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$414bn in annual net profit could be lost with wrong cloud adoption models

Global study finds specific links between business profit growth and the use of cloud to rapidly develop and launch new solutions and bring new functionality to market.

By João Marques Lima

Co-founder and Editor, The Tech Capital

5 Mins

May 25, 2021 | 3:22 PM BST

Businesses risk missing out on up to US$414 billion annual net profit if ineffective or no cloud adoption strategies are put it in place.

The figure, estimated by digital services and consulting company Infosys (NYSE: INFY) in the Infosys Cloud Radar 2021 survey, shines a light in the potential hold by cloud computing and its monetary benefits to businesses that make use of such technology.

The survey, with over 2,500 respondents from companies across U.S., U.K., France, Germany, Australia, and New Zealand, found 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 report shows.

Ravi Kumar S., president of Infosys, said: “Effectively leveraging cloud is a transformational pillar in digital journeys. Where early cloud was a tool for allowing companies to rapidly scale, modern cloud allows companies to rapidly innovate. Today’s cloud creates a network effect across processes, data, content, experience and more. This network effect keeps enterprises relevant in a rapidly changing new digital age. The findings from the Infosys Cloud Radar 2021 comprehensively show that growth and profitability can be correlated to superior enterprise cloud adoption and orchestration.”

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, Infosys warns. However, they only kick in when businesses have at least 60% of their systems in the cloud. 

To benefit from AI on cloud, the bar is even higher. Businesses must have at least 80 percent of their business functions – such as cross domain business applications – in the cloud for AI to boost profit growth.

The 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%) use a larger mix of cloud service providers and more frequently employ hybrid cloud arrangements.
  • Highly effective performers (19%) 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%) 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%) 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% threshold to reap the profit benefits. By 2022, more than 40% of enterprises surveyed plan to shift over 60% of systems into the cloud, from 17% 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.

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João Marques Lima

Co-founder and Editor, The Tech Capital

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