Public cloud adoption is not a goal in itself, but a powerful enabler of core business ambitions. Successful adoption depends on a clear set of business goals, initiated from the top down. It should be led by a key business leader –as a transformation initiative.
Prior to the COVID-19 pandemic, CEOs and COOs were not taking a strategic lead, but we now have clear evidence that it must be led from the top, Public cloud strategies are most often led by the CTO (47%). CIOs are taking the lead in 27% of banks, ahead of IT (13%). In rare cases, the Chief Data Officer (7%) and Global Head of infrastructure are leading the cloud strategy. This indicates that the benefits of public cloud are not being understood by all business lines. Banks are perhaps still in the incubation stage of potential transformation or at risk of missed opportunities.
It’s vital that the group CEO sets the public cloud strategy and transformational objectives, cascading those decisions down to the group CIO and CTO. CTOs have a key role in building a unique, compliant and secure cloud foundation to support all business applications, as well as in helping to automate some of the risk capabilities and provide real-time reporting. Without this strategy, there is a risk that the bank will begin to create shadow IT, resulting in increased set-up and maintenance costs due to siloed public cloud teams.
Top business objectives of cloud adoption for UK banks
- 69% Cost optimisation
- 54% Innovation
- 46% Managing resilience
- 46% Speed to market
With cost optimisation the top business objective of public cloud adoption, it’s clear that banks are using public cloud to underpin their attempts to drive profitability in a volatile and high paced environment. Cost optimisation is a strategic play to improve long-term efficiency in ways that add real value to the business. Achieving cost savings is one aspect. 11% of banks believe that public cloud will deliver more than £20m in savings in the next two years. However, success isn’t guaranteed. Achieving real long-term cost savings requires banks to redefine their business and operating models across the board – not just to modernise their existing IT. If a transformative and holistic lens is applied, we’ve seen clients achieve cost savings of up to 30%.
Until recently, resilience was considered a barrier to public cloud adoption. Even more so now, managing resilience is a top business objective identified by just under half of UK banks. Pre COVID-19, 73% of banks also see resilience as a beneficial by-product of moving to cloud, with no bank considering it to be a barrier. We expect this percentage to be much higher now. Today, views are pivoting to see cloud as central to resiliency challenges. This recognises the investments being made by the large vendors, who own the network, infrastructure and technology underpinning public cloud, on a global scale. The risk of systems failure is much lower than banks’ own systems, especially given the mismatch in budgets allocated to protecting against IT failures and cyber-attacks. We’ve also seen human risk during the COVID-19 pandemic, where staff had to journey to their offices to run systems that are on-site.
With pressures to remain competitive and to constantly respond to changing customer demands, it’s no surprise to see innovation (54%) and speed to market (46%) as key objectives of public cloud adoption. Despite this being high-up on the business agenda and 73% identifying cloud as a competitive play, 0% of banks are using cloud in a disruptive capacity.
Despite setting clear business objectives, there’s a disconnect between banks’ ambitions and the reality on the ground. Given that the majority have migrated less than 10% of their business, they appear to be making investment decisions based on opportunistic use-cases. Banks are focusing on being better at what they do rather than pursuing a public cloud-based competitive play. To achieve a transformative cloud strategy, leadership from the CEO is essential – with decisions cascading down through the business.