Cloud Radar 2021: How Cloud Can Boost Profits with Chad Watt

Jeff Kavanaugh: Welcome to the Knowledge Institute podcast, where we talk with experts on business trends, deconstruct main ideas, and share their insights. I'm Jeff Kavanaugh, Head of the Infosys Knowledge Institute. And today we're here with Chad Watt, the writer and researcher behind the Infosys Cloud Radar report. Chad, thank you so much for joining us. Although, we've worked together for some time, it's the first time we've actually seen each other in over a year and the first time working in our new podcast studio.

Chad Watt: Thanks, Jeff. And let me sincerely say that it's great to be here and it's great to see you.

Jeff Kavanaugh: Before joining the Knowledge Institute a couple of years ago, you had a long and distinguished career in business journalism, and I think it's relevant for this discussion. Could you give us a few bits about your background?

Chad Watt: Sure. I got started as a newspaper journalist 20-plus years ago here in Texas. And then, I had an opportunity to study new media at Columbia University's Graduate School of Journalism in New York. This was in the late 1990s and this was at the leading edge of the dot-com boom. It was there that I really developed more of an interest in business and technology and the intersection of those two things. Following the VC private equity roadshow IPO ecosystem, the cycle of building technology ideas into companies. And over the years, I've worked in DC, North Carolina, Florida, and back here in Texas. I've always kept my eye and kept my interest on that intersection of business and technology.

Jeff Kavanaugh: You know there are some who would say that very young journalists, digital natives, make the best for thought leadership or some of this writing, but I would actually disagree because I think your background, especially getting into it, you successively seen speed go faster and faster with these cycles. And as a journalist, you had to turn things around pretty quickly.

Jeff Kavanaugh: So, I think this discussion today about cloud and how it's speeding up business, you actually have a lot to bring to the table, seeing these different cycles over the past 20 years or so. Chad, you've spent the last eight months working on the Infosys Cloud Radar research report. Today, we're going to focus on that and how cloud can be a competitive edge and actually drive profits and growths. Companies have been adopting cloud for years. Why did Infosys decide now to do this research?

Chad Watt: That's really a great question because it was kind of an organic event and I had to go back and actually research this as we were wrapping up the project. Like, now let's go back to the beginning. What were we originally setting out to discover here? And as I've found out, talking with Balaji Sampath, one of the VPs of marketing here, the original curiosity about what's going on in cloud developed in the summer of 2020, when you had Infosys as a company, all of its employees had shifted to a work-from-home orientation. In India, in the US, and around the globe. And were using cloud to make that happen, to enable remote access and to connect people who normally would sit beside each other and collaborate.

Chad Watt: And at the same time, our cloud infrastructure services and people who were involved in cloud work, were seeing unprecedented demand from clients and potential clients. Anyone who was on the fence about, "Do I pursue a cloud project?" They were saying, "Yes, let's go ahead and do that." So, you've got a situation where you've got tens of thousands of workers working from home, using cloud in new ways. And you've got this unprecedented, unflinching demand for additional cloud work, whether it's migration, adoption, orchestration. And that led to the observation, cloud is basically surrounding us. It's all around us. And that observation led to the question, what's different about cloud now?

Jeff Kavanaugh: After this pandemic pivot and so much work from home and usage of the cloud, you conducted this survey with thousands of respondents around the world. What's the most interesting or perhaps unexpected results and responses you received from the survey?

Chad Watt: The more I think about it, it's how enterprises want to use the cloud and how that aligned with our analysis in the ways that companies use cloud to boost profits. Cloud is basically, we've discovered, was a tool for saving time and money. And now it's so pervasive and so developed that it can be used to improve speed, add new capabilities and in the end, enable and catalyze growth. So, our analysis found correlations between those strong cloud performance areas. And what we discovered was those companies that were at that exceptional performance level, they weren't using cloud just to save time and money or to connect people who were remote. They were using it to impact and as part of their business strategy.

Jeff Kavanaugh: Why is so much cloud adoption happening right now, and is it really all related to the pandemic or is there something more?

Chad Watt: I can say that for about two out of three companies, it is related to the pandemic. Looking at our survey results, you can see that there were companies that just had to scramble to enable remote access and reset their whole workforce. Now, there was this one third, who actually represent our top performing cohort, actually the top two performing cohorts combined, really had already begun advancing to the cloud two years ago and had managed to get those table stakes levels of cloud capabilities in place. Your ability to work from anywhere, “zero distancing” is what Google would call it, your ability to connect with someone in a organic and natural fashion. They had that in place, so when the pandemic happened, they just easily were able to pivot, and those folks have kept moving ahead.

Jeff Kavanaugh: So, it pulled up the rear very quickly and it gave the people out front, perhaps a bit of a turbo boost to go to the next level. Of all the things that you found, what do you think is the most important takeaway from this report?

Chad Watt: I'd say it's using cloud as a tool for speed and capability is kind of a new way of thinking about business and cloud and IT. For the first decade or so of cloud, companies and their technology partners were able to use cloud as a way to save time and money. That's still very valid, especially for companies with an aging IT infrastructure, but it's only part of the growth story now. As I've said, cloud is so pervasive and computing has grown so powerful that, that combination can empower companies to recognize new opportunities and act quickly to capture them.

Chad Watt: Now, another level down in our research, we found that, that really doesn't kick in until companies have moved about 60% of their IT infrastructure over to cloud. So having some cloud, you're not going to see the results. So, it's one of these lessons that we're seeing is that you have to stay with it, in order to get to the levels where you start to see the benefits that accelerate your reaction time and allow you to put things together in new ways. We're talking about interoperability and just creating new capabilities.

Jeff Kavanaugh: Speaking of capabilities, what are those capabilities that allow companies exceptional performance to achieve these great things?

Chad Watt: Well, our analysis came across six different ways that companies can use cloud to basically boost their profit growths. There are three that are in a grouping, we call the speed competency. And three in a grouping, we call the capability competency. Speed include, speeding up how fast a company can develop and launch new solutions, how fast they can add new functions to software in use, and speed up how fast they are able to expand processing capacities.

Chad Watt: On the capability side, using cloud to foster collaboration, not just between people who are familiar with working together, but people who bring different assets to the table, connecting the unconnected. How they use cloud to unlock value from data and AI. The combination of cloud, AI, and data, is one we're going to see a lot more about in the coming years. And finally, using cloud just for awareness of the whole organization, to find new revenue sources.

Jeff Kavanaugh: Yeah. It's amazing. As an engineer, a former engineer, I think about friction and you could say that cloud doesn't just help you store things or maybe save some time, but maybe reduce the friction between going from one thing to another. And so, as business is coming at you, new markets, competitors, the ability to make those changes be more resilient. We've heard that word resilient a lot in the past year or so. Can you comment on how cloud helps companies become more resilient or agile?

Chad Watt: The baseline awareness of the organizations is something that is so hard for companies. Companies face such a big challenge keeping pace with what's going on in the world around them, what their competitors are doing, what they should be doing themselves. When we look at cloud, we looked at different ways that companies, individual companies and individual industries, use cloud. And we looked at use cases. And a lot of those tended to point toward predicting the future, agility, being able to adjust on the fly.

Chad Watt: For healthcare, it's about improving interoperability and moving toward more patient-centered services. The high performers in retail and CPG are completely focused on their customer. The financial services and insurance industries are very focused on scaling up digitization and automation and making all those traditional, repeatable processes, something that's managed automatically. So, they can, in turn, focus on what's coming next and what their customers’ next needs will be.

Jeff Kavanaugh: The analysis also showed the cloud can produce an increased profit growth, which is a little different finding than people are used to with cloud, just trying to save money. Take us through that. How can cloud actually drive profits?

Chad Watt: So, there's six ways that we found that correlated back to increased profit growth, those three speed competencies and three capability competencies. How fast you can speed up your development and launch new solutions, add new software capabilities, add new functions to software that's in use and expand your processing capacity. The ability to foster collaboration, unlock value in data via AI, and discover new revenue sources. Put those all together and that works out to an 11.2% increase in your profit growth, from our sample size of 2,500 companies. And that worked out to basically a $414 billion profit boost in the regions that we surveyed. The US, the UK, France, Germany, Australia, and New Zealand. So, applied more globally, that's an even larger potential boost that's out there.

Jeff Kavanaugh: One of the coolest things I found about the research is that engineering is finally going on the cloud, the product development area, which is about as collaborative and as detailed and proprietary as you can get. Any interesting tidbits from folks you talked with in either engineering or product development?

Chad Watt: There is a very keen interest in to moving CAD and design to the cloud. These are things that have historically resisted breaking out of their current ecosystem, whether it's a work bench or a digital system. Those digital systems were locked down on mainframes, on private clouds. But now with the pandemic, you had companies designing cars over the web together, collaborating on real products remotely. And now that they've seen that they can do that, that's a emerging top use case in the manufacturing industry.

Jeff Kavanaugh: There's a saying about, never waste a good crisis or never let a good crisis go to waste. And I think while there's certainly some baggage with that statement, there's also a silver lining. If you do have to go through the pain or you have to do go through a period or all of the expense, what can you take that's positive from it? And how has cloud maybe taken something positive or driven something positive to experiment, maybe they hadn't done before?

Chad Watt: We asked all our respondents about what motivated them to pursue more cloud. And, everyone's pursuing more cloud. The smart ones were doing it before there was a crisis. Now everybody's pursuing more cloud. It's just a tool that's not negotiable. You have to have this. But the motivation for going to the cloud is evolving from crisis reactive points of view, making sure that everybody can work from home, ensuring that we have some resilience in place. If there's one thing companies have achieved now, they're much more resilient than they were 18 months ago.

Chad Watt: The ones that are making the most interesting projects and making the most interesting new ideas come to light, are the ones who are focused on, how do we use these technology tools to achieve our business goals and our business strategies? To which this is a very critical point. Cloud used to be a place for the IT department to take care of business and make sure that everything was running on time. It was housekeeping. It was maintenance and operations. It was CapEx. It's keeping the lights on, keeping the phones running. Now, how you arrange your cloud has as much to do with your business strategy as it has to do with keeping the lights on.

Jeff Kavanaugh: Let's talk about collaboration. Within a company, maybe within units or departments, people are used to dealing with each other and cloud made it easier, which is great. What about for individuals or units or even companies that hadn't been collaborating, how has cloud made it easier for them to talk to each other?

Chad Watt: This is a work in progress for most companies. The potential is there and some people are doing it, but many are still battling silos. Cloud gives you the opportunity to put information together, put people together, that had not connected previously. That comes from very human collaborations in terms of just information exchange. But that also comes across in the form of linking old customer data with new inputs from suppliers and partners. In retail, there's a lot of rethinking about the omni-channel and how best to serve customers. The customer really doesn't care about the showroom. During the pandemic, they probably didn't go to the showroom, but they still cared about those products. So, what are retailers doing to make sure that they're in touch with those customers? And that connects both the marketing, that connects through sales, that connects through floor representatives.

Jeff Kavanaugh: What do companies, or what do people in general, get wrong when they think about cloud? What is it that people think, pretty emphatically, that they might not be right about?

Chad Watt: The glib answer, cloud is just another place to put your stuff. It's somebody else's computer to hold your stuff. And that is technically accurate, but that is strategically very limiting. You can treat it that way. It's just another drawer to put your information in.

Jeff Kavanaugh: Maybe necessary, but not sufficient. Right?

Chad Watt: Right, right. The second thing I'd say on that point is, cloud is so simple and magic and easy. It's real easy to get it wrong. I've got a project and I really want to do it in Google Cloud platform, but you're a Microsoft guy, and I send you all my Google Cloud stuff. And it's like, you're trying to type with one hand because you don't know that ecosystem.

Jeff Kavanaugh: So, you go from islands within your own company to these cloud providers, but they themselves, in some respects, are larger islands.

Chad Watt: Precisely. And there have to be some orchestration decisions and some strategic decisions made about, okay, what is the best format for this information to reside? And what do we keep of it? What is the valuable information here? Is it the raw data or is it the curated analytical data that we've drawn the conclusions from? What do we hold on to? Where do we hold on to it?

Jeff Kavanaugh: All right. Let's dig into that word, because we haven't talked about it yet, and I want to make sure we did, orchestration. What does it mean, speaking of these large islands, to orchestrate and what's the value in doing that?

Chad Watt: In the cloud context, orchestration functions as a layer that sits between many different cloud servers, cloud uses, cloud applications, cloud platforms. And this is the piece where the magic happens, where you can connect the curated analysis with the person who needs to know it. Bringing together relevant information in a timely fashion to the person who can take action on it. That's a high level description of it. It takes many more forms in terms of making sure all those connections work. And that's where companies really need to spend some time figuring the best way, the best practice for them. And then, coming back to that best practice, is what worked in 2020 and 2021 going to be the best setup for 2022 and 2023, when we're living in a hopefully very different world?

Jeff Kavanaugh: Yeah. That was one of the main points I got from the research report, was harmonizing or orchestrating all these different layers together. What are three things that an executive or a leader can do to go from where they are, to the next level with cloud?

Chad Watt: First and foremost, have a good sense of what you have in the cloud. What are all your systems out there? And coming back to my point, cloud is real easy to spin up and set up. There's a whole phenomenon we can get into for another talk, about shadow IT systems. Where a well-meaning vice president will set up a whole system because it really works for his task at that moment. But then all of a sudden you have something that's totally off the grid, that the CIO, CTO don't know about. So one, get your hands around all your cloud assets, what you have, where.

Chad Watt: Make some decisions about, do we want to use private cloud? Do we want to use public cloud? Which is cheaper, but has less control. Private cloud is something you have only your stuff on, you can keep control of it, but it's going to be more expensive, but it's more customizable. Public cloud is cheap and easy, but you have less control. Do you do some sort of hybrid mix of those two, multiple clouds? Which kinds of clouds work for what situations? Make that as a strategic decision, not just a technical decision. And lastly, I'd say, remember to revisit, you've got to reevaluate these decisions, because guess what? Business changes, business will change and it will change more quickly.

Jeff Kavanaugh: Where can people find the cloud report?

Chad Watt: You can find the Cloud Radar report at cloudradar.infosys.com.

Jeff Kavanaugh: What resources do you recommend to learn more about cloud?

Chad Watt: There's some great journalism out there by MIT Technology Review, technologyreview.com. And of course, Infosys' own TechCompass has a great discussion about the different horizons of cloud.

Jeff Kavanaugh: Right. I think that's one of nine tech threads or areas out there.

Chad Watt: Right.

Jeff Kavanaugh: And everyone, you can find details about these resources and also anything else we've discussed on the show, on our show notes and transcripts at infosys.com/IKI, in our podcast section. Chad, thank you for your time and sharing your inside knowledge of the Cloud Radar Report.

Chad Watt: Thank you, Jeff.

Jeff Kavanaugh: Everyone, you've been listening to the Knowledge Institute podcast. If you enjoyed this conversation, we hope you'll subscribe or follow us. Thanks to our producers, Catherine Burdette, Christine Calhoun, Dode Bigley, and Dylan Cosper. Until next time, keep learning and keep sharing.