Most cloud transformations are stuck in the middle
The landscape of enterprise technology continues to evolve rapidly, with cloud transformation as a primary investment, according to HFS and IBM Consulting. Yet, most organizations have not yet experienced tangible business value from these efforts.
Findings show that despite cloud transformation ranking among the top three critical investments for 60% of enterprises, only 1 in 4 can demonstrate a hard return on investment from their initiatives.
“For too long, cloud transformation has been confined to the realms of technology, but it’s time to recognize it for what it truly is—a crucial investment in the future of businesses,” said HFS CEO and Chief Analyst, Phil Fersht. “Cloud investments must transcend the traditional IT narrative and become a central discussion in the broader context of business transformation.”
Cloud transformation is increasingly funded by non-IT stakeholders
A significant obstacle in successful cloud transformation is the notion that it is purely technological. In enterprises that left cloud transformation to IT, it was left out of the business discourse entirely.
“Our findings underscore the need for a fundamental shift in perception, where cloud is not just a technological shift, but a crucial business discussion,” Fersht said. “Cloud transformation that moves enterprises forward demands a seamless alignment between technology and business.”
Cloud transformation is increasingly funded by non-IT stakeholders, emphasizing its place as a broader enterprise transformation rather than solely an IT endeavor. Only 32% of cloud initiatives are funded by IT stakeholders, challenging the perception of cloud transformation solely as an IT-centric journey.
Most cloud transformations are stalled in intermediate stages, with concerns around cost, lock-in, and meeting budget and timeline constraints. Less than a third meet budget and timeline expectations, indicating a significant disconnect between cloud discussions and clear business objectives. Nearly 95% expressed some regrets over their hyperscaler contract.
Only 25% of enterprises can showcase a solid ROI on business benefits from cloud transformation, relying on soft or deferred ROI to justify their cases. A lack of collaboration between business and IT remains a substantial barrier, with only 17% having a well-articulated future state and less than a third defining customer journeys and value streams.
The secrets to mastering cloud for business
The report also highlights the emergence of “business cloud masters,” constituting around 5% of enterprises, who have successfully harnessed cloud for significant ROI in business growth and new models. The report analyses the differences between the masters and their counterparts, unveiling the secrets to mastering cloud for business.
“These findings reinforce what we continue to see within enterprises―they are recognizing the need for adopting a hybrid cloud approach, but if not architected well, maximizing the return on investment is a challenge,” stated Varun Bijlani, Global Managing Partner, Hybrid Cloud Services, IBM Consulting. “To achieve tangible business outcomes through cloud initiatives, businesses need to make intentional choices when it comes to architecture, process, and talent across the enterprise. Those that do will become business cloud masters and will derive tangible value from their cloud transformation.”
At the core, the masters understand that cloud transformation is part of the broader enterprise transformation. That philosophy opens the door for business and IT collaboration. Other attributes they tend to share is an identified future state, having mastered architectural principles and a willingness to adopt the newest technology such as AI.