Cloud and data to be the cornerstone for successful Gen AI - EY-FICCI Report, ‘India's cloud and data revolution: From adoption to enabling innovation’

• 78% of organizations are implementing cloud strategies for modernising the technology stack and infusing intelligence into business applications. Organizations that neglect the adoption of the cloud may face challenges harnessing the full advantages of advanced technologies such as Gen AI.
• Rising cost of the cloud continues to be a “going – concern” as larger organizations achieve cost optimization of only 20% from the cloud, while medium and small-scale organizations fall short of meeting their cost-saving goals.
• 75% of organizations encounter a talent gap to enable cloud journeys as the release of the technologies is faster than its adoption and man-power readiness for it to be implemented and sustained.

New Delhi, 31 Aug 2023: Large-scale cloud adoption has accelerated India’s innovation drive, and organizations are significantly investing in their cloud offerings to sustain this momentum. The EY-FICCI cloud report titled ‘India's cloud and data revolution: From adoption to enabling innovation’ illustrates how Indian enterprises across various industries are actively scaling cloud technology. This current wave of cloud adoption goes beyond migration and emphasizes leveraging the cloud's capabilities to optimize processes, enhance customer experiences, and unlock new revenue streams.

Commenting on the findings of the report, Abhinav Johri, Partner – Technology Consulting, EY India, stated, "Leadership in the age of the cloud is about more than just technology; it's about unlocking the full potential of innovation, efficiency, and growth. With 80% of Indian organizations adopting the cloud to enable a range of business capabilities such as intelligent applications with Gen AI, native functional & data products, and highly intuitive orchestration platforms the imperative is clear: embrace the cloud not merely as a tool, but as an enabler of transformative change”

India becoming a global cloud hub

India is evolving into a hub for cloud-first companies, with major cloud regions located in Mumbai, Chennai, Hyderabad, and Pune. Indian GCCs (Global Capability Centers) have become cloud engineering hubs for global companies. India has become a potentially significant market for cloud service providers (CSPs). CSPs have rapidly established new cloud regions in India, expanding the array of cloud-native services available to Indian enterprises.

GenAI success to be driven by cloud and data

India is currently experiencing a golden era of disruptive technologies in data and technology. Leading enterprises that were early adopters of cloud computing have shifted from using the cloud primarily for cost optimization and operational efficiency to leveraging cloud services for building their next-generation digital platforms. The broader objectives that companies aim to achieve through cloud adoption include data modernization, application modernization, agility, business growth, and innovation.

The success of Generative AI is closely tied to cloud computing, as it relies on large datasets and robust computing infrastructure, both of which are inherent features of cloud technology. The adoption of Generative AI is expected to lead to increased data usage and greater consumption of cloud resources. The advantages of using the cloud for Generative AI, include scalability, access to pre-trained models, and simplified integration into existing applications. However, it is imperative a strong framework for responsible Generative AI use, considering potential concerns such as data leakage and biased output. Striking the right balance between sector-agnostic guidelines and sector-specific considerations is crucial.

Cloud to drive data infrastructure modernization

The survey reveals that organizations are increasingly utilizing the cloud for data infrastructure modernization, deriving benefits from their data, and gaining new insights. Furthermore, organizations are looking at achieving business growth, fostering increased collaboration, enhancing workplace productivity, ensuring security, and safeguarding data privacy.

The survey states that 49% of organizations adopt the cloud to modernize their data infrastructure, with larger organizations leading at 55%. Additionally, 78% of organizations are implementing cloud strategies for app modernization, and 40% of organizations are using the cloud for collaboration and workforce productivity.

Cloud for data monetization and innovation

The exponential growth in data footprints of organizations has necessitated the exploration of newer data monetization techniques. Shifting data workloads to the cloud offers various advantages, with primary motivators including data monetization (63%), developer productivity (51%), and innovation and incubation (43%). The survey results also indicate that cloud adoption helps enable data and analytics capabilities for 80% of organizations.

Alexy Thomas, Partner – Technology Consulting, EY India, added “Data and analytics capabilities are significant enablers for approximately 84% of larger enterprises to adopt the cloud.  As India's cloud-first companies spearhead innovation and sustainable growth, leadership means charting a course towards more resilient, digitally-driven future, effective data and analytics shall be instrumental."

Challenges to be addressed

1. Adequate cost management: Although adopting the cloud can generate substantial value when done correctly, many companies are now spending almost 20% more on their cloud budgets every year. For many organizations, as much as a third of their cloud budget is misspent. Larger organizations achieve cost optimization of about 20% from the cloud, while medium and small-scale organizations fall short of meeting their cost-saving goals. Businesses should be fully conscious of all details of cloud economics, including associated costs such as fees for data transfer, support, storage, licensing, migration, security, and compliance. 80% of organizations were able to save only over 10% cost by adopting a hybrid approach, while 85% of organizations use automatic scaling for cost control.
2. Plugging the talent gaps: One of the biggest challenges that organizations of all sizes face in their data infrastructure modernization journey is finding cloud-native skills. Almost 75% of organizations encounter this difficulty. To address the talent shortage, companies can expand their apprenticeship and internship programs and provide on-the-job training to upskill fresh graduates and build relevant experience. India also has a significant untapped supply of cloud talent in tier II and tier III cities that organizations can tap into.
   
3. Increased cyber risk: As cloud technology matures, organizations face ever-increasing threats to security and data privacy. Inadequate threat notifications and alerts, along with misconfigurations of security systems, are some of the major concerns. 53% of the organizations shared that they consider data and cybersecurity a challenge.

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What's next

In recent years, cloud hyper-scalers have witnessed multi-fold growth, and organizations are now moving beyond the proof-of-concept phase in the cloud. This will be instrumental as India strives for sustained economic growth with a strong focus on digitization. Indian organizations will spearhead the delivery of differential growth, driven by enterprises that adopt the cloud to innovate, scale, and grow sustainably, gaining a competitive advantage in the process.

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