Cloud 2.0 is here

Driving game-changing innovation to turbocharge enterprise growth and transformation 

That there is no digital strategy without a cloud strategy is a given in today’s business world. We would go beyond that to say there is no business strategy without a cloud strategy.

Cloud technologies have become a mainstay of an enterprise’s agenda and key to achieving sustainable growth. As a unifying digital hub that brings multiple other technologies to life, cloud has accelerated digital and business transformation over the years. The way entire economies shifted to cloud-based, contactless ways of buying and selling during the pandemic is proof enough.

The next big wave of business innovation, growth and transformation that’s powered by cloud—what we call Cloud 2.0—is more about addressing what businesses need to achieve their purpose than it is about IT infrastructure. It’s about driving game-changing innovation and ecosystem synergies between industries. Central to this Cloud 2.0 transformation is “innovation at the edge”. Exploiting the power of cloud across applications, data infrastructure, machine learning—all at the edge. Think data processing right where the action is happening—at a production line or an offshore wind farm instead of a central command point. Indeed, the true impact of Cloud 2.0 can be seen in how it enables the next level of edge computing, artificial intelligence (AI) or the Internet of Things (IoT) for business innovation. 

3 horizons of growth

We see the cloud-led digital transformation playing out over three horizons.

First, organizations focus on modernizing the core technology (infrastructure, applications, and data) while migrating workloads to the cloud to achieve better elasticity and resilience. In the second stage they use cloud-native capabilities for business innovations. This horizon is significantly driven by innovation mindsets and integration of best practices from across industries into an operating model. A higher-order transformation and more challenging to achieve, the third horizon is about driving exponential value by orchestrating or participating in horizontal ecosystems. 

Innovate your future

We believe that many large enterprises are traversing the second horizon today. 

With a strong digital core in place, companies can use cloud to extend existing products and services to drive growth. They can reach consumers in new ways by incorporating additional digital channels. They can gain ground-breaking insights through expanded use of intelligent analytics with cloud. They can reshape business processes to deliver greater efficiency and better customer and employee experiences. And fueled by cloud-native capabilities and AI, machine learning, or low- or no-code solutions, they can create an environment of agile innovation where anybody with a compelling idea can turn it into reality.

In Cloud 2.0, technology is not something to adopt, but a strategy for business transformation and growth itself.

If cloud was earlier seen as a way of future-proofing enterprises’ technology infrastructure, today it’s a means of future-proofing the business itself. Cloud technologies were first seen as a means of building resilience and lowering costs through models like pay-as-you-use. Today, they are recognized as a way to achieve faster speed to market, a quicker response time to customers, and rapid innovation and new business model development.  

The native capabilities of cloud hold an exponential potential for business innovation and growth—companies have only realized a small fraction of the possibilities.

Transformative power  

While today’s cloud workloads represent just 20 to 30 percent of what the potential could be, the transformative power of Cloud 2.0 is already on display.

It can already be seen across many areas:

• New business models and products: Think about how cloud platforms are enabling the shift from products to product as a service. Or helping entrepreneurs in small towns and villages reach customers thousands of miles away. Cloud platforms have become core to an organization’s innovation strategy. Whether through an application or advancing a business model, new capabilities are being built on these platforms like this storied global financial services company did. It progressed from having its business model disrupted by new competitors to becoming an industry disruptor, offering new services such as regulatory compliance and risk management consultancy services in addition to cross-border money transfers thanks to cloud-based services. Japanese tire company Toyo Tires reinvented itself from being a manufacturer of products to a digital service provider, digitizing its knowledge of tire performance and maintenance to generate more timely insights and redefine its tire-as-a-service business model using cloud.
• Elevated customer experiences: Adopting cloud platforms, many of which have been designed for multichannel communication, is helping companies support customers better. It enables them to reduce wait times for customers, increase interaction, and provide 24X7 self-service. For mass personalization with a focus on the segment of one, cloud is a game changer. 
• Driving sustainability: There’s rising pressure from investors and customers for companies to become more sustainable businesses. Companies can reduce their carbon footprint by choosing greener cloud service providers that use renewable data centers, and through remote work and improved efficiencies in application development. 
• Autonomous intelligent operations: Cloud-based, AI-powered solutions make it possible to deliver services autonomously. This is applicable across a wide variety of areas, such as inventory management, financial reporting, personalized learning, tailored recommendations, and the diagnosis and self-healing of IT systems.
• AI-driven real-time insights and decision-making: Across industries, the power of these three technologies—cloud, AI, and advanced analytics—is helping companies gain a deeper understanding of customers and make smarter, faster decisions. Maersk, for instance, uses real-time data to give visibility of ambient conditions to shippers, allowing them to make quick decisions. 
• Business restructuring: Modular cloud business architectures help in inorganic restructuring of businesses, bringing about ease of acquisitions and divestitures. With microservices, containers, and cloud platforms that support integration of servers, applications, and systems, cloud can play a key role in making mergers and acquisitions more successful. One example is that of a European professional services company that leveraged cloud as it handled 80 acquisitions in about 6 years.

Simply put, Cloud 2.0 empowers businesses with an innovation-led transformation mindset that helps them leap to the future.  

Perpetual value creation

Leveraging cloud-based ecosystems to achieve a purpose-led, higher-order transformation

As companies mature in using cloud-native capabilities to refine innovative business models, they prepare themselves for a purpose-led, higher-order transformation in the third horizon. The pandemic reinvigorated the discussion around purpose, with more and more organizations reflecting not just on their economic objectives, but the overall reason for their existence. Many have made it their goal to contribute to a better future, whether it’s by fostering healthier communities or nurturing our planet for future generations. And going beyond lip service and tag lines, many are ensuring purpose is being baked into their operating and business models.

We have found that sustainable, purpose-led businesses are shifting from delivering point-products or point-solutions to meeting holistic purposes. For this, they are open to collaborating with competitors and partners across industries, government, academia, startups, and others, often through platform play. Take the case of Vitality—it’s no longer just a medical insurer, but also an orchestrator of wellness. One of Vitality’s programs enables their diabetic customers to track activities using an Apple watch app and reap a reward in the form of lower insurance premiums if a certain goal is met. Damen Shipyards, a Dutch shipping company, is repositioning itself as a maritime solutions provider rather than just a shipbuilder. Leveraging a connected vessel platform, it shares and uses data from its partners in the maritime ecosystem to enable cloud-based predictive maintenance, provide access to remote services, and ensure up to 12% savings in fuel. The energy company Total is another case in point—it no longer just produces and sells fuel but is reinventing itself as a responsible energy major, providing affordable, reliable, and clean energy. Each of these companies has set in motion a transformation, led by cloud and other technologies, to future-proof themselves.

Innovation without boundaries

“Boundaryless cloud” is truly opening a world of possibilities—giving companies the ability to transcend not just enterprise boundaries, but also industry boundaries.

In other words, they can look at innovations in completely unrelated industries and adopt those innovations for their own purposes, making themselves ever more relevant to their end customers. Combine it with a strategy to continuously invest the gains from cloud—be it savings from hardware and development or from cloud-enabled automation and data analytics—to fuel greater innovation, and organizations would be sure to shape a greater future for themselves. 

As organizations progress along the cloud continuum toward the third horizon, they can unlock exponential value for themselves and for their partners in their ecosystem. Australia’s energy market operator AEMO has done this by transforming the energy market in Australia. Through a big data and AI-infused metering data management solution built on cloud, AEMO could move from a 30-minute settlement of buying and selling energy to a five-minute settlement (5MS) and, in the process, help smaller renewable energy providers compete in the market.

Despite some excellent examples, we’re still a few years away from realizing the potential of cloud-based ecosystems. To get there, what’s required is a shift in thinking. Collaboration is key, even with competitors. By creating or participating in ecosystems that catalyze cross-domain innovation with cloud-based platforms, enterprises can chart the path to perpetual value creation. The promise of Cloud 2.0 is in driving innovation for businesses and companies must start their journey now to soar in the future.