Improving speed to market and the ability to discover new revenue streams through cloud can increase profit growth by up to 11.2 percent.
Enterprises in six global regions will be looking to add up to US$414 billion in net new profits, annually, through effective cloud adoption, reported the latest research report by Infosys.
The Cloud Radar 2021 survey was conducted by the Infosys Knowledge Institute (IKI), a research arm of Infosys, with over 2,500 respondents from companies across US, UK, France, Germany, Australia, and New Zealand.
It covered a range of business performance goals related to cloud and found specific links to competencies such as speed to market and capabilities. A strong profit link was identified when using cloud to rapidly bring new solutions and services to market.
These investments provide a foundation to leverage AI & automation and build cloud based new sources of revenue.
The study found specific links between business profit growth and the use of cloud to rapidly develop and launch new solutions and bring new functionality to market. Cloud’s ability to generate new value from data and discover new revenue sources also links to profit growth.
Specifically, these benefits are derived from business’ ability to accelerate time to market, enhance business capabilities and build a competitive edge.
The study found that the highest performing businesses had annual profits growth that correlated with using cloud in six ways:
- Speed up how they develop and launch new solutions
- Add new functions to software in use
- Expand processing capacity
- Foster collaboration
- Unlock value from data via AI
- Discover new revenue sources.
Superior Cloud performance requires high levels of adoption and orchestration
Cloud-fuelled profit boosts can be attained by companies in any region or industry. However, they only kick in when businesses have at least 60 percent of their systems in the cloud. To benefit from AI on cloud, the bar is even higher. Businesses must have at least 80 per cent of their business functions – such as cross domain business applications – in the cloud for AI to boost profit growth.
Our research describes four distinct performance cohorts – minimally effective, effective, highly effective, and exceptional. Businesses can benchmark themselves against each cohort by exploring the cloud radar digital experience and learn how to improve their cloud strategy and performance.
Exceptional performers (16 per cent) use a larger mix of cloud service providers and more frequently employ hybrid cloud arrangements.
Highly effective performers (19 per cent) have shifted nearly as many business functions to the cloud as exceptional performers. They are motivated to use cloud for accelerating deployment of new solutions and services.
Effective performers (33 per cent) have rapidly shifted business functions to cloud but started with fewer business functions in cloud two years ago. This cohort is more focused on cloud for cost savings than better-performing peers.
Minimally effective performers (32 per cent) are least likely to use public cloud and have the least certainty in estimating cloud expenditures.
Despite acceleration in cloud adoption, only a fraction of large companies reached the highest level of performance and adoption. The Cloud Radar study found that nearly 1 out of 6 companies achieved exceptional cloud performance. In cloud adoption terms, fewer than one in five have crossed the 60 percent threshold to reap the profit benefits.
By 2022 about 40 percent of enterprises surveyed plan to shift over 60 percent of systems into the cloud, from 17 percent today.
Companies delivering exceptional performance in the cloud show a strong motivation to use cloud for business growth, namely, increasing speed to market, adding capabilities, and increasing scale. These exceptional performers also demonstrated greater confidence in terms of cloud spending and were more likely to engage with three or more cloud service providers, giving them the capability to place workloads optimally. They also more frequently utilize a hybrid multi-cloud arrangement – combining the best features of private and public cloud.