Digital transformation was always supposed to be disruptive. But what happens when disruption is disrupted? That is what happened to many organizations roughly a year ago when COVID-19 hit. The shock of COVID-19 caused businesses to halt transformation, regroup, and reorder their IT priorities. Suddenly, cost savings bubbled to the top of the list.
According to the CIO COVID-19 Impact Study published in April 2020, expense management quickly appeared as a key task on IT leaders’ radar as they shifted their focus from strategic and innovative to responsive and preventative. Specifically, the report found that cost control and expense management leapt to the top of 45% of IT leaders’ activities, outpacing improving IT operations and systems performance (38%) and redesigning business processes (37%).
While most of us expect an eventual return to normalcy, that new normal will be different than it would have been without the disruption of the pandemic. One lasting change is likely to be the fiscal discipline thrust upon IT leaders in the wake of COVID-19. But there’s an upside to belt-tightening: By forcing IT leaders to cut costs and closely scrutinize expenditures, the pandemic has steered organizations toward new ways to balance cost management with digital transformation. Doubling down on the cloud is one such measure.
The cost-saving reasons for accelerating cloud usage are widely known:
- Shifting Cap-Ex infrastructure costs to monthly Op-Ex payments eases budget pressure.
- Reducing the need to hire and retain skilled staff saves money.
- Running the most up-to-date software without worrying about licenses and upgrades streamlines management tasks and reduces operational expense.
Beyond cost savings, there are many other benefits that the cloud brings to organizations, both during the current, turbulent times and in a (hopefully) calmer future. One key benefit is tightening data security and cyber resilience—it’s no secret that the data centers and networks managed by cloud service providers are better secured against cyber threats. An additional benefit is the enablement of the remote, collaborative workforce—something that has accelerated during the COVID-19 pandemic and is expected to become a fixture of the future of work. Relying on cloud-based services enables employees to be productive regardless of their location.
The cloud promotes transformation by:
- Enabling participation in the API economy — the use of APIs to permit business applications to seamlessly send and receive data across the cloud.
- Enabling the implementation of microservices, replacing monolithic applications with numerous cloud-based services working together.
- Centralizing information and making it readily accessible for analysis, process integration and information sharing.
Having gravitated to the cloud for budget reasons amid the shock of the pandemic, IT leaders are now looking to expand their reliance on the cloud as a foundation for digital transformation. And it looks like they will have some financial wherewithal to do so. According to CIO’s 2021 State of the CIO, IT leaders now expect healthy tech budgets for 2021 – 49% of IT leaders anticipate their tech budgets to increase.
Disruption happens. COVID-19 caused organizations to retreat from the bleeding edge of bold but sometimes risky transformation initiatives. By redoubling their commitment to cloud, many businesses will find themselves better positioned for more enduring innovation.