Digital Transformation and Cloud: A Strategic Connection

Enterprises are rapidly embracing cloud technology by shifting from legacy data centers to the cloud. According to Globe Newswire, the global cloud computing market size and share will reach $1025.9 billion by 2026, from USD 321 Billion in 2019 at a CAGR of 18%. And why this rush? The strategic connection between digital transformation and the cloud is one of the evident reasons for this uplifting.

Further, the unprecedented changes worldwide in the post-Covid-19 era have accelerated the need to mark a digital presence. As a result, enterprises urgently need to be driven by innovation, intelligent processes, and automation to stay competitive. Additionally, they widely leverage modern technologies such as artificial intelligence and machine learning to ensure their position in the global market. As a result, a cost-effective, secured, and sustainable infrastructure is on-demand that can scale with demand spikes. 

Organizations reform their businesses to achieve goals, enhance growth, and attain digital transformation using the cloud. This article unlocks how the evolution of cloud technology has been a phenomenal factor in transforming the business. Moreover, some enterprise instances highlighted in this article explain why moving to the cloud could mark an effective digital presence.

Evolution of the Cloud- an Overview

Today, cloud computing is one of the key influences to attain business transformation. However, it is a disruptive technology, and the future of the cloud started shaping up during the 1950s when computational services were the forte of distributed systems and mainframe computing. During that era, the systems were giant and expensive machines that functioned over a time-sharing network within a restricted location. As a result, it encountered massive traffic and sluggish processing time. For quick and efficient operations, computing systems expanded the functions during the 1980s with cluster computing. In cluster computing, the computer nodes were connected via a high bandwidth network. However, the location restrictions persisted. Later in the 1990s, the internet and virtualization were introduced, which opened the avenue to interconnect the systems located at different geographic locations and allowed users to run multiple processes over the same hardware. It was during this time that accessing the applications from the remote location found their roots. 

During the early 2000s, the concept of Web 2.0 emerged, where the development of interactive websites was the prime focus. During this time, organizations like Google, Facebook, Twitter, etc., started introducing their web pages. Needless to say, that, the concept of social media also arose during this time. Later on, rapid technological development introduced the concept of utility computing that allows the applications, storage, and infrastructure to be available at metered service on a subscription basis.

These are the phases of the evolution of cloud computing to become what it is today.

Cloud and Digital Transformation

Enterprises agree that innovating the business models with the latest market demand is the key to success. Cloud computing is one of the crucial trends that drive the customer experience and help to gain customer loyalty. The direct impact of cloud computing in future business is that it fuels growth and leads towards business transformation by realigning your business processes. We know how the cloud is advantageous for the business, but considering the limitations and knowing how to overcome it will ease your digital transformation.

“Cloud computing changed the technological aspect and the market dynamics in the business world.”

What Are the Advantages of Implementing Cloud for Business Transformation?

Here is the list to remind you about the advantages of implementing cloud technology for your business:

• Cost-efficiency: Shifting to the cloud helps reduce the cost of managing and maintaining data centers and infrastructure. Further, you can also opt for cloud services such as SaaS, PaaS, and IaaS that allow you to pay for the services that you use.
• Scalability: The cloud provides almost unlimited storage capacity. Further, it also allows expansion of your operational requirement based on the business needs. You can quickly scale up or down your cloud resources at a reasonable cost. Otherwise, with legacy systems, expansion was expensive.
• Easy Deployment and Security: Cloud Deployment is quick and easy compared to establishing an on-premise data center. Further, cloud providers emphasize security by leveraging protection and access control mechanisms to ensure customer data safety.
• Improved Responsiveness: Cloud technology is fast and known for its quick action. It has minimal latency for dependent processes. As a result, your business provides prompt results and stays relevant in the market.
• Enhanced Backup and Data Recovery: The data in the cloud is flexible, and hence it is easier to back up and restore whenever necessary. Otherwise, running back up of on-premise and legacy data centers was a time-consuming and cumbersome process.
• Flexibility and Easy Accessibility: The cloud allows you to utilize its resources as per the demand variations. When the demand spikes, you can add up the features and resources, and when it drops, you can reduce the same. Further, it allows you to access data from anywhere, anytime, through the internet.
• Collaboration and Resource Sharing: Earlier with legacy systems, cross-functional collaboration was not easy, and sharing the resources was tedious. Eventually, it affected the overall functioning of the business. With the cloud, your inter-departmental connection is accessible through the internet, making the resource sharing capability seamless to boost the role of cloud computing in digital transformation.
• Reliability with Auto Updates: Cloud helps run easy backup and data recovery functionalities to avoid data loss for your business, which was a lengthy task for traditional data centers. Further, regular automatic updates with the latest technology retain the performance quality of your operations. These updates could be up-to-date versions of applications, servers, and processors.

What Are the Main Roadblocks for Cloud Implementation?

Although the cloud brings several benefits, certain aspects are the area of concern for business leaders. According to Statista’s survey in the last quarter of 2020 conducted with the technical managers and business executives, around 81% responded that security is one of the significant challenges of the cloud. Here we list some of the substantial areas where cloud needs to improve.

• Data Security: As stated above, data security has always been on the top list of challenges for cloud-based services. Your company data is stored in a shared environment for your cloud service provider’s access to the public cloud. This accessibility for any third-party vendor might increase the risk of data leakage. Further, although the private cloud has an access control mechanism yet, it is vulnerable to cyber-attacks.
• Working with Multiple Cloud Environments: As cloud technology flourishes, most organizations use multiple cloud platforms to optimize workloads and control costs for specific business operations. Such cases bring potential security threats while sharing or transferring resources between the cloud environments due to the involvement of multiple cloud vendors.
• Data Governance and Regulation Compliance Challenges: You should check whether your cloud service provider has data governance and regulatory compliance to ensure that your critical and non-critical organizational data is safe.
• Dependency on the Service Providers: If you are using service from a vendor, you cannot simply transfer to any peer cloud service provider due to incompatibility of technology or other services. Such situations are called vendor lock-in, which makes you dependent on the service providers.
• Optimizing Implementation Overheads: Cost management has been one of the most challenging tasks for cloud users. Enterprises often tend to spend a lot of money on the cloud because they lack knowledge about estimating the investment, planning resource utilization, and monitoring the cost of services. As a result, it increases the overheads in several instances.

How to Overcome the Cloud Implementation Challenges to Augment Business Transformation?

Though specific challenges act as a roadblock for cloud adoption, digital transformation and the cloud are interlinked. Therefore, you can formulate some guiding principles for purchasing and adopting the cloud. Here are some of the ways you can plan to tackle the challenges of cloud implementation:

• Emphasize on Security: Plan out specific security provisions, such as encryptions, multifactor authentications, keys rotation, and tokenization to safeguard data in the cloud. Further, you can also deploy firewalls preventing malpractices such as SQL injection attacks, etc.
• Evaluate Your Cloud Vendor: Establish essential guidelines around compliance and regulatory needs for cloud services. Based on the guideline, you can evaluate your vendor. For example, their policies and work around user identity and access management, data security, response time, etc., can help evaluate your cloud vendors.
• Classify the Resources: It is crucial to identify the cloud-ready workloads. You can Shift those workloads first and invest in app modernization to make the other workloads compatible with the move. This classification will help you to control the pricing changes.
• Emphasize on Cloud Governance: Establish compliance protocols and governance methods in the security framework that explain the factors such as the number of users, services, and the approvals required for the cloud services.

Some Enterprise Instances of Successful Cloud Business Transformation

“The cloud is about how you perform computing, not where you do it.”

The statement is well justified by the enterprises like Shopify, Salesforce, and Adobe that are growing proficient to compete with FAANG. In addition, industry leaders like Microsoft and IBM are also widely leveraging the cloud as a platform to expand their horizons and upkeep their lead. Here are some examples of how enterprises are leveraging the cloud to achieve their business goal.

How IBM Helped American Airlines to Attain Business Transformation?

Customer experience is the critical differentiator for any business, and it holds for American Airlines as well. The airline wanted to serve its customers with innovative digital services. However, the legacy architecture and platform were the primary hindrances against the transformation.  The airlines’ customer-service applications were based on monolithic architecture, managed in silos by different teams. As a result, addressing and resolving customer inquiries were sluggish that affected customer retention.

For the quick and efficient response to the customer queries, American Airlines needed to transform with the help of new technology features. As a result, there was a need to upgrade its technology stack, to enhance agility. As a result, the company leaders identified cloud adoption as the stepping stone towards their business transformation.

American Airlines collaborated with IBM, and IBM helped migrate some of their vital legacy customer-service applications on IBM Cloud to accomplish their goal. Concurrently, it also upgraded the legacy applications of the airlines to a microservices architecture to make them cloud-ready.

As a result, the globally leading airlines could innovate their response time with spontaneous customer queries. It also launched Dynamic Rebooking and operated through an app with easy augmentation facilities based on customers’ feedback. This instance of American Airlines has rightly justified the relation between digital transformation and the cloud.

How Adobe’s Digital Transformation Helped to Amplify Their Stock Price?

What is the first thing that comes to your mind when you think about Adobe? Is it a PDF file, Acrobat Reader, or Photoshop? Well, that’s not what Adobe is confined to anymore. It is now a transformed software service for several global organizations and helps create a rich digital content stack today. In addition, it is one of the leading providers of specialized software solutions for businesses and individuals.

During its early days, Adobe used to sell its applications through licenses on CDs. However, after the global recession in 2008, Adobe realized that innovation is the key to survival and decided to transform from a license-based company into a cloud-based company. Since then, Adobe has shifted its operations from a licensed software model to a cloud-based subscription service. At present, the company completely operates functions in digital media through three subscription-based models – Creative Cloud, Document Cloud, and Marketing Cloud.

After Adobe’s cloud business transformation, the company’s stock price amplified significantly, with overall revenue growth ascending from 19 percent in 2011 to 70 percent in 2015. According to McKinsey, Adobe achieved a revolutionary annual revenue of USD 12.87 billion.

Conclusion

Needless to say, that although the concept of cloud computing was prevalent years ago, today, enterprises are adopting cloud not just to improve the ongoing business processes but also to drive new enhancements to stay competitive. At present, the cloud is one of the intrinsic pillars for this modern dynamic business world. It drives efficiency and enables responsiveness in business operations. Moreover, with the advantages and limitations, it is the key to delivering flexible, on-demand access to the services based on the changing business priorities. As a result, it would be wise to state that digital transformation and the cloud have a strategic link.

“Cloud computing is based on the time-sharing strategy we leveraged long ago before we could afford our personal computers. The idea is about sharing the computing capacity to cut the cost for those who leverage it.”

Frequently Asked Questions

How Does Cloud Computing Transform Business?

Cloud computing allows organizations to scale their platform as required to support dynamic business priorities. It helps in resource sharing while managing costs and makes businesses agile to ensure optimum customer service promptly.

What is The Role of Cloud Computing in Business?

Cloud computing is one of the crucial requirements that help develop the customer experience and fuel customer loyalty. The key role of cloud computing in business is that it drives growth and accelerates business transformation by streamlining business processes.

Is Cloud a Route to Digital Transformation?

Cloud computing has a key role in digital transformation. It becomes the catalyst that helps in transformation by optimizing the business performance to offer a high-level customer experience by distinguishing its strategy and solutions over the other competitors of the market.