What's Fueling Cloud Adoption In The Enterprise?

07 Jun 2016

The past one-and-a-half year has experienced tremendous advancement of technology, particularly in the digital space. This has been fueled by the opportunities that technologies provide to change traditional business and operating model through the development of more effective ways to engage with stakeholders, fine-tune operational effectiveness and strengthen risk management strategies. High on the agenda for any enterprise today is transforming the IT organization to meet the needs of businesses.

Digital technologies are impacting industries and businesses alike. Social, mobile, analytics and cloud (SMAC), along with agile, continuous integration and development practices like DevOps and Internet of Things (IOT), are having an unforeseen impact as enablers of business.

Cloud computing, in particular, promises significant transformational benefits across industries. It provides robust, secure, elastic and scalable infrastructure which is accessible from anywhere and with any device.

Though enterprises have been adopting cloud at a rapid pace, concerns like data security and privacy continue to hinder the migration of the core business-critical workloads to cloud. Two industries in particular—healthcare and financial services—where security is a key concern, due to the sensitive nature of data that is transacted and which have traditionally been subjected to stringent regulations and compliances, however, are experiencing a rise in the adoption of cloud services, according to the CII-PwC joint Report on Boosting Market Dynamics with Digital Technologies – The Cloud in healthcare and financial services.

In order to understand the state of cloud adoption in the financial services and healthcare industry, a survey was conducted with the stakeholders in the two sectors. The fact that cloud is increasingly being recognized as the platform of the future is clear, as almost a quarter of the organizations surveyed suggested that more than 15 per cent of their IT budget—21 per cent for financial services and 23 per cent for healthcare—was devoted towards cloud computing.

According to our 6th Global Digital IQ Survey, 47 per cent of the total enterprise IT spend is outside the CIO budget. Also, an International Data Corporation (IDC) study shows that 8 per cent of department personnel are now dedicated to IT.

PwC expects this trend to continue in the future as well, irrespective of industry, and it expect business units will get more involved in technology decisions.

As technology reshapes all industries, enterprises will continue to make sizeable investments. In order to understand whether increased technology spending leads to improved financial performance, PwC recently analyzed 250 global companies. The results clearly show no direct correlation between technology investments and profitable growth; that is, spending more on technology does not necessarily lead to better financial performance.

How to maximize value from IT investments?

The four key steps which will help in maximizing value from IT investments are as follows: 

1.Alignment between IT spending and business capabilities 

2.The technological capacity to execute IT initiatives 

3. The ability to assess the potential value from a particular IT initiative relative to its risk

4. An optimal IT operating model to sustain results from the new technology

On which technology one should invest?

Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources such as networks, servers, storage, applications and services that can be rapidly provisioned and released with minimal management effort or service provider interaction. According to report the following chart shows the technology area where one should focus for investment.

However, despite the positive outlook, concerns persist. Data security and trust, followed by legal and regulatory compliances, are the key issues. In addition, 50 per cent and 36 per cent of respondents from the financial services and healthcare industry respectively stated that lack of knowledge is one of their barriers to cloud adoption. Thus, there is further scope for this technology if the knowledge gaps are addressed suitably.


This article appeared in Cxotoday , Jun 07, 2016