McKinsey claims companies 'prone to self-delusion' when using cloud
By MYBRANDBOOK
According to Gartner, worldwide expenditures on public cloud services will balloon to $362.2 billion in 2022 from $257.5 billion last year - a 41% increase, according to estimates by Gartner. Money channeled to the cloud will represent 14.2% of total IT spending by 2024 compared with 9.1% in 2020.
According to some estimates, yet the typical company wastes as much as 35% of its cloud budget. Many companies have identified lax budgeting as their No. 1 problem when using the cloud. Sixty-one percent of firms said cost savings was their top cloud initiative, ahead of moving workloads off of in-house computers, Flexera said.
Companies also seek payoffs from the cloud in the wrong place. They expect to gain the biggest benefits from improved IT reliability, speed, data security, governance and cost control rather than in generating business value, McKinsey found in its survey across six countries and a variety of sectors, including automotive, machinery, semiconductor, aerospace and defense manufacturers.
McKinsey said, "Our research indicates that the cloud's value in IT amounts to only about 5% of the cloud's potential value, "adding "around 95% of the cloud's $600 billion value potential lies in business-related functions" such as manufacturing, procurement and supply chain.
According to McKinsey, cloud adoption can lead to greater operational efficiency, reduced time to market and the launch of cloud-enabled products and services. "Capturing these business benefits requires transformational changes in business processes, organization, product development or sourcing."
Companies that widely use public cloud service providers gain more than those that rely more on in-house computing, McKinsey said.
"With a name like 'cloud,' it's no wonder organizations lose sight of what it means and how it can deliver tremendous amounts of business value," McKinsey said.
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