Tangible business value from cloud transformation remains elusive

Cloud transformation continues to be a critical enterprise initiative, but it is no longer just a technology discussion Cloud transformation is funded by the board, CEO, or non-IT stakeholders for most enterprises, implying that cloud is a part of the broader enterprise transformation rather than just IT transformation. Only 32% of cloud transformations are funded by IT stakeholders. Thus, the term “cloud transformation” provides the wrong context and aspiration when looked at purely as an IT transformation. The discussions should be about business transformation.

Most cloud transformations are stuck in the middle Only 10% of enterprises are in a mature “post-implementation innovation” state for cloud transformation. Nearly 95% have some level of buyer remorse from a primary hyperscaler contract. Cost and lock-in remain vital concerns; less than a third of all cloud transformations meet budget and timeline constraints. While there is no end-state for transformation, organizations need to justify costs with clear business objectives that have been achieved; the disconnect in cloud discussions is the strongest here.

Driving tangible business value from cloud remains elusive Only one in four enterprises can demonstrate a hard ROI on business benefits from cloud transformation. They rely on soft or deferred ROI to make the case. A lack of business and IT collaboration is the most significant barrier to cloud transformation, supported by the fact that only 17% have a well-articulated future state. Less than a third have well-defined customer journeys, value streams, and business-to-IT blueprints.

Mastering cloud for business and enterprise top-line growth are correlated Only around 5% of enterprises get significant ROI from cloud in business growth or new business models. We call these enterprises “business cloud masters.” These business cloud masters witnessed a stronger top-line growth compared to other enterprises. The research unravels what sets these organizations apart and what needs to be done to master cloud for business:

1. While IT is always a critical stakeholder, cloud transformation is completely funded by non-IT stakeholders for 70% of business cloud masters. More than 30% of business cloud masters have articulated and communicated a shared future state for the entire organization, compared to 15% for other organizations.
2. Significantly more business cloud masters have defined their organization’s most critical customer journeys, value streams, and business-to-IT blueprints.
3. Business cloud masters have mastered cloud architectural principles, including containerization, microservices, site reliability, infrastructure, applications, and data modernization. They’ve also mastered cloud business principles, including value stream mapping, product engineering, teams-based operating model, business model innovation, cloud-native culture, learning and upskilling, and servant leadership.
4. Business cloud masters are more forward-leaning by including the latest technologies in their cloud transformation initiatives. Fifty-five percent (55%) of business cloud masters include generative AI (GenAI) within the scope of cloud transformation, compared to 35% for other enterprises. Thirty-eight percent (38%) of business cloud masters deploy quantum-safe cloud architectures, compared to 24% for other enterprises.