Accenture report: Organizations that move to the cloud for savings risk missing competitive advantage
According to Accenture, organizations' focus solely on cost savings from cloud computing can lead to the loss of strategic advantages. These include AI, machine learning, and other technologies that only the cloud can unlock.
Getting the most out of the cloud is a challenging task. According to a recent Accenture research, which analyzed how businesses are using cloud computing, migrating to the cloud does not come cheap, but those companies that refuse to make such an investment risk being left behind. The survey was conducted from late 2020 to early 2021, with nearly 4,000 companies from 16 industries in 25 countries. Among the responses was the opinion that focusing only on the cost savings might put a company in a very disadvantaged competitive position.
The debates on whether organizations should migrate their data and computing operations to the cloud or leave them on-premises are never-ending. Assessing the ROI of migration remains a challenge.
"Even companies considering the cloud only as a platform for tactical operations (such as migration and technology activities) can save 10 percent or more if they decide to use the environment differently," says Tristan Morel L'Horset, senior managing director of Accenture Cloud First. However, he says, if companies do not make changes to their IT operations during the migration, they will find it difficult to figure out a way to save money.
"Is the cloud saving you money or not? Our research shows that it does, even at a basic level," says L'Horset. - "The difference between the cost savings you can get with the cloud and the value of the innovation you absolutely can and should get with the cloud are the main reasons you should move to the cloud.
Roy Illsley, a chief analyst at Omdia, believes the profitability of the cloud can be positive if the workload varies with resource requirements, its resource needs meet the cloud provider’s offering, or if high availability is required. "If the workload is stable and consistent, it's more cost-effective to use an on-premise system," he says.
Accenture Research's managing director of IT, Jim Wilson, notes that even companies that did not include the cloud in their list of top priorities realized significant cost savings. He says the survey was conducted to examine how organizations have responded to the pandemic, which in many cases has accelerated transformation plans.
"For most companies, the migration to the cloud and getting the most out of it is complicated by organizational and technical challenges. However, experienced executives tend to have a clear idea of why they need the cloud".
According to L'Horseth, business challenges change rapidly, which can highlight the advantages of agile resources such as the cloud over legacy technologies. The need for them has been demonstrated by the pandemic. Clouds are also changing rapidly, which can give companies the ability to dynamically adapt to market changes. "Legacy technologies are very static," he says. - Once you implement them, you're stuck with them for years."
New technologies just emerging in the cloud could further change the way organizations achieve competitive advantage in the coming years. Wilson says legacy systems won't be able to run GPT-3-type language models, which generate near-human texts with a huge number of parameters. "We're entering a new generation of AI that is more focused on language technologies and systems," the expert says. - It's born in the cloud." He believes that companies that want to take advantage of new technologies such as natural language processing and AI will need to connect to hyper scale data centers rather than using legacy systems. "If you want to play in league with the next generation of AI, you're going to have to work in the cloud," Wilson believes.