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What CEOs Need to Know About the Cloud?

It’s vital for the CEO to become intimately involved in the cloud journey. Cloud is too important to a business’s fundamental competitiveness to be treated as an IT program. It’s about creating a platform for the efficiency, innovation, and growth that will determine the future success of your business.

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Cloud Technology

Source: HBR.org/ Bhaskar Ghosh and Karthik Narain

Summary.

While companies’ shift to the cloud has been gradual over the last decade, Accenture’s research shows that the pandemic has accelerated that move. In 2020, companies of all kinds quickly learned that they had to depend on cloud technologies to enable entire staffs to work from home, to ramp up digital commerce, and to provide telehealth, entertainment streaming, and more. CEOs must now evaluate a changed and changing business for the longer term. And despite the enthusiasm for what cloud can do, executives across the C-suite have concerns. The authors answer five key questions about cloud adoption on the minds of business leaders.

One of the companies leading the way is Moderna, a relatively small organization compared to the pharmaceutical giants working on other vaccine candidates. But by building and scaling its operations on the cloud, Moderna was able to deliver its first clinical batch to the National Institutes of Health for phase one trial only 42 days after initial sequencing of the virus. To accomplish this, the company invented proprietary cloud-based technologies and methods to create mRNA constructs that cells recognize as if they were produced in the body. This allows Moderna to experiment rapidly and easily shift between vaccines for different viruses without investing in new technology or infrastructure.

Moderna also uses the cloud to achieve higher efficiency and visibility across manufacturing, inventory management, and even accounting — and to “copy and paste” its digital manufacturing model onto partner facilities, which is critical for the rapid scaling of vaccine production.

The Moderna example reveals the cloud’s connection to five key areas all CEOs must lead: speed to market, reduced costs, flexibility of operations, business resilience, and innovation capabilities. Cloud technology allows start-ups and midsize companies to access big tech capabilities — compute power, algorithms, programming tools, and architectures — and partner in an ecosystem with larger firms.

But prior to 2020, progress toward the cloud had actually been quite gradual. Today, about 20% to 30% of work is being done through the cloud, and companies initially planned to accelerate that to more like 80% over an eight- to 10-year process.

Despite the enthusiasm for what cloud can do, executives across the C-suite still have concerns. In our survey, only 37% said they had fully achieved the outcomes they expected from their cloud initiatives — an increase of just two percentage points from our 2018 survey. Only about three in 10 reported complete confidence in their organization’s cloud migration initiatives to deliver expected value at the expected time.

We identified the five key questions business leaders have as they strategize for the long-term and move closer to that 80% target. Two are longstanding concerns about security and legacy IT. The other three ultimately come down to how cloud makes it possible to help CEOs reimagine their business.

Can I really trust my data in the cloud?
There are two important points here. First, cloud providers operate comprehensive data security programs so you don’t have to. On-premises infrastructure is prone to the kind of small mistakes that determined cyberattackers can exploit. The main public cloud providers, however, are able to provide advanced data security controls, including data encryption, database monitoring, and access control.
That said, security continues to be a legitimate concern, and companies would rightly (and often for legal reasons) refrain, for example, from putting sensitive consumer or healthcare data in the public cloud. Most companies are addressing the desire to work through the cloud without exposing certain data to risk of exposure by turning to a hybrid model of public and private cloud operations. The latter allows businesses to maintain control over their most sensitive information.

Do I have to get rid of my legacy infrastructure once and for all?
Unwinding the spaghetti is difficult. And beyond the technical issues, the question of who pays for it can slow things down. Executives naturally aren’t keen to start over from scratch; in fact, in a 2018 survey, 70% of C-level leaders told us they wanted to keep running legacy systems as long as possible despite the limits they set on innovation and market agility.
What to do? A “lift-and-shift” strategy is a good approach for many companies. Imagine moving your entire house from one city to another without bothering to pack and unpack all the individual items or even rethink the layout of your rooms. For companies, this makes sense, because it causes minimal disruption to customers and provides relief from pressing concerns like outages. The rest can be worked out later.

How do I make the right cloud choices for my business?
The most important step here is to understand the three major cloud capabilities and what they make possible: Software as a service (SaaS), infrastructure as a service (IaaS), and platform as a service (PaaS).

SaaS started the cloud revolution. Companies could roll it out quickly, fund it directly from business budgets, and standardize processes while also enabling innovation. In 2015, Rolls Royce put in place a cloud-based HR system in 46 countries overnight using a SaaS solution. Before making this move, the company faced challenges getting an accurate view of its workforce and deploying the right people to the right places.

As cloud computing matured, IaaS and PaaS models emerged, giving businesses a higher level of control over the alignment of business and IT objectives. Food company Del Monte (full disclosure: Del Monte is an Accenture client) transformed its IT infrastructure — including their core applications — in less than four months using IaaS and PaaS. The company was able to consolidate a fragmented IT environment, improve management of hundreds of apps, and speed up new solutions and upgrades.

Today, the key for organizations is to understand the capabilities and strengths of each model and apply them judiciously to enable business innovation and growth. How do you get started? Here are a few simple rules of thumb: IaaS is a simple way to access computing and data storage resources. With IaaS, an organization rents servers and storage in the cloud rather than purchasing and maintaining its own infrastructure. PaaS is a popular choice for businesses that want to create unique applications without making major financial investments. And SaaS, the most commonly used cloud application service, is an important means for organizations to access software applications.

How does shifting our work to the cloud make it possible to reimagine the business?
The cloud dissolves many of the limits on innovation. For example, in the pharmaceuticals industry, Takeda (also an Accenture client) is using “edge” technology to help hemophiliacs monitor their enzymes while at home. (Edge computing, part of a cloud approach, is the ability to sense and respond to data locally, reducing latency and demands on communications technology.)
Also consider one of the issues at the top of mind for many CEOs today: Sustainability. It’s not just companies that benefit from cloud reinvention. The city of Barcelona has worked on a smart-city strategy culminating in a move to the cloud since 2013. The strategy enables the central management of urban transportation, traffic, waste disposal, noise, water, and energy on a single platform through IoT sensors. This open source platform also connects to other smart cities around the globe.

Business leaders understand the potential of cloud in this area. In our survey, 87% said that cloud would be a critical component, to a moderate or great degree, in achieving sustainability goals.

Do I have the skills I need to take advantage of the cloud?
When it comes to accelerating cloud initiatives, what’s keeping CEOs up at night the most is probably a lack of skills in the organization. For companies that have been low adopters (those doing less than 30% of their work in the cloud), almost half of CEOs cited a lack of the needed skills as a barrier to success. But even for high adopters (companies doing 75% or more of their work in the cloud), three in 10 CEOs are concerned about skills shortages.
There’s no shortcut here, but making aggressive plans today is an essential first step.

Above all, it’s vital for the CEO to become intimately involved in the cloud journey. Cloud is too important to a business’s fundamental competitiveness to be treated as an IT program. It’s about creating a platform for the efficiency, innovation, and growth that will determine the future success of your business.

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