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Cloud migration is only a first step, Accenture says

Cloud spending boomed in the first quarter of 2021 as enterprises continued rapidly transitioning their systems and applications, but migration to the cloud is only step one. New research published today by Accenture reveals many enterprises are stopping at migration or focusing too much on cost savings, causing them to miss out on opportunities. Companies that are using the cloud “not just as a single static destination, but as a future operating model,” however, are aiming higher with their business objectives and pulling ahead, too.

For the research, Accenture combined interviews, case studies, economic modeling, and 4,000 surveys of both technical and non-technical C-suite executives representing 16 industries and 25 countries. The findings show that almost every company adopted some type of cloud and AI in the last decade, and that about a third are aiming to move more than 75% of workloads into the cloud. Only half, however, are using cloud to transform their day-to-day business to, for instance, reinvent warehouses processes, market their products, and reimagine the role of data and compute. What’s more, the research shows even a smaller set are using cloud “strategically” as a future operating model — just 12% to 15%, depending on region.

Accenture dubbed this small group of cloud-forward companies “continuum competitors” and details how they’re pulling ahead throughout the report. According to the findings, these companies target up to 50% more business measures and are 2 to 3 times more likely to use AI in knowledge work. They’re also almost 3 times more likely to use cloud technologies to reach sustainability goals. To name a few, Accenture highlights Starbucks, Siemens, 3M, Roche, and Carlsberg, noting that it’s not only digital natives who can and are moving quickly in this space.

“The reason we refer to cloud as a future operating model is that some companies may be limiting themselves — and may actually be at a competitive disadvantage — by treating cloud migration as a one-time activity or end-point in a technology journey,” Accenture Cloud First lead Karthik Narain told VentureBeat. “Rather, we’d like people to think of cloud as a launchpad for innovation and a new way of operating.”

The cloud and cost reduction
One finding Narain called “surprising” is that while “continuum competitors” aren’t driven primarily by cost savings, they end up achieving greater cost reduction compared to other organizations. “They realize greater value across the board,” he said.

Interestingly, the levels of cost reduction among these companies varied between North America (1.2 times) and Europe (2.7 times), which Narain said is mostly driven by intent.

“European CXOs are hyper-focused on cost reduction above other business goals, rating cost reduction as their top business priority during the pandemic, as opposed to their peers in North America and Growth Markets, who are aiming first at increasing their customer base, improving cross-sell and up-sell, and scaling new innovations,” he said.

Carlsberg, for example, is one enterprise Narain said reduced costs through a cloud-focused digital transformation. After struggling to keep up as costs rose and consumer preferences changed, the Danish brewer set out to transition 100% of its global process workloads to the cloud back in 2016. In addition to operational savings, the company says the cloud has enabled it to “launch new initiatives and campaigns in hours, rather than months,” according to Narain, citing the freedom to innovate and experiment as a key advantage of the technology.

Getting strategic

Based on the successes and approaches of the “continuum competitors,” Accenture wraps up the report with recommendations for how to make the most of the cloud: craft a clear strategy, have an “agility” mindset, prioritize experience-related initiatives, and recognize the “all hands” nature of the challenge. But it’s the theme of breaking down cloud silos and supporting digital transformation with next-generation technologies, such as 5G and software-defined networks, that stands out.

“The reason we call cloud a continuum in the research is because innovations that used to be exclusively in the public cloud can now be found in multiple locations and destinations — from public cloud through edge and everything in between,” Narain said. “Rather than treating each of these locations as silos, companies will realize more value if they treat them as a seamless continuum of capabilities that they can choose from to meet ever-changing business needs.”

According to the research, the “continuum competitors” are those who are able to not only take this approach, but extend it to their entire technology stack, from infrastructure to network, applications, and beyond. Overall, Narain says the most important takeaway is that the cloud choices you make today, as well as the speed and proficiency of executing those choices, will dictate whether an enterprise leads or follows in the coming years.

“A company’s future competitiveness hinges on choosing the right type of cloud and cloud-based services — such as artificial intelligence, smart contact centers, edge computing, robotic computing, extended reality, and more,” he said. Venture Beat

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