What happened to agility and new business models? Cloud benefits have all gone to IT

Orgs are missing a trick when it comes to the white fluffy stuff, survey says

The migration of IT workloads to the cloud is benefiting tech departments rather than the wider business, according to a McKinsey survey.

The interviews with around 50 European cloud leaders found that only one in three European companies monitors non-IT outcomes of cloud migration, such as cost savings outside IT (37 percent) or new revenue generation (32 percent).

The figures might concern those who have seen the move to the remote distributed architecture as a means to achieve nebulous concepts like business agility rather than IT savings.

"A stunning 95 percent of European companies in our recent survey say they're capturing value from cloud, and more than one in three say they intend to have more than half of their workloads on cloud," the report said. "But scratch below the surface, and the story is a little less rosy. The vast majority of the value companies have captured, for example, remains in isolated pockets and at subscale.

"The focus of their cloud efforts, for example, has been disproportionately on improvements to IT, which generate lower rates of value than improvements to business operations. A shift to higher-value cloud use cases in business operations would create significantly more value."

The report found that 71 percent of companies measure cloud impact in terms of IT operational improvements, while 66 percent measure in IT cost savings, and 63 percent measure the number of applications on the cloud.

It makes the argument that the cloud would help create fleet-footed business units seeking new markets and commercial models seem less of a reality for some.

However, the global consultancy argues that businesses' success in adopting new technical trends will depend on them measuring cloud migrations in different ways.

"The ability to take advantage of new technologies, particularly generative AI, will depend on how well companies can establish and scale their cloud programs," the report said.

"It is not much of an exaggeration to say that Europe's growth ambitions will hinge on its success in the cloud. Companies that effectively integrate gen AI in their transformations may achieve up to seven times the ROI of their peers for each migrated business domain. Such potential makes incorporating gen AI into cloud adoption a 'must-explore' action for successful cloud journeys."

The view that "AI plus cloud equals growth" is not shared by everyone. Earlier this year, John-David Lovelock, distinguished VP analyst at Gartner, told The Register: "In terms of productivity, that doesn't necessarily translate to GDP. If I make another email, another slide, improve quality, drop error rates ... none of that is GDP producing."

Both Microsoft and Dell said recently they are still at an early stage of trying to convince customers to pay for these new services.

Nonetheless, European companies polled by McKinsey claim they are already getting value from the cloud. While 13 percent say returns have been insufficient, 55 percent report satisfaction with their cloud investments. Nineteen out of 20 companies say they have improved operations – in terms of security and quality, for example – while 75 percent have saved money on IT or improved productivity within the tech department. ®

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