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Everybody loves the cloud

Turns out we’re just not very good at using it…

Not everyone good at using cloudAs enthusiasm for the cloud overtakes competence, decision makers and IT departments alike are starting to feel the burden.

Businesses big and small have embraced the cloud as the magic bullet to drive down costs, increase security, eliminate IT departments and/or scale wildly. According to one reckoning, 85 percent of enterprises already have a multi-cloud strategy in place. And to another, the global cloud market is worth US$148 billion and growing at a rate of 25 percent annually.

Adding fuel to the fire is the fintech boom, with decision makers already declaring their intentions to get onboard, whatever that may bring. Gartner’s new Once in the Cloud, Where Does Finance IT Go? predicts that by 2020, 36 percent of enterprises will use the cloud to support more than half of their transactional systems of record, with even more optimistic numbers offered for the longer term.

“93 percent of businesses see the cloud being utilised for half of enterprise transactions in the future,” said Gartner research VP John Van Decker.

“The cloud has definitely changed the game for financial management business applications. Vendors have responded with new and rearchitected platforms in the cloud, and most have de-emphasized their on-premises solutions, in favour of cloud implementations, which are more profitable for the vendors, while reducing the effort of local IT support.”

So sure, there’s momentum, but that doesn’t tell the whole story.

Because while there’s enthusiasm for the potential of the cloud, many businesses are not sufficiently skilled to fully realise that potential. At least, not yet.

Of the almost 2000 IT decision makers and cloud professionals interviewed for The Cost of Expertise, nearly three quarters (71 percent) reported that their organisations have lost revenue due to a lack of cloud expertise.

Issued by the London School of Economics and Political Science and cloud management company Rackspace, the report also estimates that big businesses lose US$258 million – five percent of all global revenue – annually due to a lack of cloud competence.

And it gets worse.

Four in ten (42 percent) IT decision makers believe a lack of skills is causing a lag in their organisation’s ability to deploy cloud platforms and around half (49 percent) acknowledge that a lack of expertise is holding their business back.

It appears that something, somewhere, has gone wrong.

“Cloud technology is a victim of its own success,” said Will Venters, assistant professor of information systems at LSE.

“As the technology has become ubiquitous among large organisations – and helped them to wrestle back control of sprawling physical IT estates – it has also opened up a huge number of development and innovation opportunities.”

However, to fully realise these opportunities, said Venters, organisations need to not only have the right expertise in place now, but also have a cloud skills development strategy to ensure they are constantly evolving their IT workforce and training procedures in parallel with the constantly evolving demands of cloud.

“Failure to do so will severely impede the future aspirations of businesses in an increasingly competitive digital market.”

The challenge, it seems, is this: Though the cloud promises more efficiency, lower costs and faster innovation, it doesn’t run itself. It still requires insight and billable hours to work. For those hoping that advances in AI may just step it to take care of both the busy- and the brain-work, think again.

“While the rise of AI and automation may cause some to think that human insight is less important, our report shows that this is not the case,” said John Engates, Rackspace CTO.

“With technology and the cloud now underpinning business transformation, the growing technology skills gap means organisations must have a strategy to access the expertise needed. Those that don’t will struggle to be competitive and innovative.”

So is any of this cause for despair? Not really.

The benefits of cloud tech are still clear: 82 percent of companies report savings from moving to the cloud, according to one source. The Cost of Cloud Expertise says that 11 percent of Australian companies report increases in ROI via third-party cloud management services, and 18 percent spend time spent managing cloud technology than they would with other solutions.

But the question remains: What will it take for business to finally exploit cloud tech to its fullest potential?

In collaboration with Rackspace, the London School of Economics offers three common-sense approaches for navigating the cloud expertise skill gap.

Splitting the IT function into separate streams – “Innovating in today’s cloud landscape involves a plethora of different, constantly evolving, external cloud services. Simultaneously, businesses are also under pressure to constantly evolve their own value proposition through digital technologies.”

“Asking a single IT department to achieve this seems a recipe for problems, particularly in the context of the skills crisis. In response, we believe that companies should conceptually separate their IT function into two parts.”

The two streams proposed? A business-focused digital innovation function (DIF) and a separate operations-focused cloud management function (CMF)

“Conceptually dividing IT functions into two parts will allow businesses to focus on the dual priorities of business-focused digital innovation and operations focused innovation – both essential to helping an organisation accelerate in a technologically led market”.

Developing a cloud skills strategy – “Every enterprise IT executive should adopt a Cloud Skills Strategy, which will map current skills in the organisation, map future innovation trajectories and changes (both within the business and in cloud), and match these with realistic market analysis of the available talent pool”.

“This strategy should not be focused on mapping today’s cloud usage, but on the flow of future cloud and digital innovation.”

Full assessment of the cloud ecosystem – “Organisations should adopt an ecosystem approach to the provision of basic cloud services (for example pooling risk by relying on providers).”

“As a result, the dual challenge of both constantly improving and significantly innovating can be greatly improved by relying on a balanced pool of skills and competencies both within and beyond the organisational boundary.”

Read the full 2017 Cost of Cloud Expertise Report.

Read Gartner’s Once in the Cloud, Where Does Finance IT Go?

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