12 minute read 8 Jun 2022
Tech horizon hero

How cloud strategy can be the silver lining to data centricity

Authors
John Ward

EY Ireland Partner, Head of Digital & Emerging Technology

Skilled communicator with strengths in distilling complex architectural designs.

Eoin O'Reilly

EY Ireland Partner, Head of Data and Analytics

Passionate about innovation, data and advanced analytics.

Contributors
Neha Neha,  
David Ryan
12 minute read 8 Jun 2022

Organisations need to overcome leadership, technical, and financial constraints as they seek to unlock the value of data centricity.

In brief
  • The journey to data centricity begins with buy-in from the very top to ensure that necessary resources are allocated.
  • Data centric organisations make better decisions faster and have a deeper understanding of their customers.
  • A cloud-first strategy offers the technological platform and tools for an organisation to become data centric.

As businesses reimagine their operating models in a post-pandemic world, they need to make data and analytics a core asset for driving long-term value. The value of data is determined not by data itself, but by its conversion into analytics-driven insights. The COVID-19 pandemic forced organisations to accelerate their cloud migration to drive agility and respond to unprecedented levels of change in ways of working and customer behaviour. The transition to becoming data centric is accelerated by modern cloud platforms. Cloud and data strategies are symbiotic. Approached in tandem, they can accelerate transformation and improve organisational resilience to deal with future disruptions.

Chapter1
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Chapter 1

Entering the age of data centricity

Customers are evolving faster than enterprises can track them.

The EY Ireland Tech Horizon 2022 survey finds that 64% of Irish businesses are either making good progress on transformation objectives or making incremental changes as a first step towards a broader transformation. However, only 14% of Irish respondents say their organisations are data centric. In other words, only 14% are leveraging data to be predictive, drive innovation and continually improve every aspect of the business.

This suggests that Irish organisations have some way to go in their maturity levels in relation to data and this may be holding them back in realising its full potential.

Data is emerging as the strategic currency of the digital age, with shared data intelligence and insights unlocking the value of operational, customer and market data. Organisations that do not adopt that currency will struggle to compete against their more advanced peers who are better able to respond to changing market conditions and customer needs and behaviours.

“Becoming a data centric organisation is not just about technology. It’s about creating a vision and a culture that the whole organisation can buy into and ensuring that every step taken aligns with the business strategy and has the customer at its centre,” says John Ward, EY Ireland Partner, Head of Digital and Emerging Technology.

Data centricity is precisely what is needed to meet the primary objectives of a tech-enabled transformation: addressing changing customer demands and reducing costs. Customers are evolving faster than enterprises can track them. Organisations need to combine people and technology to become more data centric and to adapt at the speed that their customers change.

“The ability to become a data centric organisation requires a clear strategy that permeates the organisation and links to business objectives. This strategy must incorporate the right approach, tools, platform, and skills. Data professionals want to work in environments where their work is central to the organisation’s strategy. If there is a strong data culture, finding the skills will follow; the organisation can become a destination for data professionals,” says Eoin O’Reilly, EY Ireland Partner, Head of Data and Analytics.

According to the survey, 20% of Irish respondents say they have completed or achieved the transformation’s objectives, and while that is more favourable than the global number of 13%, it does highlight that digital transformation is a challenging undertaking. This is backed by the statistic that 32% of Irish respondents (vs 34% globally) say their digital transformation is falling short of expectations.

The research highlights four key enablers that distinguish organisations that are succeeding in becoming data centric: building a vision from the top for a data centric future; focussing on use cases aligned to the overall business strategy; building the technology foundations; and focussing on customers to the point of obsession.

Data and analytics form the core – with 46% of Irish respondents saying they expect data and analytics to deliver the most value (compared to other technologies) for the organisation in the next two years.

Data and analytics

46%

Of respondents say they expect data and analytics to deliver the most value for the organisation in the next two years.

When it comes to investment, 38% Irish respondents said data and analytics are most likely to account for the largest share over the next two years, compared to the 53% global peers who said the same. When compared against cloud investment, 52% of Irish respondents indicated this would be the largest area of investment versus 49% globally. When ranked, cloud is the number one investment for Ireland versus number two for global respondents.

"Irish respondents clearly recognise the potential value of data and analytics but placed cloud investments ahead of them for investment. This suggests that they are focussed on building the technology foundations and accelerating their migration to the cloud as an enabler of data centricity. The availability of powerful data analytics tools on a software as a service basis on the cloud may be another reason for the higher priority placed on cloud investment,” explains John Ward.

Chapter 2
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Chapter 2

Challenges to becoming data centric

The top challenges to data centricity are a mix of leadership, technical, and financial constraints.

Data centricity will drive and predict the most important decisions, processes, and interactions of the future enterprise. 52% of Irish respondents said difficulty in tracking customer needs or lack of data/technology to track those needs is the most significant challenge to improving customer centricity in the organisation.

Customer centricity

52%

Of respondents say difficulty in tracking customer needs or lack of data/technology to track those needs is the most significant challenge to improving customer centricity in the organisation.

Customer focus is viewed as the most important factor to a successful transformation, and innovation is seen as the key to a better customer experience. Hence, to succeed and become customer centric, organisations need to view data as an asset of equal value to raw materials or sales.

This requires investment, but it will also deliver great value. Employees will make more informed decisions on the spot, customers and their behaviour will be better analysed, and supply chain problems unravelled more quickly if the organisation is data centric. These tactical decisions will then aggregate into insightful predictive analytics delivering benefits such as more accurate market entry plans or supply chain overhauls. Data will no longer look backward; it will predict the future with great accuracy.

“As customer interactions are becoming increasingly digital first, the ability to capture customer data and link it to other organisational data is becoming essential. By creating a 360-degree view of the customer, which captures all customer interactions, and layers in advanced AI and ML tools, organisations can offer seamless customer experiences that enhance customer satisfaction and drive positive business outcomes,” says David Ryan, DA Partner and Data Analytics Customer Lead.

What’s holding Irish organisations back in their pursuit of data centricity? According to our survey, the top challenges to making this a reality are a mix of leadership, technical, and financial constraints.

Irish respondents say the number one barrier is leadership styles that rely on intuition (30%). Uncertainty at leadership level on how data can create value for the organisations was also pointed to as one of the main barriers (26%). Other key blockers were finding and combining data from different platforms (28%) and budget limitations (28%).

“There is evidence of a lack of buy-in amongst the leadership of Irish organisations when it comes to becoming more data driven. This, in turn, will translate into a lack of support for data initiatives and the budget limitations highlighted by respondents. This should be a cause for concern as data driven organisations will enjoy a competitive advantage when it comes to operational efficiency and the ability to serve customers’ changing needs,” Eoin O’Reilly elaborates.

It is interesting to note that in this respect, Ireland deviates from averages for the rest of the world. For global respondents, the top challenges to being more data driven are difficulty scaling data-driven products/services (29%) and employee skill gaps in data and analytics (29%), followed by concerns around data sharing, privacy, ethics and consumer trust (25%).

Interestingly, those challenges are all associated with data already being in widespread use in an organisation. This suggests that Irish companies are lagging behind their global counterparts in that respect.

The top reasons Irish companies give for pursuing transformation relate to meeting changing customer demands and reducing costs (both at 36%). Given data is central to both, there are bound to be frustrations if there is a failure on the part of leadership to back data initiatives. When asked what prevents their organisations from being more customer centric, the top answer wasn’t data based, it was people based. Once again leadership emerges as a key issue with 44% saying a lack of consensus at the top level on how to improve the customer or citizen experience is their number one challenge. 

Chapter 3
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Chapter 3

Need to address technology complexities, culture, and talent gaps

Competition for talent continues to put pressure on organisations and there is a deficit in the skills to connect the different data silos.

Tech-enabled transformation is being delayed by complexities related to integrating systems and ecosystems. Connecting or integrating multiple systems is cited as the top challenge for 36% of Irish companies, followed by complexities relating to establishing and managing corporate partnerships and ecosystems (34%). Skills shortages and the high cost of infrastructure are also key challenges.

This lack of integration plays out in organisational culture as well. 32% of respondents cited ineffective cultural collaboration and corporate culture differences across geographies (28%) and ineffective virtual collaboration as among the most significant culture challenges during transformation. The top cultural challenge encountered during transformations is siloed functions, with 40% of Irish respondents experiencing difficulties with organisational siloes that don’t support organisation-wide collaboration. Interestingly, this was only an issue for 22% of global organisations.

“This finding suggests that Irish organisations are still working in very siloed and traditional ways. This is quite surprising as it is not our experience here in EY. It might reflect the far higher proportion of privately owned companies (56%) involved in the Irish survey than in the global study (30%). Nevertheless, there is a need for a greater appreciation for the whole of organisation response required for organisations to become truly customer and data centric. It is not just a technology issue. Strong collaboration is required for data and analytics to work,” explains John Ward.

Pace of change was also identified as a significant issue with 36% of Irish respondents saying the culture is failing to evolve in line with customers, technology and the transformation itself.

The majority of enterprises are still working on developing a transformation culture, with 80% of Irish respondents agreeing this is a work in progress.

Competition for talent continues to put pressure on organisations and a key issue highlighted by respondents is a deficit in the skills to connect the different data silos that tend to exist within organisations. To address talent gaps, 70% say they are focussing on re-skilling rather than hiring to acquire technology-related skills. This may be to reduce time requirements to onboard and align employees with the corporate vision.

Re-skilling

70%

Of respondents say they are focussing on re-skilling rather than hiring to acquire technology-related skills.

Technology skills are in high demand. Focussing on re-skilling is a sensible response to that mismatch. Existing employees with an understanding of the business can have an immediate impact with the right technology training, whether that’s ‘on the job’ training or something more formal.
Megan Conway
EY Ireland Associate Partner, Head of Business and Technical Analysis

Developing the right internal talent for transformation is proving to be no easy task, however. The most significant internal barrier to getting the skills needed for transformation is ineffective upskilling programmes. 54% respondents cite difficulties related to retaining existing skilled talent or ineffective programmes to upskill existing employees as the biggest internal barriers for obtaining skills.

This is further complicated by the Great Resignation, which has made talent acquisition more difficult: 76% of respondents agree that competition for workers with technology-related skills has increased because of the COVID-19 pandemic. And when it comes to attracting experienced talent, inadequate compensation and incentives and insufficient flexibility in work policies (i.e., limited remote working and fixed hours) are seen as top barriers.

  

Chapter 4
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Chapter 4

Achieving data centricity through cloud adoption

Cloud technologies offer a transformational opportunity to accelerate the journey to data centricity.

Cloud technology was ranked as the top area for investment over the next two years by Irish respondents. This is not surprising in light of the cloud’s capabilities as an enabler of data centricity. Other foundational technologies prioritised for investment were the Internet of Things, Artificial Intelligence and machine learning, and data and analytics.

Top areas of technology investment in the next two years

“Adopting a cloud-first strategy is the best means to keep pace with the changing environment and to establish a data platform on which to build AI, machine learning, data analytics, and IoT applications. The cloud also helps organisations address challenges in relation to scaling data driven products and services. The ability of the cloud to flex in response to demand changes is among its key advantages for organisations,” says John Ward.

The sheer scale and volume of the data collected by organisations today creates quite serious challenges to their ambitions to become data centric.

“High standards of data governance are essential for data-centric organisations. Policies must be put in place to manage the availability, integrity and security of data as well as to control its usage. It is also vitally important to ensure that data doesn’t get misused and that all legal and regulatory requirements governing its use are complied with,” says Neha Neha, EY Ireland Data and Analytics Senior Manager.

The cloud offers the capacity and tools to overcome the challenges. Public cloud services can scale almost infinitely to match growth in data volumes while they also offer the platform and modern tools to collect and collate data from different sources and provide the technological foundation to become data centric. While data centricity can be achieved without a cloud foundation, it is not advisable.

Connecting siloed data is a major challenge for digital transformation, but integrating systems is of a higher order of magnitude still. Connecting different functional systems to deliver an end-to-end experience can be a highly complex and expensive undertaking.

Ordering a product online requires a digital store that can connect the ordering system at the front end to stock management systems, payment systems, and fulfilment systems at the back end. There can be at least four or five different system actors in what appears from an end user perspective a very simple process.

The cloud can help overcome the complexity and mitigate the risks associated with systems integration. As cloud platforms continue to evolve and provide new and innovative ways to connect different systems, they are moving more towards system composition rather than systems integration making the whole process much simpler, more efficient, and less costly. But organisations must still pay attention to the risks associated with it.

The cloud more often than not is the solution and has been for some time. In moving to cloud, organisations need to understand key considerations around data migration, hosting infrastructure and associated managed services, together with legal considerations of confidentiality, data protection, cross-border processing and IP. Appropriate allocation of risk and exit planning is key.
Peter Bolger
Partner, Head of Technology and Commercial, EY Law Ireland

Cloud technologies offer a transformational opportunity to accelerate the journey to data centricity. Data can be quickly assimilated from lots of systems – including legacy, and analytics products can be built rapidly to turn raw data into insights for business decision makers. Cloud also offers the capability to easily integrate data and real time analytics into digital applications.

“The ambition to become data centric is facilitated by modern cloud platforms. They provide the required scale to handle the volumes of data involved; the ability to compose and integrate systems to aggregate information from the data silos that exist in most organisations; as well as the data governance, and observability tools required to understand your enterprise data ecosystem. The cloud also provides the operational monitoring and security measures required by modern enterprises,” says Paul Browne, EY Ireland Cloud Platform Lead.

There may be another driver behind cloud investments. Software vendors have been making significant investment in the cloud for some time and a number of the more established vendors are investing more in their cloud solutions than their on-premise versions. In these circumstances it is wise for organisations to align their transformation strategy with where vendor investment is going.

Organisations embarking on a cloud-first strategy should first establish where the value exists and identify where data and technology can drive transformational change for the business bottom line.

“Often the clearest data benefits can be achieved in customer and sales where a better understanding of the customer through data can help target sales efforts and customer offers. Significant benefit can also be derived from data centric initiatives in other areas of the business such as demand forecasting for the supply chain and self-service reporting for finance,” reflects Eoin O’Reilly. 

Chapter 5
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5

Chapter 5

Five steps to build a tech foundation that delivers long-term value

Organisations need to build a technology stack based on cloud that can deliver the platform for digital customer engagement.

Data centricity can deliver long term value for organisations but only if a number of key areas are addressed.

About the survey

The EY Tech Horizon 2022 report focusses on the intersection of technology and transformation, addressing key challenges facing the CIO, CTO and CDO. Key themes include data centricity, digital foundation, customer and talent. Between September and November 2021, EY conducted a global survey of 1,668 senior executives on the role of technology in transformation, of them 50 were Irish respondents. Over half of the respondents were from the C-Suite, and all were ranked Director and above. All respondents were from companies with revenue ranging from $1B to $50B. As part of the survey, seven industries and 21 sectors were covered in Ireland that included among others consumer, energy and resources, hospitality, real estate and financial services.

Summary

The EY Ireland Tech Horizon 2022 survey finds that 64% of Irish businesses are on a digital transformation journey but only 14% of them say their organisations are data centric. On the other hand, 46% of them say they expect data and analytics to deliver the most value for the organisation in the next two years. It is clear, therefore, that Irish organisations recognise the value of data centricity but must overcome challenges identified by respondents if they are to realise it. Organisations seeking to reap the rewards of data centricity need to develop a customer focussed vision and strategy that aligns with the business’ overall strategic goals, and which everyone in the organisation from the board and C-suite down can buy into.

About this article

Authors
John Ward

EY Ireland Partner, Head of Digital & Emerging Technology

Skilled communicator with strengths in distilling complex architectural designs.

Eoin O'Reilly

EY Ireland Partner, Head of Data and Analytics

Passionate about innovation, data and advanced analytics.

Contributors
Neha Neha,  
David Ryan