ANZ companies struggle to reap the benefits of the cloud

A new Accenture report shows little progress when it comes to cloud outcomes over the last two years, with many businesses in Australia, New Zealand (ANZ) and around the world still struggling to reap the returns.

Accenture surveyed 750 senior professionals at large businesses across 17 countries, including the ANZ region. Respondents were spread across more than 10 industries, and many were IT specialists. The goal: to portray the state of the global cloud market, following up on a similar study conducted by Accenture back in 2018.

The latest study comes just weeks after Accenture launched a global Cloud First practice, with plans to channel $3 billion into cloud investments. The key message is that cloud has taken centre stage in global business, and many in the business environment appear to agree.

In fact, 80% of respondents to Accenture’s survey position cloud as tool against business risk and uncertainty while nearly 90% feel cloud is a critical part of their corporate sustainability goals and strategies. Accenture’s technology lead for ANZ Scott Hahn put this in context of the economic fallout from Covid-19. 

“With the immense challenge of competing in the age of Covid-19 and beyond, companies are under even greater pressure to implement a cloud-first strategy, in which every element of a business leverages the power of the cloud, right now. For many, cloud offers the best path to navigating uncertainty and achieving their business goals.”

Cloud technology can help save costs, boost speed-to-market, improve service, build resilience and enable a whole host of innovative business models. Businesses are well aware of these productivity benefits, exemplified by a boom in cloud investments across Australia in recent years. The problem is that few have managed to realise the full value from these investments.

Back in 2018, only 35% of businesses had fully achieved what they wanted to from cloud technology. Come 2020, this figure has crawled up to 37%. “Our study shows a surprisingly small two-year improvement in returns on corporate cloud initiatives, suggesting that a more thoughtful and holistic approach is needed to fully unlock the value of cloud,” said Hahn.

This assessment points to another key finding from the Accenture survey: companies that take a heavy-handed and integral approach to cloud adoption – “high adopters” – realise more value than businesses that dabble lightly in cloud technology, or “low adopters.” While more than 45% of high adopters have fully achieved their expected cloud outcomes, this figure stands at less than 30% for low adopters.

Key challenges

That being said, more than half of high adopters are also facing the issue of lower returns than expected, signalling a wider set of systemic challenges. Asked about the biggest barriers to achieving cloud outcomes, most professionals pointed to the security and compliance risks that come with cloud investments. It is no secret that cloud technology stretches a business’ IT infrastructure and ups the risk profile for those who don’t invest in cybersecurity – something that appears to be hindering businesses.

Another big issue is “application sprawl” – inefficiencies that arise when businesses combine legacy applications with cloud-based IT infrastructure. The more an IT system expands, the bigger the risk of sprawl. Also up there on the list of challenges is a lack of alignment between a business and its IT department – a scenario that often yields a deadlock. Other notable barriers include complexity of operations, data sovereignty concerns, infrastructure bottlenecks, and a lack of adequate skills in the workforce. 

While some of these challenges rank higher than others, Accenture notes that each of these problems was listed by nearly 40% of businesses, signaling their breadth of influence. “Our study findings point to the complexities involved in successfully executing cloud migrations that produce the anticipated business value,” said Hahn.

“The good news is that by taking a rigorous, outcomes-centric approach to devising a customised cloud strategy, partnering with the right experts and addressing challenges outside of the technology itself, such as workforce change management, businesses can achieve the results and return on investment they’re seeking.”

With Australia's cloud market due to reach a value of $11 billion by 2023, many businesses will be looking to take these steps.