How European companies can use the cloud to increase their competitiveness
Today, most European business leaders use cloud within their companies. In 2020, as the business world was struggling from a rapidly-evolving pandemic, European businesses took a global lead on compressed migration. This allowed them to move workloads to the cloud in months instead of years. It is remarkable that nine out of ten European companies report cost savings using the cloud, a far greater number than the seven percent in North America.
However, they are now losing their lead and risk falling behind.
Many of them limit their cloud activities by seeing it as a shared, public data center that hosts workloads to lower costs. In our research, we found that “cost savings” was the number one priority for senior European executives in 2020. This contrasts with “increased customer values” for counterparts in North America or “faster time-to-market” in China. It is not surprising that European companies aren’t using the cloud or cloud-enabled technology to achieve more ambitious business goals such as sustainability and exceptional customer experience.
Our research has shown that many companies have difficulty balancing cloud innovation with the complex regulatory landscapes of Europe. These factors can lead to data silos and hinder interoperability. Six out of ten European companies create data silos to protect sensitive data. Although they may not be avoided, these silos can hinder the development of data supply chains that are robust enough to support innovation and maximize value.
The Cloud Continuum offers many opportunities
One in ten European companies, or a subset thereof, have chief executives who have figured out how they can address the unique challenges of the cloud.
They see the cloud as a continuum that provides a range of capabilities that can help them be globally competitive and locally responsible. The Cloud Continuum (Figure 1). Today it spans many types of ownership and locations (from public to hybrid or co-location to edge) and is dynamically supported with next generation connectivity such as 5G.
They don’t view the cloud as a static destination. They view it as an operating system that defines their organizational working methods and behavior. They advocate “cloud first” apps, which are specifically designed for the cloud. Their board members support ambitious cloud projects. These companies are called Continuum Competitors.
IKEA is an example. Cloud was the key to the Swedish furniture company’s response. The crisis-driven online shopping frenzy prompted business leaders to immediately transform the company’s technology infrastructure. They converted closed stores into fulfilment centers and enabled contactless ‘Click and Collect’ services. This allowed them to increase their ability to manage large amounts of web traffic and to handle more orders online. IKEA was able to accomplish in weeks what would have taken months or years. The group is now putting it at the center of a permanent reinvention.
Four steps to Europe’s cloud success
The chief executives who were most open to using cloud-based technologies for decision-making and the cloud in general achieved and exceeded their business goals. The Continuum Competitors were three-times more likely than other companies to “humanize” their work and make it less repetitive. Their carbon emissions reduction was nearly twice that of companies using less advanced cloud technology. They also achieved three times greater cost savings than companies that only migrate.
Although the C-suite is not cloud experts, their support is vital to encourage ambitious cloud investments. Project teams need to quantify the tangible and long-term benefits of cloud projects in order to show that they outweigh the costs. The role of the cloud in a company’s overall transformation must be highlighted. The cases must demonstrate the innovative capabilities of cloud to create new products or services that will generate future revenue streams.
Danish brewer Carlsberg’s project Sail ’22 — a strategy for cutting operational costs and investing those savings in future growth — is an example of how to move forward on the Cloud Continuum. It was a strategy to reduce costs and invest those savings to support future growth. In 2016, Carlsberg launched Sail ’22, which saw it move 100 percent of its global processes to the cloud. They chose Microsoft Azure as their partner.
“With cloud, we have ten times the network capacity than it was,” states Sarah Haywood, Carlsberg CIO. This means that users experience less latency. “We have never seen more use of bots and self-service, which can respond to natural language queries, than we did before.
This allows our employees to put their brainpower into things that will make a difference to our customers and our consumers.
To make cloud solutions work in Europe, given Europe’s regulatory environment and business environment, they must have three legs: control, trust, and balance. To achieve balance, companies must mix and match cloud services to ensure that they have control over where data is stored and how it is processed. They also need to hold cloud providers accountable for maintaining the same level of trust as their customers.
Siemens business leaders realized that their customers, mostly engineers and manufacturing companies, could benefit from vast amounts of data gleaned from their plants, equipment, and production lines to improve efficiency.
Siemens AG. The fluid architecture of Cloud Continuum was a key factor in the rapid transition by Siemens AG to Industry 4.0. It also enabled the company’s transformation into a highly-technical industrial manufacturer. Siemens’ business leaders realized that their customers, mostly manufacturing and engineering companies, could benefit from vast amounts of data from factories, equipment and production processes in order to be more efficient. To do so, those companies would need to embrace digital transformation–driven by automation, edge, and cloud computing.
Siemens’ multicloud strategy today allows it to offer a variety of cloud-based solutions for customers in other industries such as healthcare and infrastructure to meet their individual preferences.
Step 3. Establish cloud practices for supporting and augmenting your technologies
Migrating to the cloud is not an option in a world where nearly a third of work is done online. It is important to combine technology adoption with disciplined practices that help companies bring their non-technology areas up-to-speed.
To succeed in the Cloud Continuum, a company must also adopt six top practices.
Feed it forward Agility – Speed time to future market, again and again
Continuous Goals Alignment: Alignment does not occur in a single time period.
Cloud Apps:Cloud is the default for developers
Talent Transformation: Continuous transformation
IT Experimentation – Unremittingly Upgrade Experiences
Scale Awareness:Predict power requirements for the new generation of Cloud AI Services
Swiss healthcare Roche researchers used NLP systems in an innovative way to mine social media conversations to better understand Parkinson’s symptoms. This was a novel approach to data analysis and data sourcing, both of which are native in the cloud. It allowed for a rethinking of a traditional research process.
Werner Boeing, former CIO at Roche Diagnostics, stated that IT is not about technology. However, it’s a behavioral science that analyzes the behavior of employees, leaders, and customers to facilitate the adoption of a new vision.
Continuum Competitors combine human-centered design and cloud technology to rethink experience and disseminate across the entire organization, including Products and Services as well as Employee Experience and Delivery Models. The Cloud Continuum is a unique tool that allows them to be experience obsessed in reimagining their business.
This is the case at Phillips, a Dutch multinational and its healthcare tech company. Philips started its journey to cloud computing in 2014 by launching a cloud-based, open-source healthcare platform. In 2019, the company partnered with Microsoft to create the Continuum, an operating room of tomorrow. This will combine Philips’ Azurion photo-guided therapy platform with Microsoft’s HoloLens2 holographic computing platform to create augmented reality applications that can be used for minimally invasive treatments.
Many European business leaders are still not familiar with the Cloud Continuum. To achieve significant, sustainable payoffs for their businesses in the future, they must start now and shift how they see the cloud