Aerial view of the Radolfzell Aachried with the poplar avenue on the Mooser Damm at sunrise and ground fog, on the horizon the town of Radolfzell on Lake Constance with the Mettnau peninsula, on the far right the island of Reichenau district of Constance, Baden-Württemberg, Germany, Europe
Aerial view of the Radolfzell Aachried with the poplar avenue on the Mooser Damm at sunrise and ground fog, on the horizon the town of Radolfzell on Lake Constance with the Mettnau peninsula, on the far right the island of Reichenau district of Constance, Baden-Württemberg, Germany, Europe

How can rethinking your cloud strategy help you reshape your business?

Tech leaders are taking stock of their organizations' cloud journey but must also take action to transform their business.

In brief

  • Cloud is a powerful enabler and instigator of business transformation.
  • EY research has found that enthusiasm about cloud’s potential has given way to the complicated reality of implementing migration to become truly cloud native.
  • Cloud offers the ability to reimagine operations, create agile business models and harness AI, but just 32% of respondents are achieving their ambitions.

Cloud adoption continues at a furious pace, but while many organizations have made significant progress on their journey, only a minority have achieved true business transformations fueled by cloud-native technologies. A combination of technical complexities and organizational barriers are often curbing firms’ potential to redefine how they operate.

The time has come to harness the transformative power of the cloud as an enabler and instigator of change in its own right. With the right strategy, cloud enables organizations to drive their business in new directions, to reimagine operations and to embrace new and agile business models, providing them with a competitive edge, particularly in the age of generative AI (GenAI).

Results from two surveys by the EY organization confirm that cloud-driven business transformation remains a work in progress for many organizations, with few successfully using it as a lever of change. While 65% of organizations have made strategic investments in cloud, only 32% are achieving their ambitions. In other words, euphoria about cloud’s potential has, for many, given way to the sobering experience of implementing the technology in reality.

Low angle view of young woman doing acrobat while jumping against clear blue sky

Chapter 1

Migration accomplished – mission ongoing

Executives are not yet leveraging cloud migration for continuous business transformation.

The investment in cloud has yielded mixed results. Most firms (74%) continue to work partly in the cloud and partly on-premises while only 26% are fully in the cloud.

The move to cloud is often also hampered by issues in migration, with 36% agreeing in principle that cloud would have been useful to drive business model change but struggling to implement migrations properly in practice. In our experience, migration alone doesn’t bring about transformational change. A senior application lead in the consumer industry recently asked, “we’ve now migrated to someone else’s warehouse [cloud], what next?” This example highlights that there is still a significant gap for many businesses to address cloud migration and using cloud as a transformative technology of the business model.

Inadequate technology planning
of respondents said a lack of tech planning stood in the way of successful migration.

The survey results suggest that inadequate planning is partly to blame. Poor financial planning was flagged by 42% as a reason for failed migration, while 41% called out insufficient technology-related planning. For the companies involved, the learning curve is steep, but investment in planning pays off in better post-migration returns.

Becoming cloud native is not just about using the technology but about embracing an end-to-end service-led business architecture powered by technology enablement.

A cloud transformation can – and should – deliver fundamental transformation in what the business does and in how it goes about achieving it. We found that cloud investment is too often viewed as an effort to update the technology strategy to augment the ways in which organizations currently operate. While 50% of IT executives stated that their cloud strategy was part of their technology transformation efforts, only 27% said the aim was business transformation. Similarly, only 16% of companies were working with cloud to evaluate new business models, underlining how cloud is not yet used as an opportunity to transform or future-proof the organization in a holistic way.

All too often organizations stop after migrating workloads to the cloud in the misconception that the transformation is complete. However, they fail to invest time in becoming a transformed organization.

Lack of long-term planning
IT executives reporting that a continuous process of transformation was a key part of their cloud strategy.

Changing the operating model was a priority in cloud-native transformation for just 2% of IT executives, while only 1% say having a continuous process of transformation is a key part of their cloud strategy. This lack of strategic commitment emerges as a major stumbling block on the cloud journey, limiting the potential ROI of any investments.

Business leaders need to understand that becoming cloud-native is not just about using the technology but about enabling and creating business transformation underpinned by technology. To do so demands visioning and strategic thinking; it’s about reimagining the organization in its future state, embracing new business models and identifying a new future for the business architecture in and with the cloud.

Stock image of a Black man conducting a seminar / lecture with the aid of a large screen. The screen is displaying graphs & data associated with movie clips of the earth.

Chapter 2

Cloud native as an imperative for transformation

Cloud enables organizations to integrate AI, get better ESG data and achieve bottom-up innovation.

In today’s modern consumer and technology markets, less nimble operational models inhibit organizations’ ability to take advantage of the agility and capabilities of cloud, at the speed of the market. Organizations need to transform their business operations to unleash the untapped potential of cloud-native services and applications. True transformation can only come about by going cloud-native – in terms of tools, mindset and skillset.

To understand why many organizations struggle to move from operation to transformation, we asked survey participants for their views and experiences of being cloud-native. Although the advantages were well recognized, we noted gaps in certain areas where benefits were undervalued.

The technology benefits of cloud are seen across a wide variety of drivers, such as cost saving and sustainability. For example, 81% of respondents were able to identify new carbon-reduction methods, and 41% reported improved monitoring of emissions thanks to cloud-native applications.

Over one-third (35%) of organizations identified innovation as a key advantage of cloud-native application development. By lowering the barriers to entry for deploying new apps and automation, employees at various levels can contribute ideas that transform the business model through bottom-up innovation. Another important aspect of innovation for businesses today is artificial intelligence (AI) and machine learning (ML). 

AI enabler
of participants said AI adoption would not have been possible without cloud migration.

Cloud-native architectures allow for seamless integration of AI and ML modules. This creates what could be termed a cognitive business model – where real-time learning algorithms enhance all aspects of decision-making and customer engagement. This is reflected in the experience of 84% of respondents who said that their adoption of AI in the business would not have been possible without cloud migration. A substantial number (42%) also said that it helped to introduce AI or ML into their innovation processes.

With the adoption of open data standards and tools, the future will likely see greater data liquidity in multi-cloud environments. This will allow businesses to leverage data as a real-time strategic asset for AI analytics and decision-making, no matter where it resides.

Another development we anticipate is greater significance of the ecosystem. A great deal of technical expertise goes into building a completely cloud-native set of services, and it’s not realistic for many companies to have that know-how in house. To bridge the gap, more companies are seeking partnerships with others as part of an ecosystem, with cloud being a key enabler of successful ecosystems as it offers IT integration of heterogenous systems. This, in turn, demands a high level of commercial awareness in terms of working with providers.

At present, even in cloud-native setups, there’s a lack of flexibility to choose components from different providers. Much of cloud-native development is based on “platform as a service.” In the future, organizations will need to be able to assemble what they need from an array of components. Cloud-native building blocks of composable architectures will enable businesses to scale and adapt their processes at speed.

Aerial view of cityscape with complex of contemporary skyscrapers towering over foggy Madrid at sunrise time with colorful cloudy sky

Chapter 3

Evolving in and with the cloud

Take action to drive organizational change.

To close, our study has produced a set of actions that can be used as guidelines to leverage the cloud as a catalyst for further organizational transformation:

  • Key for a cloud-native transformation, organizations must understand the desired business model transformation. What are the use cases for top-line growth, bottom-line savings, or innovative business services? In consequence, cloud transformation cannot be an initiative that is primarily being driven by IT management – it requires sponsorship, ownership, and input from the business.
  • While transformations traditionally aim for business process changes, firms should keep the data angle in mind and build a well-thought-out cloud platform, providing them with an edge in many regards, especially with a view toward integrating GenAI.
  • Organizations need to transform their business technology operating model. Additional research EY teams conducted with the Saïd Business School, at the University of Oxford, on where transformation programs go wrong and what organizations could do to get them right, indicates that organizations, which move beyond traditional operating models to agile-product business technology operating models and toward a higher degree of experimentation, achieved 2.6 times more success in their transformations. Central to these findings is the fundamental method of putting humans at the center of the transformation program; applying 6 drivers of human behavior is instrumental in driving transformation success: to lead, to inspire, to care, to build, to empower and to collaborate.
  • Hand-in-hand with an operating model transformation, firms need to attract and/or upskill their talent base. They need to define critical capabilities, associated roles and skills and combine this with a robust capacity planning.
  • (Co-)sourcing of talent can be a fast means to overcome time constraints. Executing a cloud transformation requires the development of cross-functional teams, both internally and externally, which will require a significant shift in behaviors and mindset from everyone involved.

We are at a pivotal moment of transition, and it is ripe for action. The organizations that will truly lead in the cloud era are those that graduate from a cloud-first strategy to a cloud-smart one. They will go beyond a one-size-fits-all approach and customize their cloud adoption, which in turn, opens up new paths to drive value and innovation. It's about aligning cloud strategies with specific business objectives, leveraging the full potential of cloud capabilities, and exploring new ways to drive growth and competitive differentiation.


Using the cloud to rethink business models and induce top-line growth while also managing the bottom line more effectively is an ambitious undertaking. EY studies show that progress is slower than some had hoped, yet we see encouraging signs of progress. As cloud adoption – and business transformation – evolve, organizations can use the lessons learned in recent years to adjust plans and drive greater value from their investments.

Related content

How can the moments that threaten your transformation define its success?

Leaders that put humans at the center to navigate turning points are 12 times more likely to significantly improve transformation performance. Learn More.

How do you harness the power of people to double transformation success?

Read about how EY and the University of Oxford explored the emotional cost of failed transformations and what it takes to get them right.

The CEO Imperative: How mastering ecosystems transforms performance

Read the EY Ecosystem Study, a first-of-its-kind deep dive into how ecosystem mastery leads to higher performance.