Dive Brief:
- Most companies have realized benefits from cloud migration, even if those gains have not had a big impact on balance sheets, according to a new report by advisory firm KPMG.
- Four in 5 respondents said cloud adoption has been a success and two-thirds said they’ve advanced business strategy through cloud, based on the survey of more than 1,000 enterprise technology leaders.
- Returns have been elusive. Two-thirds of respondents said they have yet to see substantial ROI on cloud spending.
Dive Insight:
There’s nuance in cloud adoption — layers of incremental achievements across business objectives.
The gains play out over time, with some coming sooner and more easily than others.
ROI is a long-term objective, secondary to immediate gains in speed and agility, according to Marcus Murph, CIO advisory practice leader and principal at KPMG.
“If I’m competing against the next startup in a garage in Silicon Valley, I've got to totally change my speed and agility,” he said.
Most companies — nearly 9 in 10 — have reached an advanced stage of cloud adoption, and one-third have exceeded objectives and realized substantial ROI.
Yet, 42% said they are behind schedule in cloud implementations.
The upfront cost of migrating on-prem legacy technologies accounts for some of the delay in implementation and ROI, Murph said. That process has been more complicated than many companies expected.
“It’s not as easy as they thought initially because some of their workload applications are far more complex than they expected,” said Murph.
Another unexpected bottleneck has been an ongoing shortage of technologists.
Lack of tech talent is the top impediment to modernization, cited by 44% of respondents. Three in 10 said that internal skill gaps are slowing adoption of new technologies.
Outsourcing to managed service providers has bridged the gap, but that creates a new problem.
“I've heard a lot of CIOs and IT leaders say that they have very few developers or engineers that actually wear the badge of their company,” Murph said. “You have this predicament where, if you need talent to build the next thing, you may not have those people on your payroll.”
The cost of workforce upskilling should be offset to some extent by optimization gains, as companies move past initial migration and implementation.
“You would expect the cost line to begin to go down as you optimize and as your spending on migration and hands-on modernization goes down,” said Murph.
The good news for CIOs looking ahead to 2023 is IT budgets should escape cuts.
Cloud spending is expected to decrease slightly but remain at roughly one-quarter of total IT budgets, based on Spiceworks Ziff Davis’ recent budget forecast.
The narrative is far from complete, according to Murph. “I think of it as if it were a baseball game,” he said. “We’ve played three innings and there are six left. The third, fourth and fifth innings are going to be different from the first few.”
