Cloud adoption: How cloud will become a business necessity

January 05, 2024

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From increased flexibility and scalability, to cost savings, businesses making the most of cloud computing are to help the sector grow to US$1.5tn by 2030

Although moving to the cloud represents a huge time investment, its extensive benefits are well worth the effort.

From increased flexibility and scalability, to cost savings, businesses making the most of cloud computing are to help the sector grow to US$1.5tn by 2030, according to research by Research and Markets.

And as predicted by Gartner, by 2028 cloud computing will shift from being a technology disruptor to becoming a necessary component for maintaining business competitiveness.

According to Milind Govekar, Distinguished VP Analyst at Gartner, organisations are actively investing in cloud technology due to its potential to foster innovation, create market disruptions, and enhance customer retention to gain a competitive edge.

“While many organisations have started to seize the technical advantages of cloud, only a few have unlocked its full potential in supporting business transformation,” he explains. “As a result, organisations are using the cloud to launch a new wave of disruption driven by AI, enabling them to unlock business value at scale.”

Benefits of cloud adoption: cost efficiency, time savings and greater innovation

As Rob Van Lubek, Vice President EMEA at Dynatrace, describes, there are clear benefits of cloud adoption. However, if cloud is not optimised then many, if not all, of these benefits are negated.

“Modern cloud environments have become increasingly complex,” he says. “In fact, 71% of CIOs say the explosion of data produced by cloud-native technology stacks is beyond human ability to manage. This challenge is only increasing as 77% of CIOs say that their IT environment changes once every minute or less.”

As Van Lubek describes, to maximise the benefits of cloud adoption, businesses must master this complexity. “Many are turning to their global systems integrator and consultancy partners to help them achieve this, by leveraging AI and automation technologies so their internal teams are no longer required to fulfil time-consuming, manual tasks such as quality assurance and incident response,” he says. “Instead, they can focus on higher-value work that uses the cloud to drive innovation. This will result in new features and functions being released to users much faster because the process is automated, increasing innovation and user satisfaction.”

Organisations, Van Lubek says, will also start to see cloud costs reduced when AI and automation are properly embraced. “This can be a barrier to cloud adoption, but in reality, AI and automation can enable organisations to run their environment in a highly efficient manner - meaning the business can scale up and down its cloud usage based on real-time needs.”

Cloud plays a pivotal role in driving ESG impact

With research suggesting 95% of firms now factor ESG impact into all key investment decisions, the cloud also has a pivotal role to play in helping organisations achieve their sustainability goals.

According to Capgemini Research Institute’s World Cloud Report –Financial Services report, the cloud can equip organisations with essential ESG impact measurement tools. Cloud providers, the report says, are starting to develop solutions that can track and report scope 1, 2 and 3 level emissions, offering comprehensive visibility into a firm’s carbon footprint across business functions and products.

“For today’s financial services organisation, ignoring the cloud is simply not an option. Moving to the cloud requires looking beyond a cost-savings approach and being centred around driving innovation to gain a competitive edge,” said Ravi Khokhar, Global Head of Cloud for Financial Services at Capgemini.

“As companies race to adapt and implement generative AI, they need to be mindful that there will be no future AI benefits to be realised without cloud-enabled systems. By defining and establishing an effective cloud target operating model at scale, the full potential of these transformational new technologies can be harnessed.”

Geopolitics and nation states: Cloud vulnerabilities

As Simon Thompson, Head of AI, ML and Data Science at GFT predicts, geo-politics will also have a profound impact on cloud technology in the coming years.

“Countries like India are getting much more assertive about data processing, and this trend is likely to continue,” he comments. “It is also true that many nation states are waking up to the vulnerability of their economies to cloud computing. In light of this, there will probably be pressure on cloud providers to reassure nation states about the sovereignty and control of cloud computing resources.

“It is possible that blocks like the EU or “the West” will provide a level of pooled sovereignty that is sufficient for member states. However, the lessons of COVID and the war in Ukraine, which saw significant economic and political impacts from globalised supply chains and offshored labour, may mean that nations may demand complete independence and sovereign capability.

“What form this will take and how much the wants and needs of smaller countries matter to the cloud giants is not clear at this time.”

Cloud set to become a business necessity

Most companies currently consider the cloud as a technology platform. In 2023, organisations are using cloud computing either as a technology disruptor or capability enabler. Gartner predicts that more than 50% of companies will use industry cloud platforms by 2028 to accelerate their business initiatives. In 2028, most organisations will be leveraging cloud as a business necessity.

With cloud computing as an innovation facilitator, organisations can distribute platform business concepts widely by using its underlying platform technology to provide interconnections, scale, aggregation and analysis capabilities, which allows the use of technology as a fundamental component of a business model.

“By leveraging the ecosystem of cloud providers, organisations can introduce innovative products and services, such as fraud prevention solutions for second-hand cars from tire manufacturers, or rapid vaccine development through cloud-based machine learning by pharmaceutical companies,” said Govekar.

By 2028, most organisations will fully transform into digital entities capable of sensing and responding to business and market conditions. “With cloud computing becoming an integral part of business operations in 2028, CIOs and IT leaders will have to implement a highly efficient cloud operating model in order to achieve their desired business objectives.”