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September 16, 2022
HIGHLIGHTS
  • The true benefit of cloud adoption comes from a multi-pronged journey that spans cost, efficiencies, sustainable business transformation, and organization imperatives such as operating models, talent, and change management.
  • When measuring cloud value, take out the guesswork and check progress on predefined values across various cloud stages with a metrics-based cloud value evaluation model.
  • Fine-tune your cloud journey informed by cloud value measurement models to realize the potential of cloud.
CHASING CLOUD VALUE

67% of enterprises struggle to derive the intended value from their cloud adoption. 

That’s a key finding from our research. And this is true across enterprises irrespective of whether they are just starting their journey of transforming their core, using cloud as an operating model to transform their business, or innovating with cloud for the future. 

While there are multiple reasons for this struggle, three are key:

  • Cloud value and adoption objectives are not well defined.

  • Assessment of realized cloud value is not metrics-based.

  • Cloud journey is not periodically fine-tuned to extract the potential value.

So, what do enterprises need to ensure cloud value?

MEASURING CLOUD VALUE

Adopt a metrics-driven cloud value evaluation model.

Many enterprises start their cloud journey to improve operating costs and efficiencies. However, they soon realize that the true benefit of cloud adoption comes from a multi-pronged journey that spans cost, efficiencies, and sustainable business transformation. The cloud spectrum will impact areas such as applications, data, security, infrastructure, governance such as FinOps, and organization imperatives such as operating models, talent, and change management.

To measure progress on cloud transformation, enterprises need to evaluate their cloud value realization, align with best practices in the market, and fine-tune their cloud adoption journey. They need to incorporate a ‘dynamic value’ paradigm where what cloud brings today will be different from tomorrow. For example, a hospitality enterprise began its cloud journey with the goal of reducing costs by over 30% and increasing operational efficiency. However, it achieved much more — scaling its cloud adoption to eventually drive business growth with 25% more releases and transform its business model through newer innovation ideas.

There are two parts to the full cloud spectrum journey: strategy and solution. 

  • Cloud strategy: Should focus on the purpose of cloud adoption, value definition, governance, and the required organization model. It should encompass everything from data center exit to drive cost savings and agility, to modernization in the cloud for business growth and disruptive innovation for future success.

  • Solution: Must bring the cloud strategy to life and will need industry-aligned value benchmarks that enterprises can use to compare themselves. It should assess their current performance, do a proactive intervention when plan and reality diverge, and build a journey for the future.

TAKE THE GUESSWORK OUT

Measure your progress on predefined values through various cloud stages. 

To begin with, the model should perform a comprehensive review of the enterprise’s current cloud landscape. It should assess whether cloud adoption has met the earlier defined value or not. This as-is performance across a variety of technology, processes, and business segments will form the basis of value realization.

The metrics and industry benchmarks should serve as a mirror of the enterprise’s cloud performance. They should take out the guesswork from cloud value realization and ensure enterprises achieve predefined values across various stages of the cloud life cycle. 

In areas where the enterprise lags its peers, it can proactively intervene, and course correct. In others where it leads, it can continue the best practices to sustain this advantage. The model should also help enterprises to define realistic value for future cloud adoption initiatives. Benchmarks should assist in course correction and make the journey fact-based and pragmatic.

The metrics and benchmarks should be very detailed, covering the entire technology and process ecosystem. In addition to typical metrics such as mean time to resolve, percentage of successful changes, asset scanning, and automated CI/CD, it should have next-generation metrics around infrastructure-as-a-code adoption, cloud training depth, next-gen support model adoption (for instance, SRE/DevSecOps), talent models, and return on investments. 

The model should help enterprises adopt cloud across the organization. It should address multiple business and technology objectives such as debt reduction, cost optimization, higher efficiency, and business agility. These are achieved throughout the full cloud spectrum spanning migration, modernization, and data center exits.

REFLECT AND CALIBRATE

Fine-tune your cloud journey with recommendations from the cloud value model.

Enterprises should also classify their value definition for different business objectives—whether it's cost optimization, operational efficiency, or business agility and transformation—and proactively build a newer business model. Force-fitting metrics and benchmarks without value definition will not succeed.

Enterprises need to act on the recommendations of the model. They will have to prioritize areas of strategic importance where they are lagging. This is less about being ‘green’ on operating metrics and more about contextualizing what is relevant for the enterprise. Eventually, this value transformation and measurement will need change management across the organization.

In summary, the metrics-driven cloud value realization model will help enterprises to:

  • Assess whether they are getting the defined value from cloud adoption. 

  • Realize where they stand in extracting value from cloud initiatives versus their peers.

  • Undertake proactive initiatives to fine-tune their cloud journey and realize the potential of cloud.

As cloud becomes strategic for business transformation, enterprises will need to periodically recalibrate their value realization journey. It cannot be a one-and-done exercise, but it should also not overwhelm enterprises. Therefore, adopting a value realization model and fine-tuning the cloud journey with the recommendations of the model will be critical.

This blog by Everest Group guest blogger Yugal Joshi is the first of a two-part blog series on cloud value measurement.

Yugal Joshi is Everest Group’s Business Leader for technology services research and advisory memberships. In this role, he is responsible for shaping and growing multiple programs around applications, cloud services, digital, and platforms. He regularly interacts with industry leaders and drives thought leadership on core technology and technology services.

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