Cloud technology has become an integral part of the digital transformation of today’s businesses. And that has executives asking themselves important questions — namely, how large is the value at stake in my sector? How quickly will this value be captured? Who will capture it? What can I do to ensure my organization gets its share?
The answers are multifaceted, and were sought by researchers at McKinsey through a recent analysis. They conducted a thorough review of several key resources, including the McKinsey D2020 IT spending structure benchmarking study, and independent third-party surveys of more than 1,000 organizations that have adopted cloud technologies. Researchers addressed over 700 use cases across 20 different sub industries, ultimately to inform their conclusions, which we’ll cover more below.
Organizations That Maximize Cloud Value Do So In a Combined Approach
The first prominent finding of McKinsey’s review is a prominent trend among organizations that maximize cloud value. According to analysts, those that make the most of the technology do so in a three-pronged system:
Rejuvenate – IT cost optimization, resilience improvement, and core operations digitization
Innovate – innovation-driven growth, accelerated product development, and hyper scalability
Pioneer – early adoption of cloud technology
The Potential Value Waiting To Be Unlocked In Cloud Technology
Another important finding of the review, McKinsey researchers suggest that the potential value in cloud technology is substantial. After analyzing the value at stake for adoption in US Fortune 500 companies, they estimated that up to $1 trillion in annual value is waiting to be unlocked by 2030. Moreover, when applying those same drivers to Forbes Global 2000 companies, the potential value is estimated to be around $3 trillion in EBITDA (Earnings before interest, taxes, depreciation, and amortization) over the next decade.
Asia’s Potential for EBITDA Gains
The report noted that Asia is in line to reap the highest cloud value potential from adoption at about $1.3 trillion by 2030. The continent’s businesses make up the largest regional revenue share of the Forbes Global 2000 companies analyzed, many of which fall within the oil, gas and banking industries. These are sectors which McKinsey researchers have identified as having particularly high potential for value gains from cloud adoption.
The Americas aren’t far behind, coming in second with a potential cloud value of around $1.2 trillion, driven largely by retail and manufacturing sub industries. These specific domestic sectors stand to capture nearly $162 Billion in EBITDA growth by 2030 – more than three times the value potential for those in Asia and the European Union.
The Keys to Unlocking Value
McKinsey interviewed more than 50 CTOs, CIOs, and cloud program leaders from prominent North American enterprises to better understand their work and what success factors they had in common. The research concluded that the most successful cloud adopters leveraged three key levers:
1. Discovering the full value of the cloud.
2. Solving critical technical challenges.
3. Delivering fundamental, organizational change.
These organizations withstood the challenges of cloud adoption and emerged better-positioned to capture value. Their key takeaway was that creating an effective cloud program requires a combination of technical and organizational capabilities, as well as the right mindset. This means that even if an organization has the necessary tools, they may still need to make changes in areas such as strategy, culture, and processes in order to fully benefit from cloud technology.
