HFS and EYGS LLP (EY) jointly announced the findings of a six-month study related to the challenging results that many enterprises find during the process of cloud-native transformation (CNT). In Q4 2022 and Q1 2023, HFS Research, in collaboration with EY, surveyed 508 senior executives from Global 2000 enterprises. What was discovered may be surprising.
“Today, only one-third of enterprises are realizing their cloud ambitions,” said Phil Fersht, HFS CEO and Chief Analyst. “Our goal of this study is to shed light on the importance of clear data-centric strategies, a product-focused mindset, and connecting technology directly to business priorities when implementing CNT.”
Findings showed that while 65% of organizations made strategic investments in cloud, only 32% are realizing their ambitions. The result: many are failing to capture the value of their investment. The report provides clarity about the disconnect that exists between the supply and buy side of many organizations, while highlighting the need for a clear understanding of business objectives. It also pinpoints the challenge of justifying moving workloads to the cloud and aiming for business transformation through that process.
29% of businesses felt that CNT would enable more flexibility for employees, while 21% were eager to tap the benefit of accessing information from anywhere. Another 16% hoped that CNT may enable them to use new business models to find new sources of value. In order to do so, the report summarizes that clarity is needed on the desired outcomes for business objectives along with an effective strategy to achieve and maintain results.
“Half of cloud-native transformations are abject failures,” said Matt Barrington, Emerging Technologies Leader at EY. “Failure often means the inability to capture business value because technology and business objectives are not aligned.”
On a positive note, market maturity related to understanding the potential of cloud has risen over the past two years. 41% of organizations prioritized effective collaboration in their cloud-first strategy, while 34% focused on getting to market faster with the support of CNT. Another 34% integrated modular digital business models across boundaries and still another 34% created faster, smarter prototypes.
The study’s key findings will encourage enterprise leaders to enhance clarity on business objectives, desired outcomes, and effective strategies for achieving and maintaining cloud transformation. With the main challenge being a focus on strategy versus execution, a clearly detailed business objective is needed to guide strategy before endeavoring to capture value from cloud investments.
“There are very few organizations that are looking at creating a net-new business model using digital and cloud,” said Ragu Rajaram, Global Cloud Consulting Leader at EY. “Large organizations are being held back by their technology and process debt. Therefore, many create a parallel cloud-native organization next to brick-and-mortar heritage operations.”Â
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