Fast-Tracking the Cloud Modernization Journey

Fast-Tracking the Cloud Modernization JourneyCompanies continue to accelerate cloud migration, fueled by the ongoing push for innovation and the desire to respond to a continuously changing business cContents

Coming off a period of pandemic-induced business transformation, companies have accelerated adoption of cloud-centric applications and infrastructure.

Nevertheless, despite the promise of greater operational efficiencies and competitive gains, the complexity of a multicloud landscape and the widening IT talent gap are testing enterprise resources and putting desired business outcomes at risk.

Companies continue to accelerate cloud migration, fueled by the ongoing push for innovation and the desire to respond to a continuously changing business climate. At the same time, the emphasis on cloud migration intensified over the past two years as businesses scrambled to adjust to the transition to hybrid work and remote operations. As companies aim for new business models and services, the cloud’s support for real-time integration and enhanced collaboration bolsters the digital connections linking customers and supplier networks, thereby unlocking additional business value.

According to Gartner research, global end user spending on public cloud services is expected to exceed $480 billion in 2022 and surpass 45% of the totality of enterprise IT spending by 2026, up from less than 17% in 2021. Much of that spending is directed to ongoing efforts to transform existing IT infrastructure and operations. IDC research found that 80% of enterprises have put mechanisms in place to shift to cloud-centric infrastructure and applications twice as fast as before the pandemic and that there was a 5x increase in the adoption of cloud-native architectures for core business applications in 2021.

Why are companies scrambling to modernize with cloud?

They are promoting digital customer engagement. Social engagement and commerce have converged and blurred into digital experiences, and customers are more likely than ever to seek information or participate in commercial transactions in a virtual space well before in-person interactions. The more human-centric that experience, the more likely it is that the customer will become a citizen of that experience, and cloud, artificial intelligence (AI), and data are central to making that happen. The digital experience is now the default/first expected experience — and companies that produce the best digital or frictionless experiences are winning more market share, growing faster, and unlocking more value than those that do not.

Tech-driven business model maturity is synonymous with competitive advantage. It’s become clear that investments in modern cloud infrastructure and advanced data and AI capabilities that drive business differentiation are the key to competitive advantage. Simply put, they are a hallmark for industry-leading performance.

This “normal” is here to stay. The business shifts sparked by the pandemic — specifically, transitioning employees to remote or hybrid work models as well as remote operations — are now fully on track to become permanent fixtures. As a result, there’s an increasing need for organizations to empower a hybrid workforce that blends in-person employees with virtual colleagues. To do this, they must lean into new technology platforms, updated cloud operating models, and ongoing organizational and cultural changes designed to support new forms of collaboration and engagement.

Agility is the hallmark of modern business. The critical lesson learned: Agility and resilience are essential to business success in uncertain times. CEOs are fully on board with boosting organizational agility, underscoring the importance of pursuing technology paths and implementing new business models — both of which enable companies to pivot quickly to address changing business requirements as well as planned and unplanned swings in market conditions.

Yet as companies strive for this next-level digital transformation through cloud adoption, they are running into roadblocks. Many are simply unable to consume the new technologies and operating models fast enough, given limited skills, an explosion of complexity, lack of organizational constructs for cloud operating models, and the need for IT to stay focused on traditional operations and uptime. With hundreds of software-as-a-service (SaaS) applications to be integrated as part of the IT estate, there are challenges related to managing security and compliance across an extended digital supply chain. Others are running into challenges of modernizing for a hybrid multicloud world they can’t handle on their own, undermining cloud investments. In many cases, enterprises are trading the limited capabilities and the brittle nature of legacy applications and infrastructure for cloud complexity and chaos — but this limits potential cost optimization and adds to technical debt.

Unlike previous periods of transition, digital disruption is a zero-sum game, and if customers are lost to a competitor, their business is gone for good. “In the postpandemic world, cloud adoption is accelerating, but it isn’t happening fast enough across the board,” says Arun Kundu, Kyndryl’s global vice president of consulting. Moreover, Kundu says, companies often substitute a landscape of monolithic legacy applications for a large-scale platform of microservices in the cloud world. This can be equally daunting to manage. “Cloud adoption requires a radical transformation, not just of the technology stack but also of the cloud operating model, cloud processes and workflows, cloud organization structure, and cloud skill sets,” he says.