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Are enterprises struggling to move to the cloud?
We spend a lot of time talking about the enterprise-level technologies that are now available to smaller and mid-sized businesses, from Office 365’s all-in-one collaboration tool Teams to Dynamics 365’s AI capabilities.
That’s why I found it so surprising that a recent study suggests large enterprises are finding the move to the cloud the most difficult.
A 451 Research paper, with senior figures at businesses with between 500-10,000 employees, found that the move to the cloud – a key tenant of digital transformation – is proving arduous for enterprises of this size for a number of reasons, including a lack of digital skills and the proliferation of outdated on-premise systems.
In contrast, young start-up companies are more likely to adopt a cloud-first approach, digitally transforming as they establish themselves. Indeed, a key stat thrown out at Microsoft Inspire last week was that 52% of the Fortune 500 companies in 2000 don’t exist anymore. Poof. Gone. Vanished.
That’s because young businesses are taking over with not only their innovative offerings – Uber, for example, has changed the taxi industry forever – but their forward-thinking ways of working. Think about it – why would a company like Uber be operating on an ancient ERP system that won’t integrate with anything else?
74% of respondents to the survey said that more than half of their applications are on-premise, with many of these systems business-critical. With a further 67% stating they want to move most of their on-premise apps into the cloud, it’s clear that some big businesses are facing an uphill climb.
The study states that, for many of these businesses, the struggle to migrate to the cloud is “self-induced” as these businesses are willingly taking the most difficult path to the cloud. Many are rewriting entire applications for the cloud rather than “refactoring or lifting or extending” the systems, which is significantly more efficient.
Not only did the survey find that these enterprises are taking the most difficult route to full cloud migration, they’re also experiencing a significant skills gap. 55% said they had a critical need to recruit and retain talent that can migrate existing on-premise applications to the cloud. This skills gap exists in businesses beyond the enterprise, with 75% of UK organisations reporting a digital skills gap. With a workforce that lacks digital skills comes resistance; change is uncomfortable. People get comfortable with the systems they’ve used for years, making implementing new systems or even migrating these existing ones more difficult.
This survey is an eye-opener, but it also flies in the face of what was discussed at Microsoft Inspire last week. The biggest of enterprises, for example Carlsberg, are moving everything to the cloud and leveraging Azure. Businesses of this size have the funds available to shift to the cloud, and the clear message was that more large enterprises than ever before are making the shift.
Businesses at the smaller end of the midmarket corporate space are likely to be struggling in no-mans land, perhaps without the budget to prioritise migration to the cloud. However, by leveraging cloud technologies like Office 365, which comes with truly enterprise-level functionalities like workflow automation, digital collaboration and app-building, these businesses can remain competitive.
The good news in all of this is that these businesses leaders are actively addressing the challenges faced in moving to the cloud. They’re tackling their skills gap by prioritising new hires that are experienced in migrating on-premise applications to the cloud. The aim for many is still to host most of their applications in the cloud, as they realise the value in the cloud. Two-thirds expect their move to the cloud to result in better customer responsiveness and a competitive edge.
For those businesses that are grappling with legacy systems and struggling to move to the cloud, perhaps it’s time they started following the guidance of their smaller, younger counterparts. Start-ups tend to focus on scalable solutions that will grow as the business does; legacy systems tend not to have this flexibility. My colleague Karam Haddad wrote about this topic last year, so you can take a look at his blog for a comprehensive guide on how enterprises can learn a thing or two from start-ups.
The common theme amongst these solutions? They’re all affordable and reliant on the cloud.