As more organisations realise significant benefits from the adoption of cloud, the importance of cloud to the CIO agenda can no longer be questioned. Critical to the realisation of these benefits is the development of 'whole of organisation' strategies that look beyond simple cost reduction initiatives and incorporate key elements of operating model design.
However according to a recent report from KPMG International, 'The Cloud Takes Shape', as business and IT leaders become more sophisticated with their strategies for cloud adoption, there is a corresponding and often ignored increase in execution complexity.
Approximately one third of executives reported that integrating cloud services with their existing IT infrastructure was more difficult than expected leading to higher than expected implementation costs. Despite the complexities, the survey shows that executives still believe that the benefits far outweigh any growing pains they experience through implementation. In part, this is because organisations now understand better the broader transformational benefits of cloud adoption.
“This research backs our marketplace experience that business and IT operating model evolution needs to be thought about in tandem with cloud adoption if organisations hope to achieve the full potential of their cloud investments,” said Jonathan Taylor, KPMG Australia’s National Head of Infrastructure and Architecture. "Executives have found that extending some key business and IT processes is central to addressing the complexities that often arise in the implementation and operational phases of cloud adoption." Increasingly cloud is being regarded as a strategic capability not just as a means to reduce IT spend.
The experience of one of Australia’s leading financial services organisation further supports this. AMP initially adopted cloud solutions as a way of managing costs or to deliver specific functional capabilities. Since then, the organisation has realised that the advantages of cloud are far more significant, if operational processes support the new model.
Craig Ryman, IT Director at AMP said, "AMP recognises there is value moving to the cloud. It is a potential game changer in many ways, but it is critical that we realise maximum value from our investment. Beyond a focus on costs, we’ve deliberately taken a strategic, 'whole of portfolio' approach, recognising that changes to our operating model will be required to achieve our long term growth objectives."
"There is a real shift in mindset taking place. As cloud becomes more mainstream within the business environment, we are seeing organisations move from the when and why of the cloud adoption process to instead focus on the how," said KPMG’s Taylor. "Gaining real cost savings from the cloud is about more than simply moving from fixed costs to operating costs; the greatest cost savings, and more importantly, the transformational business benefits – will come from the longer-term outcomes such as more efficient processes, more flexible operating models,"
"As cloud moves further up the ranking as a strategic tool of the business, we will see the emphasis of the CIOs role evolve with increasing emphasis of acting as the business integration broker on commercial, process and technical issues," he concluded.
Other key findings of the report include:
- More than half of all organisations are already working in the cloud.
- Seventy percent of those with existing cloud experience say that cloud had already delivered significant efficiencies and cost savings.