Capital H blog

Being smart about cloud adoption: What to know, what to do

August 9, 2019

To begin our research, we assessed 557 senior leaders about their experiences with recent technology adoptions in cloud technology based on their level of adoption.

Cloud technology enables companies to do business in a new way at faster pace, often with the expectation that it will also yield cost savings and result in a better user experience. But the benefits aren’t automatic: Being smart about implementing cloud means understanding your business challenges and opportunities while managing the cloud and workforce strategy. Deloitte teamed up with Forbes Insights to understand what differentiates the most successful cloud technology implementations from the rest. Here’s what we found.

To begin our research, we assessed 557 senior leaders about their experiences with recent technology adoptions in cloud technology based on their level of adoption.

Source: Deloitte Consulting LLP

Going all-in yielded improved results…
Our research found a link between high adoption and benefits realization. Organizations that were 100 percent cloud were more likely to see benefits than those relying on a mixed stack. On average, 63 percent of organizations that fully adopted cloud benefited from:

  • Being able to change their infrastructure rapidly
  • Improved internal end-user experience—those who use the system can see the difference in the way the system processes the work
  • Faster processing speed
  • Improved customer experience

Organizations that adopted the mixed stacks only produced success in these areas an average of 33 percent of the time.

…But overall, ROI and cost savings didn’t meet expectations
Not surprisingly, the first question most executives ask about cloud technology is, “What’s it worth to me?” The surface impacts are immediate, such as freeing up employees who would normally focus on day-to-day activities to be able to focus on higher-value strategy and services that can potentially result in increased revenue. Organizations also benefit from a reduction in technology infrastructure capital expense that could possibly provide some relief in other aspects of the business, such as tax depreciation savings.

However, when we analyzed the value of cloud solutions by comparing highly mature cloud organizations and all other cloud respondents, we found that cloud did not meet the expected ROI outcomes in 47 percent of the organizations with a consistent stack and about 70 percent of those with a mixed stack. Organizations capitalized more of the cloud investment, and overall cost was not lowered.

This begs the question: Were expectations set too high from the start? It is possible that this misconception can be attributed to overestimating ROI relative to previous tech implementations.

The research did conclude that cloud solutions appear to provide technology companies with better data for their business cases, in that using cloud solutions made it possible to more accurately predict implementation costs vs. non-cloud solutions. Sixty-five (65) percent of companies using cloud services were able to accurately predict implementation costs vs 55 percent of companies using non-cloud solutions.

Cloud improves end-user experience…more so for all-in adopters
Cloud improves the internal end-user experience by increasing top-end processing speed and decreasing complexity. Internal service levels are improved, as is the customer experience, all while creating the flexibility to make changes to the infrastructure faster and more easily.

Organizations that moved their entire technology stack to the cloud reported significant benefits compared to mixed-stack companies. Overall, companies who committed fully to a cloud stack realized significant improvements in top-end processing speed, even relative to companies with a 75 percent cloud stack. Let’s also think about the impacts to the workforce in general.

The workforce journey to cloud…. equally important to successful implementation
Organizations are not only experiencing an IT transformation but a workforce transformation as well. Cloud strategy and workforce strategy go hand in hand. What does the future of work look like for the organization after the implementation? How is the workforce going to change? What new skills and capabilities exist or will be required? These are some of the questions that should be asked. Organizations must ensure that a workforce plan is implemented not only as part of the IT organization but also outside as well. Investment in the workforce should be included in the bottom line.

Bottom Line: Be realistic about ROI and prepare to go all-in
When companies create business cases for cloud transformations, they need to acknowledge the implementation costs, investment in a cloud-enabled workforce, ongoing cloud services, as well as maintenance fees to fully understand both the costs and potential ROI. (See this post for a deeper dive into cloud sustainability in relation to SaaS.)

Cloud delivers significant value in terms of processing speed, speed to market, and end-user and customer experience when organizations are fully cloud based. So, organizations looking to enable faster changes and more adaptable business processes should consider a full move to the cloud.

By managing ROI expectations going into the implementation and getting stakeholders to agree that end-user experience and infrastructure benefits outweigh pure ROI, the result is a “smart” successful cloud implementation.

Ramona Cheatham is a senior consultant in Deloitte Consulting LLP’s Human Capital practice, specializing in organizational transformation with a focus on change management for technology-enabled transformations.

Jeffery Hallis a specialist leader in Deloitte Consulting LLP’s Digital & Cloud Enablement practice, advising and managing client business transformations driven by digital innovation.

Martin Kamenis a principal in Deloitte Consulting LLP’s Human Capital practice. Martin’s focus is on working with technology clients to help them manage and prepare leaders and employees for large-scale business transformation.

Originally published at Capital H blog