Dubai, UAE – Around 85% of the companies have already embarked on their cloud journey, 32% of the companies in the region utilize the cloud in at least one area of operations, 35% have adopted cloud computing across multiple domains of their business and 18% have already scaled cloud throughout their business, says the latest report by Strategy& and PwC Middle East.
Going forward, 68% of Middle East companies have the ambition to migrate almost all their operations to the cloud within the next two years, and to fund these initiatives, 76% of companies intend to increase their cloud budget over the coming year, the report adds.
The report also found that 90% of organizations have moved beyond a simple “lift and shift” approach to cloud adoption, employing modernization, cloud-native application development and business models built on the cloud to reap more benefits from their cloud initiatives.
The shift is being fueled by several factors, including government initiatives, the increasing presence of global cloud providers, and a growing demand for agility and scalability.
According to the report, cloud adoption in the Middle East has passed the initial adoption phase and is poised for accelerated growth, with a significant proportion of companies already capturing tangible value from the cloud.
The survey questioned 420 technology and business leaders from various sectors in the region’s two largest cloud computing markets, Saudi Arabia, and the United Arab Emirates.
According to the analysis, if the Middle East were to catch up with Europe in terms of market maturity, cloud vendors could potentially secure around US$5.6 billion in new revenue. If the region were to match North America in maturity, the new revenue potential could potentially be closer to US$14 billion.
The value of cloud computing
The report also finds that approximately 40% of companies already realized measurable value from their cloud initiatives, including improved decision making, increase in profitability, or new revenue streams amongst others.
The analysis indicated that despite their strong performance, cloud-powered companies in the Middle East have room for improvement when it comes to capturing value. By comparison, cloud-powered companies in the US are more adept at extracting value in all areas.
As for the challenges, the report stated that many of the difficulties that Middle Eastern companies typically face in realizing measurable value are external; and can be addressed through vendor support. For instance, 47% of cloud-powered companies said they experienced problems related to cloud providers, such as concerns about service quality.
In contrast, non-cloud-powered companies were more inclined to attribute their challenges to internal factors: budget constraints, limitations in technology capabilities, and leadership issues. Notably, 88% of cloud-powered companies reported an increase in revenue over the past six to nine months.
“Our findings illustrate the tangible benefits of cloud technology for businesses. Approximately 40% of the companies surveyed reported significant improvements across various dimensions. Interestingly, there is a direct link between cloud adoption and enhanced top-line performance,” said Achilles Drettas, Partner with Strategy& Middle East, part of the PwC network. “As organizations look to further leverage this potential, our report offers various recommendations drawing from the practical experiences of companies that have successfully harnessed the advantages of cloud computing.”
The report finds that organizations can maximize the value of the cloud by taking a programmatic approach rooted in a meticulously planned cloud strategy. Moreover, it must be grounded in business priorities, strong cloud controls and governance, and follow a proactive program framework which engages the entire C-suite, as well as key stakeholders from the outset.
Specifically, the analysis revealed four key actions that successful cloud-powered businesses usually take to fully exploit value from the cloud.
Holistic approach
Cloud-powered companies adopt a holistic approach, driven by a well-defined vision and supported by a robust architectural roadmap and governance framework, aligned with specific business goals. They are more likely to deploy the cloud for a combination of uses, enabling them to prioritize infrastructure strategies and migration methods on an application-by-application basis, ensuring effective value creation.
Stronger alliances across the C-suite
Cloud-powered companies excel at building strong alliances within the C-suite, encompassing both business and technology roles. Chief information officers and technology teams in these companies recognize that transformation is a collective effort—and collaborate closely at the earliest stages of planning, budgeting, and requirement gathering.
Cloud controls and governance
Cloud-powered companies are more advanced than other companies when it comes to adopting leading practices in cloud governance, risk, and controls. They are more likely to have resources dedicated to cloud governance, formal and distinct cloud controls, and robust evaluations of shared responsibility with Cloud professional and managed services providers.
Formal data, analytics, and AI strategy
Cloud-powered companies are much more likely to have an enterprise-wide data strategy than other companies (73% versus 42%). That means they typically develop a streamlined architecture to modernize data into an integrated view, create governance structures, and develop the necessary skills and operational changes needed to become data-driven organizations.
The report also discusses five key considerations for cloud professional and managed services providers that want to remain competitive and meet changing customer demands. The recommendations focused on embracing cloud native technologies, differentiating through the industry cloud, promoting security as a core offering, partnering with public cloud providers, and focusing on unique strengths.