By Stan Lepeak, Director, Global Sourcing Advisory Research
KPMG will release the first edition of its global cloud Pulse survey via a webcast on November 15th. The cloud Pulse survey is modeled after the sourcing advisory Pulse family of research studies. Results are based on surveys and interviews with advisors globally in KPMG member firms’ Management Consulting and Risk Consulting service lines. The cloud Pulse survey complements and extends research findings from the cloud market study KPMG conducted with Forbes Insights.
KPMG research has found general consensus regarding the top impacts that cloud computing will have on adopters’ business models and operations. This topic was explored in both the Insights cloud market study and the global cloud Pulse survey. End-users and KPMG advisors were asked to the select the top impacts from a list of six that cloud adoption can be expected to drive (see figure below).
The top impact cited by 50 percent of end-users and 77 percent of advisors was “It will reduce costs.” The average end-user respondent selected two impacts while the average advisor selected 2.5, leading to higher average percentage scores for most advisor selections, though ranking order was for the most part the same between the two groups.
Ranked second by advisors was “It will accelerate time to market” and a close third was “It will change how organizations interact with customers and suppliers.” The ranking of these two impacts was reversed by end-users. “It will fundamentally change organizations’ business model; enable true business transformation” was selected by 46 percent of advisors and 32 percent of end-users.
KPMG believes that the biggest potential benefit from cloud adoption is true (vs. superficial) business transformation. Results from the cited research show this is less of a priority for typical end-users. Taking a more tactical, cost cutting focus in the short term is understandable.
In the longer run, however, if users do not take a more strategic approach to cloud – for example viewing it as a key enabler of the extended global enterprise – they risk limiting the extent to which cloud can transform business operations and are likely to suffer competitively as a result.
Transformation is not the easiest, quickest, or most straightforward goal to achieve but it is one that organizations should strive for in their cloud efforts. This transformation is enabled through a combination of process improvement, cost reduction, and greater connectivity between organizations and their partners, customers, and other key constituents. Cloud does not inherently enable transformation but is an enabler and accelerator when used in concert with other change agents (e.g., process redesign, globalization, outsourcing, new market penetration). As one of KPMG’s firm advisors noted, “If the business is educated and truly understands the potential benefits of cloud, the project is no longer an IT project, but instead a business transformation project enabled by a great technology evolution – cloud. If, on the other hand, cloud is seen as an IT cost-cutting project, the organization will only be able to achieve a fancy, and most likely, expensive outsourcing project.”
Key to achieving transformation is to study and determine what it means to specific business processes and activities and what role cloud can play in enabling this. Transformation at the organizational level is conceptual but execution is required in the context of specific business processes and needs. It is also important for organizations to identify and account for any new or changed risk and compliance requirements that this transformation change will bring.
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