Leading from the top: CEOs’ critical role in maximising strategic value from Cloud

COVID dramatically accelerated the pace of cloud adoption. But many companies across Asia-Pacific have still had limited success from their cloud programs. Our research backs this up. We found just 35% of companies across the region have fully achieved their expected outcomes from cloud.

One reason why? Because they still often approach cloud primarily as a way to reduce IT costs, many companies are missing out on the transformational impact cloud can have. In this blog, I’ll highlight how CEOs have a critical leadership role to play in unleashing that impact.

 Seeing the bigger picture: what cloud can do

The hyperscalers, and the other  cloud ecosystem partners, have the scale economics to deliver IT infrastructure cost while supporting radical transformation across the enterprise – fueling new growth and innovation and increasing operational efficiency.

That’s why capturing cloud’s full value requires a multi-dimensional value approach, led by the C-suite with the CEO as Cloud Architect. The starting point? Beginning the cloud journey with a clear articulation of the company’s fundamental purpose. In other words, asking what it is they do at the core of their business – and how cloud offers potential to reinvent it.

 By scaling cloud for a broader business purpose, CEOs can maximise its strategic value as the fast-track to future growth and innovation. Then, instead of being limited by the scope of their production, the only limits on the organisations they lead will be the breadth of their ambition.

 Realising cloud’s huge potential for new business value

A lot of cloud transformations still focus exclusively on the IT function. That’s understandable. After all, they can often cut IT costs by 20-40% – a great way to free up investment for cloud innovation and lay the foundations for a broader transformation.

But think about the bigger picture. On average, most companies spend just 1-8% of their budgets on IT. So even a large saving here doesn’t translate into a big impact for the CEO.

Instead, look at revenue-generating functions like sales, marketing, and customer service.

There’s huge potential there for cloud to boost top-line revenues. And even though each initiative may only deliver a 1-5% improvement, because you’re dealing with a much bigger pie, this will have a far greater impact than making big savings in IT.

One example: we’re currently helping a large global manufacturer use cloud to optimise marketing and achieve 85% year-on-year growth in a key marketplace. It’s doing this by harnessing advanced machine-learning capabilities in the cloud to identify and target new customers – testing live propositions, pushing through changes and adding new campaigns much faster than would have been possible before.

Elsewhere in the region, look at Minna Bank. It’s leveraging cloud-native capabilities to build an online-only digital bank that can deliver a new world of responsive customer experiences on Google Cloud.

But organisations like these remain the exception, not the rule. Our research shows that while 35% of companies surveyed in Asia Pacific are leveraging cloud technologies – they’re not using them in functions like marketing and sales, for example.

The same research shows that less than 25% of Asia-Pacific companies are using the cloud technologies they adopted to develop new products and services. It’s a huge missed opportunity – particularly so in sectors like telecommunications, where more than 40% of companies are missing out on cloud’s potential to drive business growth.

The companies that do take the plunge, however, often see outstanding results. For example, leveraging a first-of-a-kind fully virtualised, cloud-native mobile network, one major Japanese telecom was soon handling 2.5 times higher levels of data traffic than a typical operator.

With network operating costs 30% lower than traditional telcos, the company was able to pass these savings directly to its customers. This boosted 5G uptake and the company is now looking at expanding its virtualised mobile network – perhaps by selling its cloud-based solution as a ‘telco as a service’ to operators internationally.

 A major competitive differentiator

Cloud can deliver big benefits elsewhere – by helping manufacturers improve their production lines, for example. Sensors linked back to the cloud can provide breakthrough visibility into day-to-day operations.

By analysing historical data, companies can spot trends, introduce predictive maintenance and dramatically improve product quality. What’s more, they can potentially save millions by minimising downtime on production lines and avoiding product recalls. It’s a great example of how using cloud can help organisations unlock value from large volumes of data at pace.

Cloud can also be the engine for innovation. Look at what Tesla is doing with its “Car in the Cloud” concept. Connecting to Tesla Cloud over a 3G link, the company’s Model S can be completely reconfigured without needing to make any physical changes to the vehicle. Like this, a car can evolve in line with customer preferences without owners having to buy an upgraded model.

Tesla has also launched a new business model for insurance, leveraging data coming from a car to tailor insurance premiums to the actual car usage. This means lower fees for customers and potentially new driving behaviours as well. The company has used the power of cloud to host the big data involved and move fast with this new offering, which allows it to compete head-to-head with incumbent insurers.

It’s clear that cloud is a major competitive differentiator. Companies that embraced cloud prior to the pandemic were two times more likely to experience double-digit revenue growth (36%) over the past five years, compared to the non-adopters (17%).

 New ways of working….new talent

As well as adopting an integrated cloud strategy, companies must rethink their operating models for a more dynamic environment. Standardisation and automation become essential and new skillsets and mindsets will be needed – right across the enterprise, not just in IT.

Moving to these new ways of working will maximise cost efficiency, enhance performance and deliver on the cloud’s huge innovation potential. And, of course, a company’s people play a critical role here.

That’s why it’s surprising that so many Asia-Pacific companies still misunderstand the relationship between cloud transformation and talent transformation. The goal shouldn’t be a cloud transformation enabled by people. Instead, it should be a people transformation enabled by cloud and data.

Remember, people are a company’s most important assets. To drive innovation, companies must upskill their employees, embrace diversity and inclusion, and enable new ways of working. CEOs that combine an enterprise-wide talent transformation with a cloud transformation can help their businesses boost agility and avoid disruption.

What’s more, as companies jostle to attract and retain top talent, cloud is a powerful differentiator. Highly skilled people don’t want to work on clunky legacy systems and navigate excessive red tape before trying out new ideas. They want the freedom to experiment.

A client told me that since moving to cloud, their engineers are more engaged because they’re excited about working on new things. It’s about providing a well-rounded, fulfilling employee experience.

A CEO imperative

It’s clear that cloud transformation goes far beyond IT cost savings. Indeed, our research shows that companies can achieve up to 5X the growth rate (in revenue and valuation) of their peers by investing in technology strategically – with cloud as the main driver – and articulating that strategy.

And it’s not just about bottom-line business value. Moving to cloud can help companies to embrace diverse talent, and ensure they use technology in a responsible manner – crucially, by reducing their energy consumption and becoming greener businesses.

Take the example of a multinational company we’re working with at the moment. By moving to cloud, it’s expecting to see a reduction of nearly 90% in carbon emissions from IT. That’s nearly 10% of the company’s green ambition over the next five years.

Many CEOs are exercising caution in their advocacy for cloud-led change across their enterprise. They prefer to leave such decisions to their CTOs and CIOs. The result? They’re missing out on the opportunity to truly reinvent their businesses by using cloud strategically.

To help them understand the changes that need to happen from here, CEOs should start by asking themselves three questions:

1.     Have you moved beyond a linear IT-led approach towards an intertwined cloud and data strategy?

2.     Have you elevated technology investment decisions as a central part of corporate strategy development?

3.     Are you driving the necessary changes in leadership, talent and culture enterprise-wide?

To learn more about why cloud transformations should be driven by CEOs, check out this Point of View. And stay tuned for our next blog, where we’ll delve deeper into the value of growing and innovating on cloud.