Test Dev Only - Whose infrastructure is it anyway?

The recent McKinsey report, the state of cloud computing in Europe has exposed not only low returns, but also serious challenges for businesses embracing cloud as the basis of digital transformation. 

The first concern is that not only is the value of cloud ‘in isolated pockets and at subscale ’, but also that it is limited to the IT department.  Whilst 75 percent of those surveyed reported either technology cost savings or productivity increases, only one-third have seen such savings beyond IT.

This may be because cloud has been historically ‘owned’ by IT and that legacy is hard to shake off. The research found that most companies (71 percent) measure the value of cloud in IT operational improvements. By comparison, just one in three European companies monitor non-IT outcomes, such as cost savings outside IT (37 percent) or new revenue generation (32 percent). 

In other words, IT determines if cloud is a success. 

This is despite 90 percent of these companies ranking cloud projects as a ‘priority’. Although, again here there is a discrepancy, as just a third of these businesses ‘regularly discuss [cloud] progress at the executive-committee level’.

Leaders have still got things the wrong way around.  It is not about embracing cloud and seeing if it can change the business. It is about identifying the change needed and employing the right technology. 

To be fair to the businesses surveyed, the report does suggest that there is ‘hybrid thinking’ when it comes to digital infrastructure. For example, for the two-thirds of companies with more than 50% of their workloads in the cloud, more than 20 percent of their activity is retained on-premises.

But the ‘cloudthink’ that leads McKinsey to proclaim that: “The ability to take advantage of new technologies, particularly generative AI…will depend on how well companies can establish and scale their cloud programs” needs challenging.  

To paraphrase the BBC guidelines when mentioning brand names: ‘other forms of digital infrastructure are available.’ Alternatives do exist. In some cases, they exceed cloud.  

For example, the low-latency processing and real-time response of edge can open new capabilities and revenue streams for a business, such as video analytics. And for oil rigs or power plants, connections to centralised cloud facilities will always represent a huge risk. 

Hence, just as McKinsey waves the flag for cloud, Gartner predicts that by 2025, 75% of enterprise data processing will take place at the edge .

But this is not a playground game of ‘my data strategy can have your data strategy’. It is an honest reflection that the IT focus on cloud must now be tempered by a business approach that includes operational demands to drive value from digital infrastructure investments, regardless of the technology.