How companies can maximize value from the cloud

Embracing the cloud is an excellent way to turbocharge performance and stay competitive in a fast-evolving marketplace vulnerable to disruption by cloud-native startups. Companies can boost their return on investment through the cloud, which helps drive revenue and cost savings and generates a host of other strategic and operational benefits.

Cloud costs fall as companies advance in cloud usage

SoftwareOne’s survey of 300 senior technology executives at mid-sized North American companies revealed that cloud investment costs fall as organizations advance in their cloud journeys. At the same time, their revenue and cost efficiencies increase.

Organizations just starting their cloud migration—cloud beginners—invest 1.3% of their revenue on the cloud, while those well-advanced—cloud leaders—invest 1.1% of revenue. While beginners report a 19% decrease in overall business costs, those savings grow to 25% as they become cloud leaders.

Revenue follows a similar trajectory. One-quarter of cloud beginners enjoy a bounce in revenue, and that percentage leaps to 48% as these companies morph into cloud leaders. Other benefits from cloud usage reported by survey respondents include a greater ability to scale their businesses, increased resilience and agility, improved market competitiveness, and customer retention.

In two years, as companies advance in cloud usage, the percentage of mid-sized enterprises experiencing these benefits is expected to climb: 56% expect to increase revenue; 53%, to reduce costs; 49%, to scale their business; 47%, to improve resilience and agility; and 46%, to improve competitiveness.

Despite a slow start, mid-market companies are accelerating cloud transformation to ensure they are not left behind. Most companies surveyed started their cloud migration within the last two to four years but now have 37% of their applications operating in the cloud. These organizations plan to take that percentage to 48% within two years. They have migrated about four major business activities, which should rise to five over the next two years.

Transitioning to the cloud can be complex. It often presents a maze of technology and business barriers that executives must navigate. The most common challenges are ensuring data security and privacy, selecting the right providers and tools, and maintaining service during cloud migration. Other pain points include coping with technical debt, tracking and controlling costs, and lacking a proper organizational foundation.

Six best practices to optimize cloud usage

To overcome these impediments and optimize cloud results, mid-market companies should consider six best practices uncovered by the research:

1. Actively manage cloud costs using best practices and tools such as cloud financial management (FinOps) to create a culture of accountability.
2. Focus on business goals rather than the technology side of cloud transformation to ensure that decisions are made for the right reasons and produce the desired results.
3. Take a structured approach to decisions about shifting and modernizing applications that focus on business imperatives and set the correct priorities.
4. Develop the culture and talent to succeed in the cloud by creating a cloud center of excellence to provide training and advice. They should ensure proper cloud governance and standard processes and foster wide adoption of cloud best practices.
5. Select the right tools and partners, using various cloud service models and turning to a range of cloud technology partners to bridge the skills gap as needed.
6. Put cybersecurity at the center of cloud migration plans, assess and improve application cybersecurity before migration, and ensure that the technology team has cloud security expertise.