Deloitte Insights and our research centers deliver proprietary research designed to help organizations turn their aspirations into action.

DELOITTE INSIGHTS

  • Home
  • Spotlight
    • Weekly Global Economic Outlook
    • Top 10 Reading Guide
    • Diversity, Equity, & Inclusion
    • Cyber Risk
    • Digital Transformation
  • Topics
    • Strategy
    • Economy & Society
    • Operations
    • Workforce
    • Technology
  • Industries
    • Consumer
    • Energy, Resources, & Industrials
    • Financial Services
    • Government & Public Services
    • Life Sciences & Health Care
    • Technology, Media & Telecom
  • More from Deloitte Insights
    • About
    • Deloitte Insights Magazine
    • Press Room Podcasts

DELOITTE RESEARCH CENTERS

  • Cross-Industry
    • Home
    • Workforce Trends
    • Enterprise Growth & Innovation
    • Technology & Transformation
    • Environmental & Social Issues
  • Economics
    • Home
    • Consumer Spending
    • Housing
    • Business Investment
    • Globalization & International Trade
    • Fiscal & Monetary Policy
    • Sustainability, Equity & Climate
    • Labor Markets
    • Prices & Inflation
  • Consumer
    • Home
    • Automotive
    • Consumer Products
    • Food
    • Retail, Wholesale & Distribution
    • Hospitality
    • Airlines & Transportation
  • Energy & Industrials
    • Home
    • Aerospace & Defense
    • Chemicals & Specialty Materials
    • Engineering & Construction
    • Mining & Metals
    • Oil & Gas
    • Power & Utilities
    • Renewable Energy
  • Financial Services
    • Home
    • Banking & Capital Markets
    • Commercial Real Estate
    • Insurance
    • Investment Management
  • Government & Public Services
    • Home
    • Defense, Security & Justice
    • Government Health
    • State & Local Government
    • Whole of Government
    • Transportation & Infrastructure
    • Human Services
    • Higher Education
  • Life Sciences & Health Care
    • Home
    • Hospitals, Health Systems & Providers​
    • Pharmaceutical Manufacturers​
    • Health Plans & Payers​
    • Medtech & Health Tech Organizations
  • Tech, Media & Telecom
    • Home
    • Technology
    • Media & Entertainment
    • Telecommunications
    • Semiconductor
    • Sports
Deloitte.com
Deloitte Insights logo
  • SPOTLIGHT
    • Weekly Global Economic Outlook
    • Top 10 Reading Guide
    • Diversity, Equity, & Inclusion
    • Cyber Risk
    • Digital Transformation
  • TOPICS
    • Strategy
    • Economy & Society
    • Operations
    • Workforce
    • Technology
  • INDUSTRIES
    • Consumer
    • Energy, Resources & Industrials
    • Financial Services
    • Government & Public Services
    • Life Sciences & Health Care
    • Technology, Media & Telecom
  • MORE FROM DELOITTE INSIGHTS
    • About
    • Deloitte Insights Magazine
    • Press Room Podcasts
  • Welcome!

    For personalized content and settings, go to you My Deloitte Dashboard

    Latest Insights

    In a competitive labor market for retail workers, sustainability programs could give employers an edge

    Article
     • 
    5-min read

    A framework for managing an extended and connected workforce

    Article
     • 
    2-min read

    Recommendations

    Government Trends 2023

    Article

    Navigating toward a new normal: 2023 Deloitte corporate travel study

    Article
     • 
    17-min read

    About Deloitte Insights

    About Deloitte Insights

    Deloitte Insights Magazine, Issue 31

    Magazine

    Topics for you

    • Business Strategy & Growth
    • Leadership
    • Operations
    • Marketing & Sales
    • Diversity, Equity, & Inclusion
    • Emerging Technologies
    • Economy

    Watch & Listen

    Dbriefs

    Stay informed on the issues impacting your business with Deloitte's live webcast series. Gain valuable insights and practical knowledge from our specialists while earning CPE credits.

    Deloitte Insights Podcasts

    Join host Tanya Ott as she interviews influential voices discussing the business trends and challenges that matter most to your business today. 

    Subscribe

    Deloitte Insights Newsletters

    Looking to stay on top of the latest news and trends? With MyDeloitte you'll never miss out on the information you need to lead. Simply link your email or social profile and select the newsletters and alerts that matter most to you.

Welcome back

To join via SSO please click on the key button below
Still not a member? Join My Deloitte

Data modernization and the cloud

by Thomas H. Davenport, Ashish Verma, David Linthicum
  • Save for later
  • Download
  • Share
    • Share on Facebook
    • Share on Twitter
    • Share on Linkedin
    • Share by email
8 minute read 26 August 2019

Data modernization and the cloud Which trend is driving the other?

8 minute read 26 August 2019
  • Thomas H. Davenport United States
  • Ashish Verma United States
  • David Linthicum United States
  • Save for later
  • Download
  • Share
    • Share on Facebook
    • Share on Twitter
    • Share on Linkedin
    • Share by email
  • What is data modernization?
  • What role does the cloud play?
  • Cloud and data modernization initiatives
  • In conclusion: Cloud migration and data modernization go hand in hand

​Many US companies are moving data to the cloud, and while doing so, they prefer modernized platforms. This begets the question—is data modernization driving cloud adoption, or vice versa?

Two of the most dramatic changes in contemporary information technology (IT) architectures are the rise of the cloud for processing and storing data, and the modernization of data management tools to accommodate unstructured data and open-source technologies. These two trends are happening simultaneously, but their relationship is unclear. Both are critical to success for today’s organizations, but which drives the other?

Learn More

Explore the Digital transformation collection

Visit the Analytics collection

Subscribe to receive related content

Download the Deloitte Insights and Dow Jones app

It is, of course, always difficult to establish causal relationships among trends, but results of our recent survey (see sidebar, “Survey methodology”) reveal that these two developments are reinforcing each other. On the vendor side, cloud providers are offering not only cloud-based storage and processing, but data modernization capabilities as well. On the user side, many leading firms are doubling their data footprints once or twice each year, so they are looking to simultaneously reduce costs, take advantage of new forms of big data, get greater flexibility in analyzing data, and employ powerful artificial intelligence (AI) and analytics algorithms. These benefits are available to firms that modernize their data and move to the cloud at the same time.

Survey methodology

In April 2019, we conducted a survey of 504 respondents in the United States, all of whom work in IT groups of medium to large companies. These companies have annual revenues in excess of US$500 million and 60 percent have revenues of more than US$1 billion. In terms of respondents’ levels, 46 percent are C-suite executives, 30 percent senior executives/head of business units, and 24 percent managers or programmers. All respondents reported being involved in or making decisions about cloud and/or data management issues.

What is data modernization?

Simply put, data modernization means moving data from legacy databases to modern databases. It is particularly critical for any organization that needs to store unstructured data—images, customer voice audio, social media comments, clinical notes in health care, and so forth. Data modernization offers substantial cost advantages over previously used data management technologies.

Over several years, many large organizations have shifted from a data architecture based on relational enterprise data warehouses to data lakes based on Hadoop and other open-source tools.1 However, they may not have eliminated warehouses completely—warehouses are still useful for many applications involving structured data—but these companies are deploying modernized platforms for many new business applications.

How prevalent is data modernization? Very much, indeed. Our survey results reveal that the companies we surveyed are already well along in the process of data modernization, with the great majority (84 percent) having already started their journeys toward that goal. Around one-third (34 percent) claim to have such initiatives fully implemented, while half have data modernization initiatives underway (figure 1). Financial services firms are the most likely to have initiated data modernization. Somewhat surprisingly, technology, media, and telecom firms are the least likely to have started down the path, despite the technical orientation of their products and services. Even then, 81 percent respondents from the sector report having begun modernization initiatives.

Data modernization adoption: Financial services is the frontrunner

While the majority of respondents (62 percent) expect to succeed in their data modernization efforts, such initiatives are not always formalized (figure 2). Less than half (48 percent) of respondents say they have a specific, formal initiative for data modernization, but many others are modernizing their data storage anyway. Interestingly, the majority of respondents—57 percent—report that they are doing data security planning as part of their data modernization activity, and “data modernization” may even be the primary banner under which they will describe it (figure 3). Respondent companies are cognizant of the real-world needs of their businesses and consider the tools and technology that are available in the marketplace the third most important reason in their decision-making.

Data modernization activities and plansDrivers for one-time data modernization

Although there is clearly progress on data modernization, it is not without obstacles (figure 4). The most common obstacle cited by respondents is “budget/cost concerns overall” (55 percent). The other factors include the lack of understanding of technology (44 percent), the lack of consensus among decision-makers (41 percent), and the absence of clarity on success metrics (40 percent).

Perceived obstacles to implementation of data modernization

What role does the cloud play?

The cloud is both a means to and an important consequence of data modernization. Survey responses indicate that the cloud is already a dominant location for data storage—more than nine in 10 organizations (91 percent) primarily keep their data on cloud platforms. Of the remaining nine percent that primarily keep their data on premise, nearly all plan to migrate to the cloud. What’s more, on average, 57 percent of the surveyed organizations’ businesses are actually operating on the cloud—meaning that all their important applications and data are on it. That’s saying a lot, since many organizations—including the financial services firms in the survey—often have to keep some applications and data on premise for regulatory reasons.

It is possible to pursue only on-premise modernization projects, but given that many firms are moving data to the cloud, they often put it on modernized platforms at the same time. This makes the cloud a non-negotiable part of data modernization. The cloud/modernization connection is strongly apparent to survey respondents (figure 5)—55 percent see data modernization as a key component of or reason for cloud migration. It is second only to security and data protection. The C-level respondents actually rank it the highest as a rationale, with 65 percent overall saying it is a driver of cloud migration.

Drivers for cloud migration

There are many other reasons for moving to the cloud. Traditional IT architectures and on-premise data centers often come with their own cost concerns, which make cost a key driver of cloud migration. In the survey, 32 percent identified the “general cost and performance of IT operations” as the top-most or second driver for moving to the cloud. Middle-level executives were most worried about this issue, C-level executives somewhat less so. Since companies expect to save money by migrating to the cloud, they could perhaps mitigate some of their concerns about the cost of data modernization by leveraging cloud migration as the primary means to modernize. Other drivers are the availability of cloud-based software and access to external data.

Many companies are discovering that the core capabilities of understanding customer journeys, making “next best offers,” and monitoring customer experiences are difficult or even impossible to achieve with a traditional premise-based analytics footprint. Cloud providers typically have strong capabilities in data management—even including relational data warehouses in the cloud—as well as high-quality algorithms for analytics and AI, and a wide range of external data sources.2 As such, most cloud providers enable companies to achieve more than on-premise capabilities.

Cloud and data modernization initiatives: How they helped companies improve performance

Several companies have combined cloud migration and data modernization to deliver on their strategic goals. Given below are some examples of how these initiatives have panned out.

  • A large rental car company in the United States is making large investments in both cloud and data modernization as part of a general updating of its technology infrastructure. It outsourced operations of legacy systems and is moving all new applications such as digital, customer relationship management, accounting, reservations, and rentals to the cloud. At the same time, they are building a next-generation data platform to support analytics and reporting. This platform is the long-term foundation for employing cloud-based AI-based algorithms for a “constant management program” combining fleet and demand forecasting.
  • 24 Hour Fitness, a US-based fitness industry pioneer with over 440 clubs nationwide and nearly four million members, realized the need to offer members more personalized offers, with customized pricing and contracts, but its premise-based data architecture was unable to do that. Therefore, the company moved its key data to a cloud-based data lake and data warehouse. Now, its data is refreshed 40 percent faster, and data from nine different sources flows into a single cloud repository. 24 Hour Fitness also adopted new cloud-based applications. Both transactional and analytical systems are able to provide the needed customization and are always up to date. In the words of the firm’s president, it can now provide “mass consumer personalization that scales.”3

These companies are examples of rapid advancement on both cloud migration and data modernization dimensions. Cloud migration and data modernization can help solve complex business and information challenges, including personalization of customer information and predictive analytics for operations.

In conclusion: Cloud migration and data modernization go hand in hand

While no survey can identify the next trend in IT and information management, results of our current survey confirm the direction and strength of the existing trends—almost all data management approaches will likely eventually be modernized and almost all data and applications will be in the cloud. Survey results confirm that both cloud migration and data modernization initiatives are well underway in most medium to large organizations in the United States, and both initiatives—whether formalized at the corporate level—are generally successful.

Notably, cloud migration and data modernization are mutually reinforcing trends—they seem to support and overlap each other.

As such, most companies would do well to embrace both trends. If factors within your organization are aligned to only one, then perhaps you can pursue a stealth strategy that also embraces the other. If you are moving to the cloud, consider adopting some data modernization approaches too. If your primary need is to modernize data, you can do that most effectively in conjunction with cloud migration. Since the two trends are overlapping, a “two for one” strategy is eminently reasonable.

Acknowledgments

The authors would like to thank Anthony Abbattista, principal, Deloitte Consulting LLP; Rohit Balasubramanian, managing director, Deloitte Consulting LLP; Rupesh Dandekar, senior manager, Deloitte Consulting LLP; Jonathan Holdowsky, senior manager, Research & Insights, Deloitte Services LLP; and Tim Murphy, senior manager, Research & Insights, Deloitte Services LLP.

Cover image by:  Emily Moreano

Endnotes
    1. InsideBigData, “New survey reveals businesses are bullish on data lakes,” insidebigdata.com, July 24, 2018. View in article

    2. Ben Lorica, “Core technologies and tools for AI, big data, and cloud computing,” O’Reilly.com, February 11, 2019. View in article

    3. Tony Bradley, “24 Hour Fitness tailors the fitness experience with Microsoft Dynamics and Adobe Experience Cloud,” Forbes, April 25, 2018. View in article

Show moreShow less

Topics in this article

Analytics , Digital Transformation , Cloud

Deloitte Analytics and AI

Achieving your business outcomes, whether a small-scale program or an enterprisewide initiative, demands ever-smarter insights—delivered faster than ever before. Doing that in today's complex, connected world requires the ability to combine a high-performance blend of humans with machines, automation with intelligence, and business analytics with data science. Welcome to the Age of With™, in which Deloitte translates the science of analytics—through our services, solutions, and capabilities—into reality for your business.

Learn more
Get in touch
Contact
  • Ashish Verma
  • Managing director, US Data & Analytics Modernization offering leader
  • Deloitte Consulting LLP
  • asverma@deloitte.com
  • +1 703 251 3952

Download Subscribe

Related content

img Trending

Five vectors of progress in cloud computing

Article 4 years ago
img Trending

HR cloud

Article 4 years ago
img Trending

Scaling IoT to meet enterprise needs

Article 4 years ago
img Trending

2018 global CIO survey, chapter 5

Article 5 years ago

Explore the Analytics collection

  • How analytics and AI-driven enterprises thrive Article4 years ago
  • Predictive analytics in health care Article4 years ago
  • Infusing data analytics and AI Article4 years ago
  • Automated machine learning and the democratization of insights Article4 years ago
  • How third-party information can enhance data analytics Article4 years ago
  • Anticipatory government Article4 years ago
Thomas H. Davenport

Thomas H. Davenport

Senior Advisor | Deloitte Analytics and AI Practice

Thomas H. Davenport is the President’s Distinguished Professor of Information Technology and Management at Babson College. He is also a visiting professor at Oxford’s Said Business School, a fellow of the MIT Initiative on the Digital Economy, and a senior advisor to Deloitte’s AI practice. His most recent book is Working with AI: Real Stories of Human-Machine Collaboration (MIT Press, 2022).

  • tdavenport@babson.edu
Ashish Verma

Ashish Verma

Ashish is a managing director with Deloitte Consulting and has more than 18 years of management consulting experience with multiple Fortune 100 companies in building solutions that focus on solving complex business problems related to realizing the value of information assets within an enterprise. Ashish leads the Big Data and IoT Analytics Services for Deloitte Consulting building offerings for selected use cases with vendor partners. Ashish is a frequent speaker at external conferences and has published and presented on the challenges of overcoming Information Integration and Management at vendor conferences, Deloitte TMT and CFO Dbriefs.

  • asverma@deloitte.com
  • +1 703 251 3952
David Linthicum

David Linthicum

Managing Director | Chief Cloud Strategy Officer

As the chief cloud strategy officer for Deloitte Consulting LLP, David is responsible for building innovative technologies that help clients operate more efficiently while delivering strategies that enable them to disrupt their markets. David is widely respected as a visionary in cloud computing—he was recently named the number one cloud influencer in a report by Apollo Research. For more than 20 years, he has inspired corporations and start-ups to innovate and use resources more productively. As the author of more than 13 books and 5,000 articles, David’s thought leadership has appeared in InfoWorld, Wall Street Journal, Forbes, NPR, Gigaom, and Lynda.com. Prior to joining Deloitte, David served as senior vice president at Cloud Technology Partners, where he grew the practice into a major force in the cloud computing market. Previously, he led Blue Mountain Labs, helping organizations find value in cloud and other emerging technologies. He is a graduate of George Mason University.

  • dlinthicum@deloitte.com
  • +1 703 216 6676

Share article highlights

See something interesting? Simply select text and choose how to share it:

Email a customized link that shows your highlighted text.
Copy a customized link that shows your highlighted text.
Copy your highlighted text.

Data modernization and the cloud has been saved

Data modernization and the cloud has been removed

An Article Titled Data modernization and the cloud already exists in Saved items

Invalid special characters found 
Forgot password

To stay logged in, change your functional cookie settings.

OR

Social login not available on Microsoft Edge browser at this time.

Connect Accounts

Connect your social accounts

This is the first time you have logged in with a social network.

You have previously logged in with a different account. To link your accounts, please re-authenticate.

Log in with an existing social network:

To connect with your existing account, please enter your password:

OR

Log in with an existing site account:

To connect with your existing account, please enter your password:

Forgot password

Subscribe

to receive more business insights, analysis, and perspectives from Deloitte Insights
✓ Link copied to clipboard

Deloitte Insights and our research centers deliver proprietary research designed to help organizations turn their aspirations into action.

Deloitte Insights

  • Home
  • Topics
  • Industries
  • About Deloitte Insights

DELOITTE RESEARCH CENTERS

  • Cross-Industry
  • Economics
  • Consumer
  • Energy & Industrials
  • Financial Services
  • Government & Public Services
  • Life Sciences & Health Care
  • Tech, Media & Telecom
Deloitte logo

Learn about Deloitte’s offerings, people, and culture as a global provider of audit, assurance, consulting, financial advisory, risk advisory, tax, and related services.

  • Terms of Use
  • Privacy
  • Privacy Shield
  • Cookies
  • Legal Information for Job Seekers
  • Labor Condition Applications
  • Do Not Sell My Personal Information