CEOs and cloud computing

Only 4% of CEOs fully understand their company’s digital strategy, even in IT corporations. Today businesses will have to understand the dynamics of cloud computing.

These facts were recently shared by Nigel Fenwick, Vice-President at Forrester, at the Huawei Connect conference in Shanghai. According to Fenwick, the percentage of CEOs who understand their company’s digital strategy -just 4%- is extremely low. This is partly due to the rapid developments in technology, but also to the way people understand its role. More than 50% of all businesses expect cloud services to amount to at least 40% of their revenue. But this is an optimistic expectation, since they do not know exactly how to achieve this goal.

Only 1 out of 4 businesses has a specific strategy outlining the path to transforming into a digital business, while 48% simply extend their existing business model, integrating elements such as a website, an app or social media. Another ¼ of businesses are still in the planning stage, while 2% will choose to completely ignore digital developments.

Fenwick is taking for granted that cloud-driven technologies and services are so radical that any attempt to adjust the existing ways of working to the cloud, is simply ineffective. Forrester’s analysts expect that the cloud will become as common as gasoline for cars, shifting from innovation to common ground. On the other hand, most businesses and CEOs have not yet identified this technologic tsunami that is headed their way.

According to Forrester’s Vice-President, the third wave of digital transformation is promising to be even more holistic and cohesive. Technology will no longer be just a tool to improve effectiveness, but the foundation for successful strategies and revenue increase. CEOs should be aware that the estimated revenue will largely depend on their ability to utilize technology in order to generate value for their customers and increase sales. A few examples would be the use of artificial intelligence, machine learning and predictive analytics.

Furthermore, CEOs should realize that IT will have to move out of the background and into the spotlight, as it will be the department actually generating revenue. The problem lies in the fact that other departments view IT more as a “vendor” rather than a partner, and this is a tactic that needs to be changed.

Ken Hu, one of the three CEOs at Huawei, stated that the cloud is disrupting and restructuring everything. Every business will be using cloud technologies by 2025, which means that 85% of the workload will actually be on the cloud. We are currently shifting from the revolution of information to the revolution of intelligence. But, cloudification is a giant step that requires a series of transformations both in business operations and in the beliefs and mindsets of highly-ranked executives.