September 5, 2016

What is the real value of being cloud mature?

Erik Johannisson

Head of Strategic Marketing and Marketing for Technology Services and Modernization, Tieto

The strong growth in cloud services seen over the last couple of years has been primarily motivated by cost considerations.  The need to reduce cost in IT operations has allowed (or forced) a move to cloud services in order to serve less complex and less strategically important IT needs. Cloud services have become a staple in the delivery of “bread and butter” IT services.  

We have just repeated our Cloud Maturity study that Radar conducted on our behalf a year ago. This time, the research was based on interviews of 200 decision makers in Sweden and Norway.

Benefits of cloud maturity

In the new study, we continue to see a number of significant differences between the really cloud mature organisations (10 percent of all participating) and the rest of the sample. There is a difference in how they approach cloud services and how they employ them, but also a difference in what business value is created.

Our new study confirms that Cloud Mature organisations show advantages in terms of cost management and efficiency compared to their peers, as well as a higher capacity to support business IT demand and better outcomes in the execution of cloud services.  Or, expressed differently,  their IT spend delivers more effect per Euro spent. This makes these organisations better equipped to deliver IT to the core business allowing the business to stay competitive and/or delivering services to their customers.  Basically, within these “best in class” organisations, cloud services have become an important tool to achieve desired financial objectives and business outcomes.

Cloud as enabler of digitalization and innovation

We also see signs that cloud services are important enablers of digitalization and innovation. For example, cloud mature organisations assess their capability to support digitalization of core businesses by employing existing (i.e. already sourced) cloud applications a staggering 74 percent higher than peers, and their capability to support innovation almost 60 percent higher than peers.

Another interesting insight is that operational IT spend is, on average,  34 percent lower within Cloud Mature organisations compared to the rest of the sample. The most mature organisations also have more than twice the share of the IT budget available for innovation and transformation compared to the rest.

This shows that Cloud Mature organisations have been able to successfully re-distribute and free up resources and capital from IT operations to innovation and transformation to a much larger extent than their peers, which is the challenge for many organisations today.    

How would your organisation measure up? Do you recognise the real value of the cloud in enabling success for your business? Are you lagging behind strategically, operationally, or both?

Read our study, Business value of cloud maturity - Cloud Maturity Index 2016.

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