The business value of cloud maturity
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What is the real value of being cloud mature? Find out in survey by Radar and Tieto.
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The business value of cloud maturity
- 1. Public The business value of cloud maturity Cloud Maturity Index 2016 September 2016
- 2. © Tieto Corporation Methodology • Survey and interviews with IT decision makers in Norway and Sweden conducted by the research firm Radar on behalf of Tieto. • The study includes 200 organizations with 250 or more employees including public sector • Cloud maturity is determined by a number of key indicators, subjective assessments and self-assessments under six main areas, weighed differently as below. 2 Strategic Operational 50% 30% 20% 30% 30% 40%
- 3. © Tieto Corporation Public About Cloud Maturity Index 3 The result of the 2015 study was published in the report Benefits of Cloud Maturity. 1 2 3 4 5 6 7 Created by the Radar Group in 2014 on behalf of Tieto A model to establish an organizations operational and strategic Cloud maturity The model is based on some 30 key performance indicators, assumptions and self-assessed indices Strategic and operational maturity is assessed in three categories. The categories are weighted according to importance and impact (see next slide) Quantitative studies undertaken 2015 and 2016 The result of the 2016 study was published in the report A new way to embrace Cloud.
- 4. © Tieto Corporation Public Conclusions 4 Cloud Mature Organizations show business benefits in terms of cost management and efficiency 1 2 3 4 5 6 7 8 9 Cloud usage is increasing in both Sweden and Norway Cloud Services penetrate a larger part of the business operation The way Cloud Services are perceived by the customers are gradually changing Strategic and operational Cloud Maturity is higher 2016 than in 2015, in both Norway and Sweden The gap between the least mature and the most mature organizations is increasing Cloud Mature Organizations achieves substantially better business outcomes from Cloud Services Diversification of forms of production and delivery is rapidly growing Organizations with a more hybrid IT portfolio show higher positive business outcomes.
- 5. © Tieto Corporation Public Cloud usage in Sweden and Norway 5 60% 46% 77% 64% Sweden Norway Organizations using Cloud services: 2015 2016 23% 32% 24% SaaS PaaS IaaS Cloud spend, growth 2015/2016:
- 6. © Tieto Corporation Public Cloud usage in Sweden and Norway 6 Customers are using Cloud Services for more diverse applications that penetrate a larger part of the business operation The Cloud is leveraged for more complex components in the production of IT than before Growth is also partly explained by industry restructuring on the supply side. Cloud Services constitutes 4.9% of Swedish IT Spend and 4.2% of Norwegian IT Spend Market penetration has increased dramatically in the past two years and is predicted to continue Cloud spend is predicted to increase by 22% in Sweden and 24% in Norway in 2016
- 7. © Tieto Corporation Public Drivers for Cloud usage 7 27% 12% 13% 10% 60% 78% 2015 2016 Perceived best form of production for a short time-to-deployment: In-house Outsourcing Cloud 39% 28% 24% 25% 37% 47% 2015 2016 Perceived best form of production to support innovation: In-house Outsourcing Cloud
- 8. © Tieto Corporation Public Benefits of being Cloud mature 8 Cloud mature organizations have 34% lower cost for IT operations. Cloud mature organizations have at least twice the IT budget for innovation. Cloud mature organizations have a higher contribution to business development. 34%
- 9. © Tieto Corporation Public Cloud Mature Organizations achieve substantially better business outcomes from Cloud than peers 9 4.0 4.7 4.0 4.3 4.0 4.7 3.7 2.5 2.7 2.8 2.7 2.6 2.4 2.8 Increased flexibility Support digitalization Support business development Support innovation Support business competitiveness Reduce costs Support business efficiency Currently used Cloud services impact on IT strategic priorities (indexed 1-5): Cloud mature organizations Non mature organizations No impact High impact
- 10. © Tieto Corporation Public Benefits of being Cloud mature 10 Cloud Mature Organizations show advantages in terms of cost management and efficiency Cloud Mature Organizations have a higher capacity to support business IT demand Cloud Mature Organizations show better outcomes in the execution of Cloud Services Cloud Mature Organizations are better equipped to deliver IT to the core business allowing the business to stay competitive.
- 11. © Tieto Corporation Public Cloud maturity 2016: Country differences 11 Sweden [5,7-4,2] Norway [4,3-3,7] Cloud mature [9,1-8,1] 0 2 4 6 8 10 0 2 4 6 8 10 Operational Strategic Average Cloud maturity 2016: 3.7 5.2 3.0 3.8 4.2 5.7 3.7 4.3 Strategic Operational Strategic Operational Sweden Norway Cloud maturity 2015-2016, by country: 2015 2016
- 12. © Tieto Corporation Public Cloud maturity 2016 by Industry 12 3.0 4.1 2.9 4.2 3.5 5.2 3.2 4.9 4.3 5.8 3.7 5.1 3.4 5.1 3.8 5.4 3.8 5.4 4.7 5.9 Strategic Operational Strategic Operational Strategic Operational Strategic Operational Strategic Operational Public sector Manufacturing Retail Professional services Finance Average Cloud maturity in Sweden and Norway, by industry: 2015 2016
- 13. © Tieto Corporation Public Stages of Cloud maturity 13 %1518% %4951% %2421% %1210% Immature • There is no cloud strategy at all. • Low competence and slim capabilities in dealing with any cloud services • No to very little use of cloud services Basic • Cloud usage is on single services not integrated with the other IT services and functions provided • Driver for investments is commonly cost reduction. • The services tend to be simple and standalone • There is a cloud strategy and most of the procured cloud services are in line with it. • Most likely more than one service and delivery model implemented • On average multiple SaaS services are being used. • Cloud services are clearly defined and an analysis of existing IT functions in a cloud setting has been performed. • Procurement is fully in line with strategy. • Key drivers are development, change and innovation. Proficient Mature
- 14. © Tieto Corporation Public A new way to embrace Cloud services 14 2.5 2.4 2.8 3.2 3.4 3.5 3.3 3.8 3.0 3.0 3.1 3.4 3.4 3.6 3.7 3.8 Increased IT security Less business risc Higher quality Positive effects on innovation Cost efficiency Easy to purchase and implement Short time-to-deployment Increased flexibility Drivers for using Cloud services 2016 (indexed 1-5): 2016 2015 Source: Radar/Tieto Cloud Maturity Research 2015, 2016 n: ~200 IT decision makers in Finland (2015), Sweden and Norway
- 15. © Tieto Corporation Public Cloud top priorities 2016 15 18% 18% 21% 28% 40% 53% 56% 39% 54% 56% 29% 13% 40% 18% Integrate purchasing of Cloud into existing sourcing process Increase integration of Cloud into other parts of the IT Portfolio Integrate Cloud Services into current IT Strategy Qualify Cloud Services according to IT Security criteria Develop in-house expertise on Cloud Services Cloud top priorities 2016: High priority Priority Not a priority
- 16. © Tieto Corporation Public Hybrid Cloud is the new black 16 14% 23% 2015 2016 Share of organizations that use SaaS, PaaS and IaaS: 1.1 1.5 2015 2016 Average number of distribution models used: • Diversification of services has increased (organizations using both SaaS, PaaS, and IaaS). • Average number of employed distribution models increasing, from 1.1 to 1.5 (~30%).
- 17. © Tieto Corporation Public Hybrid Cloud is the new black 17 55% 51% 32% 31% 13% 18% Infrastructure Applications Average IT portfolio 2016, by component and form of production: In-house Outsourcing Cloud
- 18. © Tieto Corporation Public Hybrid Cloud is the new black 18 1 2 3 4 5 Diversification of forms of production and delivery is rapidly growing Cloud and Outsourcing services are expanding their market share Organizations that show higher positive business outcomes than peers use a more diversified IT portfolio and are more prone to employ hybrid delivery models Growing Cloud Maturity means that they also realize the benefits of different types of Cloud Services’ The Industrialization of IT increases diversification.
- 19. © Tieto Corporation19 • Every potential buyer of enterprise Cloud Services should define their preferred form of delivery (supporting long-term business goals), based on industry standard NIST terms & definitions. • A long-term plan for the utilization of Cloud Services is necessary for successful operational outcomes as well as achieving strategic goals. A Cloud Strategy should be based on the individual circumstances of each organization while at the same time allowing for standard methodology and industry best practice. • The IT portfolio should be qualified according to good sourcing practices and Cloud Services should be treated equally to any other form of IT production and delivery. Define cloud services Secure expert resources Establish a cloud strategy Qualify existing IT services • The IT Portfolio will evolve over time but make sure Cloud Services are included in the planned transformation, and commit the necessary resources and skills to make sure there is a controlled process of transformation into the Cloud. Recommendations Commit resources and plan transformation • A large part of the organizations in our survey reported a severe shortage of in-house expertise. To successfully carry out a transformation to Cloud Maturity, decision-makers need to secure and leverage the right people with the right skills.
- 20. © Tieto Corporation Public 20 Tieto Cloud Maturity Research Download the study: http://pages.tieto.com/LP-GL-XX- CloudMaturityIndex2016_LP.Downloa dPage.html
- 21. Public
Editor's Notes
- The dynamics behind Cloud Services usage and the way they are perceived by the customers compared to other forms of IT productions are gradually changing. Until recently, Cloud Services were mainly viewed as a means to reduce cost and increase flexibility in times of demand fluctuations, but perceptions are evolving.
- Cloud Mature Organizations display obvious differences in key performance indicators and strategic and operational capabilities. Redistribution of resources of capital and resources from IT operations to innovation and transformation is carried out more successfully by Cloud Mature Organizations. Cloud Mature Organizations express that they find it easier to meet business demand for IT-supported business change than their It is probable that business proficiency and business process maturity influences Cloud Maturity rather than the other way around.
- Cloud Mature Organizations achieve substantially better business outcomes from Cloud Services than peers. The differences between the respondents in the survey are marked, especially so in areas of strategic importance. Cloud Mature Organizations assess their capability to support digitalization of core businesses by employing existing (i.e., already sourced) Cloud applications 74 percent higher than peers do. Cloud Mature Organizations assess their capability to support innovation almost 60 percent higher than peers do.
- Strategic and operational Cloud Maturity is reported higher in 2016 than in 2015, in both Norway and Sweden. Norway is catching up with the comparative advantage enjoyed by Swedish organizations. There is still a strategic debt – Cloud Services in general are used far more extensively than allowed for in strategic planning.
- The gap between different industries has narrowed during the past 12 months. Industries that were hesitant to employ Cloud Services are catching up Maturity moves along a staggered curve, where laggards are catching up In two or three years we predict a more pronounced differentiation between industry segments once again
- The average Cloud maturity is increasing, but Immature category appears to display some signs of semi-permanent levels. The gap of difference between the least mature and the most mature organizations is increasing. There is a risk that organizations that are semi-permanently positioned in this stage of immaturity will experience significant difficulties over time in delivering IT services that support the core business.
- The strong growth over the last few years has been primarily motivated by considerations of cost and flexibility. Cloud customer satisfaction levels, that tend to emphasize cost and simplicity, also reinforce this perception. The general trend shows changing reasons for adopting Cloud Services. Short time-to-deployment and positive effects on innovation are now ranked second and fourth (in 2015, they were ranked 4th and 5th). The most significant change compared to the previous year is found in the category. Increased IT security, Higher quality and Positive effects on innovation also rank substantially higher than in 2015.
- In line with the gradual growth of Cloud Maturity the diversification of services has also increased A measure of diversification is provided by the total number of organizations using both SaaS, PaaS, and IaaS. Discounting the Cloud Mature organizations the rest of the sample show a growth from an 8 percent share to 16 percent, a 100 percent increase in 12 months. The average number of employed distribution models is increasing too, from 1.1 last year to 1.5 this year, an annual growth by a third.
- Diversification and hybrid delivery is growing across the IT architecture landscape. IaaS makes up 13 percent of infrastructure components in the average Nordic IT portfolio today, and SaaS has captured 18 percent of application layer components.
- The new hybrid reality means that the diversification of forms of production and delivery is rapidly growing. Both Cloud and Outsourcing services are expanding their market share at the expense of in-house production. Organizations that show higher positive business outcomes than peers use a more diversified IT portfolio and are more prone to employ hybrid delivery models. Growing Cloud Maturity means that they also realize the benefits of different types of Cloud Services