Migrating to cloud computing is often assumed to be a purely technical move, but how can it help companies improve their business models, support business transformation efforts and generate value?
Any migration, including a move to the cloud, should be based on business value. Typical reasons organizations adopt the cloud include taking advantage of the ability to scale quickly and drive efficiency while focusing on core priorities.
The cloud can be a key enabler of innovation. In a recent EY survey that looked at how rethinking your cloud strategy can help you restructure your business, 35% of executives said cloud-native development will lead to greater innovation and a greater ability to develop new revenue streams. By lowering the barriers to entry for new applications and automation, employees at various levels can contribute ideas that transform the business model through bottom-up innovation.
Rapid technological advances, including AI and generative AI, are changing the way businesses operate. The ability to utilize these new technologies is critical to surviving and thriving, and leveraging the cloud for these technologies is a necessity.
Cloud Leader for EY Global Delivery Services.
Along with AI, the cloud plays a key role in enabling better insights and experience through data and analytics, facilitating the use of the latest technologies with elastic scaling.
Additionally, well-designed cloud solutions can deliver cost savings over traditional on-premise solutions if optimally designed and implemented. Likewise, moving to an Opex model can help with cash flow and offer flexibility to organizations. Well-designed solutions designed to utilize the right mix of services and regions can also help reduce a company’s overall carbon footprint, helping to achieve sustainability goals.
Data security and privacy are important requirements for all businesses. While the cloud itself doesn’t necessarily offer guarantees, it’s important to understand that hyperscalers have invested billions in best practices, including encryption, key vaults, identity and access management, and threat detection. They also comply with many regulations, such as GDPR, HIPAA, and PCI-DSS. However, the responsibility for implementing all best practices to ensure security still falls on the organization.
In the past, business continuity, including disaster recovery, involved building alternative data centers with high levels of availability. Today, the cloud makes it easier and cheaper to build applications using an “as-code” approach.
In the world of digital transformation, the cloud is the foundation and should be seen not only as a matter of infrastructure, but as a representative of all technologies.
How does cloud migration impact AI adoption by businesses?
By migrating to the cloud, organizations can take advantage of cutting-edge technologies such as artificial intelligence, machine learning, and big data analytics. In the survey, 84% of respondents said that AI adoption would not have been possible without cloud migration. The cloud offers the ability to reimagine operations, create agile business models, and leverage AI.
However, adopting cloud AI services requires organizations to embrace the cloud more broadly rather than relying on it solely for specific or isolated AI use cases.
For example, a universal approach to data, cloud, and AI can help businesses gain a better overview of operations and customer behavior. Having access to a larger, more diverse data set enables more accurate and reliable analysis, which improves AI outcomes. This continuous, real-time data stream in the cloud creates an ideal environment for AI models to evolve. These models can adapt and learn as new data arrives, forming the foundation of an agile and intelligent business ecosystem.
We believe the cloud has the potential to democratize access to AI by breaking down silos and technical complexities to help create an accessible and collaborative environment where cross-functional teams can share ideas and collectively innovate.
How is AI transforming cloud migration?
AI is completely transforming cloud migration and modernization lifecycles from end to end. Overall, we see that GenAI-powered tools, including the use of AI agents, help significantly improve productivity across the migration/modernization lifecycle. GenAI intervention is increasingly important when it comes to optimally executing large-scale migration programs, helping to improve quality, consistency, and risk mitigation. Some examples include using AI tools to support cloud migration risk and planning, scenario testing, cybersecurity in cloud operations, and costs.
Many companies believe that their cloud migrations would have been helpful, but were not implemented effectively.
Companies can face barriers or challenges when it comes to cloud migration, especially in highly regulated industry sectors such as banking, capital markets, asset and wealth management, insurance, healthcare, public sector and government. This includes viewing cloud migration as a purely IT project; 50% of IT executives surveyed told EY that their cloud strategy was part of their technology transformation efforts, while only 27% said the goal was business transformation.
Lack of executive commitment, organizational buy-in, and stakeholder availability are also challenges. Only 16% of the companies we surveyed were considering using the cloud to evaluate new business models.
Other challenges include lack of governance, skills and knowledge shortages, organizational readiness, and lack of planning or budgeting.
How can organizations readjust and recalibrate after a suboptimal cloud migration to deliver real value?
For a successful migration, we recommend that enterprises clearly define their cloud strategy and governance framework from the outset, and that the process be led by a Cloud Transformation Office incorporating all relevant stakeholders, who should frequently update their business case for cloud migration as needed and course correct as necessary to ensure the value gap is minimized.
Second, if a value gap emerges, it is critical to fully understand the specific reasons behind it. For example, this always includes reviewing and reflecting on the original business case, addressing cost overruns using FinOps best practices, validating the people strategy including training and creation of new positions, and reviewing the overall approach to IT procurement in the cloud world.
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