How businesses can realize the benefits of the cloud

(Credit: Unsplash)

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Ani Majumder, Partner, New York office, McKinsey & Company & Chhavi Arora, Associate Partner, Seattle office, McKinsey & Company & Stavroula Papadopoulou, Solution Leader, Zurich office, McKinsey & Company& Venky Anant, Partner, Silicon Valley office, McKinsey & Company


  • Businesses are increasingly leveraging cloud technologies to increase scalability, security and efficiency.
  • But progress has been lacking at achieving impact at scale.
  • Cloud transformation requires deep expertise and operating model change.

More than 90% of businesses are leveraging cloud technologies and have started migrating applications to leverage the scalability, security and efficiency that the cloud provides. But most have not established cloud-native capabilities or achieved business impact at scale.

Some companies, for example, Moderna, are using the cloud to fundamentally transform their business model. Moderna runs its Drug Design Studio, a proprietary web application, on the cloud so it can take advantage of its scalable compute and storage infrastructure. That allows the business to analyze and quickly design mRNA sequences for protein targets, integrate learnings from multiple experiments running in parallel, and quickly refine the design and production cycle. Thanks in part to cloud, Moderna was able to deliver the first clinical batch of its vaccine candidate (mRNA-1273) to the US National Institute of Health for phase one trials just 42 days after the initial sequencing of the virus.

Such examples are likely to increase as business and technology leaders appreciate how much the cloud can accelerate their digital transformations and unlock massive sources of new value.

Reduction in technology and operations spend by leveraging the cloud is attractive. But it’s a small fraction of the value available by using the cloud to accelerate innovation or build completely new business models

Our research indicates seven drivers of value from the cloud that collectively can account for more than $1 trillion EBIDTA (Earnings Before Interest, Taxes, Depreciation, and Amortization) by 2030. Effective cloud utilization can help rejuvenate IT by improving application development and maintenance productivity, as well as reducing infrastructure costs by 20-30% for migrated applications. Leveraging cloud security and resilience aspects can also reduce costs of downtime and breaches.

The greatest value from the cloud, however, comes from its ability to accelerate or enable innovation, and help businesses reinvent how to develop, deliver and sell products and services. Retailers are using advanced analytics capabilities available through cloud service providers to do real-time sentiment analysis, trend modeling and social listening to predict products likely to succeed. Some companies are entering into strategic partnerships with cloud providers to take advantage of the increasingly rich set of services they offer to reinvent their business model.

Image: McKinsey Global Institute

However, getting the cloud right is not easy for most companies. We have seen the most success come when companies set an ambitious business agenda, transform the operating model, iterate solutions quickly and scale at pace

First and foremost, business and IT leaders need to set the bar high and define clear use cases grounded on real economics that account for both cost savings and business innovation. Because the value to the business is so great, cloud transformation programs require a true partnership between IT and the business. This means IT leaders need to have a clear understanding of the value at stake for the business while business leaders need to be cloud literate and understand the true potential of this technology. Too often “cloud” becomes a catchphrase for “modernization,” and many of the benefits traditionally attributed to a cloud can be captured on-premises with a modernization investment.

Second, investing in a leading edge architecture that is integrated, secure and resilient will be critical. This is especially important if the business operates in an “hybrid cloud state”– wherein part of the IT infrastructure exists on-premise and partly on cloud – a likely scenario for most large organizations in the foreseeable future.

Finally, cloud transformation requires deep expertise and operating model change. Our research indicates talent and culture as the biggest roadblocks to successful execution. Key shifts in talent (e.g., from project to product managers, analysts to data scientists, developers to full stack engineers), as well as the operating model (e.g. from waterfall-based development to an agile, test and learn culture), will be required.

Realizing the promise of the cloud is not easy, and for most companies, it’s still early days. But the $1 trillion prize is more than worth the journey.

the sting Milestones

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

How women in developing countries can harness e-commerce

Climate change is forcing 20 million people a year from their homes, Oxfam says

Banks get trillions and the unemployed ECB’s love…

UN chief condemns terror attack in Kismayo, Somalia

Paradise islands of Pacific increasingly vulnerable to climate change, as UN boosts resilience

Having a baby during COVID-19 gave me new respect for the job ‘mom’

LEAGUE OF YOUNG VOTERS LAUNCHES TOOL FOR YOUNG PEOPLE TO COMPARE POLITICAL PARTIES AHEAD OF EU ELECTIONS

UN agency helps stranded Ethiopians return home, ending ‘harrowing migration ordeal’

Data show EU Economy in a stubbornly subdued state

Stronger partnerships with post-conflict countries needed to ensure ‘path towards durable peace’: UN chief

COVID-19: latest on evaluation and authorisation of vaccines

Europe is no longer an innovation leader. Here’s how it can get ahead

COVID-19 vaccines: MEPs quiz top officials on authorisation and contracts

Gender equality in STEM is possible. These countries prove it

Flexible jobs can make work-life balance worse, a German study finds

UN condemns deadly attack one of its vehicles

MEPs approve EU’s spending in 2017

Is Germany yielding to pressures for more relaxed economic policies?

Modernising EU justice systems: New package to speed up digitalisation of justice systems and boost training of justice professionals

The European Sting @ Mobile World Congress 2014, Creating What’s Next for the World. Can EU Policy follow?

Spring 2020 Economic Forecast: A deep and uneven recession, an uncertain recovery

These are the world’s most future-proof cities

Yemen: 11 more ‘terrible, senseless’ civilian deaths reported, following attack in Sana’a – top UN official

Cyber-Risk Assessments: the vaccine for companies in the Fourth Industrial Revolution

Boris Johnson’s no-deal Brexit to differ when issued from 10 Downing St.

Some truths about the coronavirus, according to the World Health Organization

Do not jeopardise future-oriented EU programmes, say EP’s budget negotiators

Asylum: MEPs call for more solidarity among EU member states

Business should be joyful – just ask the sports world

Kids who live in the countryside have better motor skills, a study in Finland has found

Women must have an equal share in politics, say MEPs and national MPs

Jeroen Dijsselbloem new Eurogroup president

70 years after the Universal Declaration of Human Rights, this is why we need dignity more than ever

GSMA announces first speakers for Mobile 360 Series-Middle East and North Africa

Business could learn plenty about cybersecurity from the secret state

A Sting Exclusive: “Stronger Cybersecurity for a safer EU against cybercrime and cyber threats”, by MEP Dalli

Economic recovery won’t tackle youth unemployment problem

These are the countries that have made their climate commitments law

Yellen and Draghi tell Trump and markets not to expedite the next crisis

More than 90 per cent of Africa migrants would make perilous Europe journey again, despite the risks

Central African Republic: UN chief hails signing of new peace agreement

What Keynes can teach us about government debt today

COVID-19 and its empathic social lessons

MEPs back first EU management plan for fish stocks in the Western Mediterranean

The costs of corruption: values, economic development under assault, trillions lost, says Guterres

Green economy ‘not to be feared, but an opportunity to be embraced’ says UN chief as COP25 gets underway

Vaccination: understanding the challenges surrounding COVID-19 vaccination campaigns

Commission approves emergency measures to protect eastern Baltic cod

Coronavirus: EU funding for the transport of medical goods, medical teams and patients

Importance of teaching ethics in Brazilian Medical Schools

New EU telecom rules: latest actions in time for transposition deadline

Why the fight against nature loss should be a business priority

‘Bicycle Kingdom’ makes a comeback, as China seeks solutions to tackle air pollution crisis

Bosnia and Herzegovina: MEPs concerned by slow progress in EU-related reforms

CDNIFY @ TheNextWeb 2014

Global immunization is having its annual check-up. What can we learn?

Palliative care effectiveness at Universal Health Care: an eminent need

Women who crushed the gender barrier in medicine

Energy Union: EU invests a further €800 million in priority energy infrastructure

ITU Telecom World 2017 on 25-28 September in Busan, Republic of Korea

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s