Time To Go All-In on Cloud Technology
By the end of 2020, the debate about cloud computing being the “future of enterprise technology” in consumer goods had already concluded. Today just about every leadership team in our industry recognize that the companies they lead must “move to the cloud.” However, when you probe a little deeper it quickly becomes clear that this means very different things to different people.
The truth is, that given the art of the possible that cloud enables, consumer goods companies are still not fully capitalizing on the value it can bring.
In the three-phase journey that companies are considering, many have got stuck in “phase one.” That is, they’ve migrated some of their workloads to cloud infrastructure to drive down costs and increase flexibility. But for a host of reasons, they now find themselves unwilling or unable to go further.
Cloud is much more than cost-effective IT
Migrating to the cloud to help manage costs is a sensible strategy. Cloud can enable faster, more scalable, on-demand compute — and anything up to a 40% reduction in infrastructure costs. But it can do so much more. When fully embraced, cloud is not just a source of efficient IT, it is also a way to dramatically increase the speed, flexibility and scale at which the business can operate, generating competitive advantage and enabling new business models.
A theme we are seeing increasingly across the leadership teams in the industry is what we describe as the drive to improve “TQ” — Technology Quotient. Leaders are increasing their knowledge of how to gain competitive advantage through technology, data and analytics, other digital tools and new ways of working.
Consider, for example, the way cloud enables a business to integrate huge datasets for increased security, accuracy, and real-time reporting. Or the way it provides access to cutting-edge machine learning capabilities for big data analysis.
Cloud is also now a key platform for product and business innovation, enabling rapid testing and scaling of e-commerce for example. It is, furthermore, a core requirement of connecting across the business ecosystem, enabling collaboration and secure information sharing with partners, clients and customers.
Food processing company Del Monte Foods is a good example of a business being transformed by change and cloud initiatives. Del Monte embarked on a cloud migration journey that involved transferring 200 servers and 50 complex workloads in less than four months. This was not just another story of “lift and shift.” Del Monte is seeking value from cloud-enabled use of AI and internet of things technologies to gain much-needed insights for its business.
Challenges of taking cloud up to the next level
To capture these benefits, leaders in consumer goods companies need to commit to both cloud itself, and to the significant human and business changes it entails. That means making bold decisions about how the business will compete in the future.
This “next-level” adoption of cloud is something most companies continue to struggle with and not just in consumer goods. Accenture’s research suggests that, while a huge majority of executives (84%) recognize the criticality of data, advanced analytics and artificial intelligence to their strategic objectives, almost as many (76%) admit to struggling when it comes to scaling these capabilities across the business. Being stuck in “phase one” is an epidemic.
The difficulty of changing the business to enable it to get more value from cloud is a barrier for many organizations. Nearly half of CG executives (46%) told Accenture that the complexity of business and operational change was preventing greater cloud adoption. This has contributed to a slight sense of anticlimax with cloud. Indeed, in a recent survey nearly two-thirds of executives said their cloud initiatives to date hadn’t achieved the results they expected.
Interestingly, over the last year we have found a change in focus of many leaders, shifting from asking “How do I pilot?” to “How to I scale?” capabilities globally. It is clear that this is becoming one of the most sought-after ways to increase competitive advantage.
Elevating cloud to a whole-business priority
To resolve this, companies need to address some of the obstacles preventing them from tapping the full power of cloud. There are three key steps to consider.
The first and perhaps biggest, is a question of mindset. Leaders must look to change the organization’s perception of cloud from one of “cheaper IT” to one of business innovation and reinvention.
That means broadening the cloud conversation to include the whole of the business. Aligning IT and the business around the same vision and objectives provides coherence and clarity in a cloud journey. Creating a single role in the C-suite, such as a chief data officer, to stitch together business and IT interests, can also help ensure the cloud journey is centered on business value.
The second important step is to be clear where your cloud journey is going. What new capabilities are you targeting within the next three years? Which parts of the organization would benefit most from greater speed and flexibility? What business problems are currently holding your company back?
By working back from your desired outcomes, you create a set of guiderails for your whole cloud journey, enabling you to avoid aimless experimentation with new cloud services and prioritize the projects and use cases that actually get you closer to your objectives.
The third step is to commit to going “all in” on cloud. Migrating your workloads to cloud infrastructure is only the start of this. The true value of cloud comes when the business starts to modernize and transform its data, applications, and ways of working within the cloud. The goal is to make your organization “cloud native” and able to use cloud as a platform for business innovation.
Real business value comes from committing to cloud
As the business becomes cloud native, new things become possible. Take marketing as an example. Cloud technology doesn’t just deliver a significant reduction in marketing expenses (up to 30% on Accenture’s analysis), it gives the business the flexibility to adapt faster to changes in customer preferences, products, and pricing. It enables better customer segmentation, higher returns on investment, and can support more online sales.
At the end it comes down to a single vital point. The full adoption of cloud is now a business priority, not an IT priority. Consumer goods companies must see it as a core component of digital transformation—and a non-negotiable source of future competitive advantage.