By Thor Olavsrud, CIO | July 18th, 2014
Companies adopting cloud computing most aggressively say that business agility — not cost — is the primary driver of adoption.
Companies moving aggressively to adopt cloud computing are winning competitive advantage by reducing complexity and increasing business agility, according to a recent study by Harvard Business Review Analytic Services.
Angelia Herrin, research director at HBR, says 70 percent of respondents to HBR’s survey had adopted cloud computing, and 35 percent of adopters “are very aggressively moving forward where ever it makes sense.” Drilling deeper, 56 percent of aggressive adopters told HBR they were gaining “significant advantage” as a result.”
“The people that are really getting competitive advantage are the ones who are moving aggressively,” Herrin says. “And they’re certainly not leading with cost as a reason to do this.”
In research sponsored by Verizon, HBR surveyed 527 Harvard Business Review readers in large and mid-sized companies in wide range of industries around the world. Forty-four percent of the respondents came from organizations with more than 10,000 employees and 34 percent from organizations with between 1,000 and 10,000 employees.
Money Isn’t Everything
Business agility was the leading driver for adopting cloud among all respondents, with 32 percent saying it was their primary reason for pursuing cloud — followed by increased innovation (14 percent), lower costs (14 percent) and the capability to scale up and down in response to demand (13 percent). Among aggressive adopters, 41 percent said business agility was the primary driver.
“Not even the cautious adopters led with ‘it really saves money,'” Herrin says. “If you’re stuck on using new technologies like cloud just to save money, you’re really losing out. Agility leads to being able to do things like enter new markets, improved productivity and improved responsiveness to customers.”
Among the respondents, 49 percent of cloud enthusiasts (the aggressive adopters) told HBR they’d entered a new market in the past three years, while 35 percent of moderates and 36 percent of cautious adopters said the same. Cloud enthusiasts were also more like to have been part of a merger or acquisition: 49 percent of cloud enthusiasts reported they had been part of a merger or acquisition, compared with 29 percent of moderates and 31 percent of cautious adopters.
Cloud Keeps It Simple
Among the companies that had already begun to adopt cloud computing, 37 percent said it had simplified internal operations (e.g., HR, CRM), 33 percent said it led to better delivery of internal resources (like web hosting or storage), and 31 percent said it led to new ways for employees to work, connect and collaborate. The respondents also cited faster rollout of new business initiatives to exploit new opportunities (23 percent) and improved ability to acquire, share, analyze and act on data (23 percent).
“I think this is indicative of the type of partnership that can ensue between IT and the line of business,” says Helen Donnelly, cloud marketing director, Verizon Enterprise Solutions. “I think IT has a call to action here to get out ahead of this growing propensity to use the cloud by the line of business and present it in a governed, service catalog kind of way.”
Herrin notes that companies that are successful at leveraging the cloud for competitive advantage tend to have two things in common: a champion at the C-suite level and a CIO that can drive change.
“We’re really seeing companies that are making big impacts have a lot of involvement from the top,” she says. “I think the conversation about technology is one where the companies that are moving fast and really experiencing digital transformation have a CEO that is really embracing it and pushing it. These companies are having a really strategic conversation, constantly, about what they are doing and what they are targeting with their technology. Those companies who say technology is an advantage for them also say that their CIOs don’t just have a seat at the table, they’re helping to lead the charge.”