{"id":5577,"date":"2023-10-30T23:56:16","date_gmt":"2023-10-30T23:56:16","guid":{"rendered":"https:\/\/www.horsesforsources.com\/?p=5577"},"modified":"2023-10-31T13:49:03","modified_gmt":"2023-10-31T13:49:03","slug":"industry-cloud-value-creation_103023","status":"publish","type":"post","link":"https:\/\/www.horsesforsources.com\/industry-cloud-value-creation_103023\/","title":{"rendered":"Industry Cloud must be about value creation, not re-badging IP… Unveiling the HFS Industry Cloud Continuum"},"content":{"rendered":"

The biggest problem plaguing the world of business technology – ever since businesses started using technology – is the simple fact that most enterprises blow vast fortunes on expensive tech solutions and expect them to perform wonders for their businesses without<\/em> redesigning and structuring their processes and data to achieve maximum value from the technology.\u00a0 It was the case back in the 1960s with MRP, then decades later with ERP, and these issues are even more exacerbated with the Cloud.<\/p>\n

Most customers of Cloud just want “easy”… that is the problem.<\/h3>\n

At least ERP gave companies a standard set of processes to force themselves to follow, but moving your existing mess into the Cloud is an expensive disaster if you avoid changing how you operate, modernizing your hodgepodge of systems and applications, and redesigning your workflows so data can flow freely around your global organization, up and down your supply chain, and across your business ecosystem of customers and partners.<\/p>\n

The Cloud is a whole new environment<\/em> within which to operate your business, and you can’t shoehorn your legacy way of operating into this environment without addressing these (often painful) changes.\u00a0 “Clients just want easy; that is the real problem,” stated the leader of a major transformation practice.\u00a0 This is why our recent research of over 500 Cloud decision-makers from major enterprises (Global 2000) reveals that Two-thirds of organizations don\u2019t fully achieve their strategic objectives for transformation<\/span><\/span><\/a> enabled by the cloud (see Exhibit 1 below).\u00a0 Sadly many of those transformations clearly fail miserably if your Cloud transformation will fail if it is not grounded in business <\/span>objectives<\/span>. Yet, to keep the cloud bandwagon and spending going, <\/span>hyperscalers<\/span> and service providers are now peddling \u201cIndustry Cloud.\u201d\u00a0 So let’s probe deeper into what “Industry Cloud” really means…<\/span><\/span><\/p>\n

Many service providers are merely <\/span>repackaging and rebadging existing IP<\/span> and calling it \u201cIndustry Cloud<\/span>.\u201d<\/span><\/span><\/strong><\/h3>\n

To accelerate and achieve transformation, creating industry-oriented solution wrappers is not enough. These capabilities can help for some more tactical <\/span>initiatives,<\/span> but they <\/span>won\u2019t<\/span> move the needle for transformation. Just as with the broader conversations around Cloud-native transformation, we need to reset the discussions on Industry Cloud. Otherwise, we fear Industry Cloud will be just another marketing buzzword with no real definition or value. <\/span><\/span>\u00a0<\/span><\/p>\n

Exhibit <\/span>1<\/span>: <\/span>Only a third of enterprises are realizing their Cloud ambitions<\/span><\/span>\u00a0<\/span><\/strong><\/p>\n

Source: HFS Research, 2023 \/ <\/em>Sample: 508 cloud decision makers across the Global 2000<\/em><\/h6>\n

To drive more meaningful discussions, HFS is outlining its fundamental beliefs of what constitutes Industry Cloud, the state of the market, and how we can advance the discourse on the topic. We are building on our horizontal frameworks for Cloud-native transformation (CNT) and on the insights of our industry research leads. <\/span>To understand the <\/span>context,<\/span> you might want to read our deeper dive into <\/span><\/span>Industry Cloud in healthcare<\/span><\/span><\/a> first.<\/span> Our goal is to <\/span>facilitate<\/span> more meaningful discussions, thus, do <\/span>get in touch with<\/span> us.<\/span><\/span>\u00a0<\/span><\/p>\n

Industry Cloud should be about value creation through new business models and value chain disruption.<\/span><\/span>\u00a0<\/span><\/h3>\n

To cut through the market noise<\/span> and hype<\/span>, the discussions<\/span> on Cloud<\/span> need to pivot from technology and capabilities to creating and capturing value and enabling new engagement models. <\/span>The<\/span> value from C<\/span>loud transformation<\/span> can range from optimization and efficiency gains<\/span> to <\/span>new business models<\/span> to networking effects of the platform economy, ecosystem growth, and data monetization. This is why it is so important to have clarity as to what Industry Cloud entails.<\/span><\/span><\/p>\n

Industry Cloud <\/span>should be<\/span> predominantly<\/span> about<\/span> value creation through<\/span> new<\/span> business models and value chain <\/span>disrupt<\/span>ion<\/span><\/span><\/strong>.<\/span> <\/strong>I<\/span>t <\/span>shouldn\u2019t<\/span> be<\/span> just<\/span> about<\/span> leveraging<\/span> industry solutions on the Cloud, as these result in efficiency gains at best<\/span>. Yet, these gains<\/span> are not sustainable<\/span> in the long ru<\/span>n<\/span>. Therefore, organizations<\/span> need to be clear as to whether they want to spend money on<\/span> industry solutions with<\/span> a<\/span> short-term<\/span> focus <\/span>on<\/span> efficiency gain<\/span>s<\/span> or rather invest <\/span>long-term<\/span> into transformational<\/span> outcomes with Industry Cloud.<\/span> <\/span>C<\/span>onfining the discussion<\/span>s<\/span> to industry solutions<\/span> is akin to throwing good money at moderate outcomes. Investing in <\/span>largely horizontal<\/span> Cloud capabilities is not enough to drive organizational change.<\/span><\/span> Organizations<\/span> might <\/span>achieve decentralized working and efficiency gains, but they <\/span>will continue to<\/span> struggl<\/span>e<\/span> to <\/span>accelerate<\/span> their transformation journeys. Therefore, how can Industry Cloud help organizations to finally capture business value from their <\/span>often steep<\/span> investments?<\/span><\/span>\u00a0<\/span><\/span><\/p>\n

The Three Horizons of Cloud Transformation: The HFS Industry Cloud Continuum<\/span><\/span>\u00a0<\/span><\/span><\/span><\/h3>\n

The two key reasons why Cloud-enabled transformations fail are <\/span>misalignment of technology and business objectives and a <\/span>lack of understanding of the cloud target operating model. Thus, it is not about a lack of leadership or investing in more capabilities. To achieve business objectives such as moving to a data-centric strategy, and achieving higher velocity, in essence, an acceleration of business processes, decision-making, and technology deployment, organizations have to facilitate cultural and organizational change. Ultimately, CNT is about how we create and deliver, not where. Within this context Industry Clouds can facilitate new engagement models that enable capturing business value – provided they are not just old wine in new bottles.<\/span>\u00a0<\/span><\/p>\n

Therefore, in our view, Industry Cloud must be aimed at overcoming those challenges. Consequently, it is not enough to have just pre-configured IP and some data assets that bring more of an industry context. The ultimate goal of Industry Cloud must be enabling value creation by offering new engagement models as well as business models. Exhibit 2 outlines how Industry Cloud fits into this evolution in the Cloud market.<\/span>\u00a0<\/span><\/p>\n

Exhibit 2: The HFS Industry Cloud Continuum is about progressing toward the disintermediation of industry value chains<\/span><\/span><\/strong><\/p>\n

Source: HFS Research, 2023<\/em><\/h6>\n

The HFS Industry Cloud Continuum <\/span>emphasizes<\/span> that the boundar<\/span>ies between the various horizons are blurry<\/span>. Equally<\/span>,<\/span> there is <\/span>no <\/span>pre-defined<\/span> sequence<\/span> as to<\/span> where organizations start<\/span>. <\/span>I<\/span>t is not about<\/span> envisioning transformationa<\/span>l<\/span> outcomes<\/span> and <\/span>then design<\/span>ing<\/span> the Cloud target operating model to drive the transformation journey <\/span>along those defined strategic <\/span>objectives<\/span>. <\/span>Rather the<\/span> reality<\/span> is that organizations <\/span>have many vantage points when it comes to t<\/span>ransformation. <\/span>Yet, we must shy away from simplistic suggestions of organizational change. No two Cloud native transformations are the same; each is unique. <\/span>Hence<\/span> regardless of where organizations are on their Cloud journey, they need clarity on their data-driven strategy and the desired outcomes.<\/span> Fundamentally, Industry Cloud needs to be aligned to those <\/span>outcomes.<\/span><\/span><\/p>\n

Let\u2019s<\/span> walk through the respective Horizons and what <\/span>they<\/span> entail.<\/span><\/span><\/span><\/p>\n

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