte’s Analytics offerings—Cathleen has cemented her position at the forefront of Deloitte’s largest and most important investments. She executes on some of Deloitte’s most strategic initiatives and is at her best when producing, directing, and managing teams, which affect large scale change in the world of business. Name one of Deloitte’s largest transformation and modernization efforts and you’re apt to find Cathleen’s footprints. Her experience with Deloitte spans more than 20 years. Cathleen loves to serve clients across industries and her expertise includes analytics, finance transformation, integrated performance management, process improvement, service delivery design and organization, and shared services, to name a few. Cathleen is a leading woman in technology and with three children is helping pave a path for other women in the industry to be felt for decades to come.