2023

Cloud Business Survey — CEE edition

cloud business survey
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Cloud transformation goes beyond just moving operations to the cloud. It is a process of reinventing business by unlocking new value, enabling smarter ways of working and rethinking technology. So cloud strategy should be focused on business needs first, and not oversimplified to solely technical aspects. Technology answers the question “How?” but only business strategy can explain “Why?”.

 

Through this survey we aim to provide a deeper understanding of how cloud adoption is happening in Central and Eastern Europe, as well as where we can find areas to leverage benefits and identify risks to prepare for challenges. We have identified a group of cloud-powered companies, or organisations that are leaders in achieving a measurable value of cloud transformation, and examined what practices make them different. Where relevant, we also compared the results from our region with a late-2022 survey of US companies to outline the potential prospects for cloud transformation by looking at a more mature market. 

CEE Cloud Survey Webcast

Following the launch of the CEE edition of our Cloud Business Survey, on 15 June, we held a CEE Cloud Survey Webcast: Transforming business and creating value to delve into the results and discuss insights important for our region. The event was hosted by PwC CEE Technology Alliances Leader Mariusz Chudy and moderated by Úna Barrett, Director at Financial Crime Unit, PwC Poland.

We were joined by regional business and technology leaders. Many thanks to our panellists:

  • Małgorzata Jaworska, CIO, Stock Spirits Group, 

  • Magdalena Dziewguć, Country Director, Google Cloud Poland.

If you would like to continue the conversation on the topic, please sign up for a virtual coffee with PwC Partner/Director.

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1:00:49

Missed the event? Watch the recording above.

Mariusz Chudy
Partner, Technology Alliances Leader, PwC CEE

Transformation is very high on the agenda of business leaders, as our ever-changing world stimulates constant adjustments and new ways of driving value. Sooner or later, we are all moving to the cloud. To build future-proof business models, it is crucial to not just follow along but to lead transformation, deriving maximum benefits from it. That’s why we conducted this survey: to give companies a perspective on what has been done so far, and what the areas are where they can do better. We are fully aware that advanced economies such as the US are ahead of Central and Eastern Europe, so it was interesting for us to take a closer look at these differences. Because we are adopting cloud technologies later, we may have the opportunity to start with the latest and most effective practices.

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Cloud Business Survey — CEE edition

Cloud-powered companies are driving more value from their transformation

As many as 73% of executives in CEE said their companies have adopted cloud in some or all parts of their business. However, the vast majority have not yet achieved measurable value. Running part of your business in the cloud is not the same as being cloud-powered.

To identify cloud-powered companies, we developed a success index showing which companies are achieving greater benefits from the cloud, and what they are doing to realise those benefits. This analysis clearly identified the top quartile of companies, which were significantly more likely to have already achieved measurable value across a greater range of business benefits. We identified 77 of the 389 companies we surveyed as cloud-powered companies.

How we define cloud-powered companies

Cloud-powered companies are the 77 surveyed companies that fall within the top 25% when sorted using our cloud success index. The index is calculated using answers to the following question: Which of the following best describes how cloud technology is, or is not, delivering measurable value in your organisation? An index score out of 100 was created for each respondent, of which the top score was awarded for those stating “already achieved measurable value”. Respondents who stated “unsure/not applicable” were excluded from the index.

The US findings are based on the same index. Due to a larger base size, the US results are based on their top decile (10%, 95 companies).

pattern 1

Across a range of sectors, cloud-powered companies are more likely to be $2.5bn+ companies that are growing. Looking at revenue growth expectations, 73% of cloud-powered companies in the CEE region are expecting an increase, compared to 61% of other companies.

Question: Please indicate the expected change in your organisation’s revenue over the next 12 months.
picture 1

Cloud-powered companies in CEE have achieved significantly more measurable value across a wide array of business benefits than other companies: from 2.8x more in improved decision-making to 5.7x in enhanced customer experience.

In terms of achieving measurable value, cloud-powered companies have a clear lead over other organisations in CEE. Cloud-powered companies are more likely to achieve measurable value across a multitude of business benefits, with the results of 55% and above, while other organisations’ figures are 24% and lower.

Question: Which of the following best describes how cloud technology is, or is not, delivering measurable value in your organisation?
delivering measurable value

However, even among cloud-powered companies, there is an opportunity to realise greater benefits from cloud technology, particularly when compared to US counterparts whose results range from 86% to 100%.

The appetite of McDonald’s Company for cloud migration and transformation is very high. And at the global level, Premier Restaurants Romania (McDonald’s Romania) is successfully using global applications. Many servers and apps are already on the cloud, bringing benefits, power and speed to the different vectors of the business. For the local servers, we have not started the cloud journey yet, but we plan to do this in the coming years. The reasons are multiple: we are satisfied with the current situation, we have not realised the full benefits of the cloud, the benefits are for the long term, and the costs are higher in the first years.

Liviu Osman, IT Director, Premier Restaurants Romania (McDonald’s Romania)

Cloud-powered companies

Barriers to achieving measurable value

Although cloud-powered companies in CEE are achieving greater value, they still face a variety of barriers

Across all CEE companies, both cloud-powered and other organisations, the top three barriers to achieving measurable value are the same: budget and/or investment constraints (40% for both), limitations of technology capabilities (39% for cloud-powered organisations vs. 32% for others) and talent gaps (36% vs. 32% respectively). Notable differences between cloud-powered companies and others are seen in relation to insufficient strategy or plans to guide cloud efforts, and lack of or inadequate cyber and privacy controls: 22% vs. 32% and 13% vs. 31% respectively.

Furthermore, 12% of cloud-powered companies experienced no barriers when talking about achieving measurable value, while for other organisations this figure is significantly lower at 3%.

Question: Which of the following have been the biggest barriers to achieving measurable value from cloud technologies?
chart 1

Cloud maturity

Cloud-powered companies in the CEE region are almost 3x more likely to be all-in on cloud than other companies in CEE

Cloud-powered companies in CEE are significantly more likely to be all-in on cloud (17%) or adopt the cloud in many parts of their business (43%) compared to other CEE companies (6% and 26% respectively). However, US cloud-powered companies tend to be further ahead on their cloud journey: 52% of them are all-in on cloud.

Question: Which of the following best describes your company’s cloud maturity?
picture 5

Primary reason for leveraging cloud technology

Cloud-powered companies in Central and Eastern Europe are almost 2x more likely to take a multi-faceted cloud approach than other companies in CEE

As for strategies to leverage cloud technology, CEE cloud-powered companies are more likely than other organisations to take a holistic, combination approach: 32% vs. 17%. However, this is lower than the figure for US cloud-powered companies, where 70% are taking a combination approach. Also, compared to the US, a higher proportion of CEE cloud-powered companies are focusing on modernisation (36% in CEE vs. 14% in the US). 

Question: Which of the following best describes the primary reason your company is leveraging cloud technology?
picture 29-30

Magdalena Dziewguć
Country Director, Google Cloud, Poland

A key challenge in cloud adoption in Poland and CEE is related to the fact that the majority of business leaders still believe that the "cloud" is an IT project and nobody likes to manage complex IT projects. The truth is that new business models in digital are all data-driven, and it is impossible to build efficient digital growth strategies without cloud tools to empower them. Nothing is missing in CEE — companies can benefit from a locally-based robust hyperscale infrastructure, solid engineering talent base and entrepreneurial business mindset of the region. As Google Cloud, we are fully committed to supporting local businesses. We are glad to see the market growth but would be happy for greater ownership coming from the top executives.

Cloud is seen by us as a strategic enabler and technical basis of our digital agenda which is supporting rapid business transformation and expansion of Stock. We have started the implementation of cloud-based solutions in many areas of our business, especially in the area of Data Analytics, where fast pace, accuracy and security — which can be offered by cloud technologies — are crucial for making timely business decisions and maintaining a competitive edge.

Małgorzata Jaworska, Chief Information Officer, Stock Spirits Group

Cloud maturity across CEE is relatively low when compared to the US, but there is an opportunity to implement more advanced cloud technologies from the beginning 

Cloud has become a critical component of a digital operating environment, and its adoption is part of transformation processes which aim at business reinvention.

Around three-quarters of CEE executives surveyed have begun their cloud transformation journey. However, cloud maturity across Central and Eastern Europe is low compared to the US. Only 8% of companies in CEE consider their cloud maturity as high, meaning they are all-in on cloud and have scaled it throughout the business (e.g. advanced service design capabilities, deep product expertise, optimised workload differentiation). In the United States, the percentage of companies with high cloud maturity is much higher at 32%.

Turning to organisations with medium maturity, 27% of companies in the CEE region have adopted cloud technology in many parts of their business and have evolved their operating model (vs. 46% in the US). These companies are using multiple cloud service providers or using the cloud to innovate their business.

Combined, these numbers show that 35% of companies in Central and Eastern Europe have adopted cloud in all or most parts of their business, compared with 78% in the US.

So we see that unlike in the US, businesses from CEE countries are only at the beginning of their cloud transformation journey. But they have an opportunity to turn this delay to their advantage, by implementing more mature cloud solutions.

By embracing more advanced cloud technologies from the start, there is an opportunity to leapfrog the typical cloud adoption process, bypassing the hurdles and challenges that can hinder progress. While cloud maturity in CEE is lower than in the US, this presents a unique opportunity to implement cutting-edge cloud solutions without being held back by outdated practices.

Question: Which of the following best describes your company’s cloud maturity?
picture 7

Paco Salcedo
General Manager Enterprise, Central and Eastern Europe, Middle East and Africa, Microsoft

Today, every product and service has a digital footprint, and for companies lagging in their transformation journeys, moving to the cloud and becoming data-led is the fundamental first step. With a strong foundation in the cloud, organisations can drive transformation in a matter of weeks, not years; IT costs and complexity rapidly reduce, and the ability to develop and deploy new innovation more quickly improves the bottom line.

A significant majority of CEE companies who are not all-in on cloud plan to be there or move 50% or more of their operations to cloud in the next two years

The increasing significance of cloud transformation is underlined by the fact that companies who are not all-in on cloud plan to continue their cloud adoption journey in the near future. Of those who do not have all operations on the cloud, around two-fifths (43%) plan to be there in the next two years, and a similar proportion (44%) expect 50% or more of their operations to be on the cloud over the same period.

This means companies should focus on sharpening their strategies to use the value that cloud adoption can add to their business.

Question: Which of the following best describes your company operations on the cloud? 
picture 10

Przemek Szuder
CEE General Manager, Amazon Web Services

Cloud computing is the new normal as companies of every size have realized its benefits: scalability, cost optimization, security and the ability to quickly introduce innovative solutions. At the same time the cloud has democratized access to many technologies that were previously available only to the largest customers — e.g. artificial intelligence and machine learning. Across Central and Eastern Europe, AWS already has tens of thousands of active customers and we believe that the innovation potential behind the cloud for CEE companies is just starting to show up. According to the latest study commissioned by AWS, if we could accelerate the adoption of digital technologies, like cloud and AI, a 2.8 trillion Euro economic value could be unlocked by 2030 in Europe.*

*Public First „Unlocking Europe's Digital Potential” study commissioned by AWS 

The majority have not yet realised measurable value from their cloud technology

By adopting cloud technology, companies are seeking substantial value from their investments. But taking into account lower levels of cloud transformation maturity in the region, the majority of CEE executives surveyed are not yet realising the full potential of benefits from their cloud investments.

Around one-third of companies have leveraged cloud to improve their cyber posture, go to market faster, develop better decision-making and increase productivity. The four leading value areas in the US differ from those in CEE: improved decision-making is a top theme for 52%, and enhancing customer experience, cost savings and increased productivity follow, with results slightly below 50%.

It is interesting to note that even though US companies are more mature in their cloud transformation journey, and more of them have adopted cloud technology across most of their business, the vast majority of them are still not achieving measurable value. So both for CEE companies and for more mature US companies, there are opportunities to realise greater benefits from cloud transformation.

Another reason to focus on exploring the opportunities to deliver more significant value from cloud technology adoption is that only 1% of CEE executives said their companies were achieving measurable value across all areas mentioned on the graph.

Additionally, we see that around half of companies are expecting to achieve measurable value in the next 12 months. These figures are quite high, and it will be interesting to watch how these organisations move from expectations to reality.

We should also look at those who don’t expect to achieve value in the next 12 months. One in five says that in the year ahead, they don’t expect to achieve measurable value in improved talent retention and recruitment, or in improved profitability.

Question: Which of the following best describes how cloud technology is, or is not, delivering measurable value in your organisation?
picture 14

Looking more closely at the results, we noticed that those who are all-in on cloud are more likely to already be achieving measurable value across all areas, particularly in decision-making, cost savings and enhancing customer experience.

Jason Janicke
Senior Vice President, EMEA, Alteryx

In a business landscape where words like 'uncertainty' and 'chaos' appear with alarming regularity, time to insight is now the critical strategic business transformation imperative for companies that want the decision intelligence required to thrive. Given the sheer volume of data decision-makers need to wrangle to see 'around corners' and thrive, investment in the cloud is critical. The cloud is the most effective way to store, access, and analyse large volumes of data. Cloud computing also provides the scale and agility needed to take advantage of a world of unprecedented and automated data analytics potential to quickly convert data into meaningful decision intelligence.

CEE companies

Primary reason for leveraging cloud technology

Half of CEE companies are primarily leveraging cloud for modernisation, with only one-fifth taking a multi-faceted, holistic cloud approach to improve their business

As companies in CEE are still early in their cloud transformation journey, modernisation is the primary reason for leveraging cloud technology for almost half (49%) of CEE companies (in the US, it's one-quarter). 

A combination of migration, modernisation and cloud-native to change the business is common for 20% of companies in the CEE region, while in the US this option is supported by 38% of organisations. Among CEE companies that have a holistic approach to cloud, 52% are of high cloud maturity, meaning they are all-in on cloud. A multi-faceted perspective helps companies apply the method that will be the most relevant and the strongest for their business goals and specific cases.

Question: Which of the following best describes the primary reason your company is leveraging cloud technology?
leveraging cloud for modernisation

Cloud technology strategy

Focusing on cloud-native development is a leading strategy for CEE companies over the next 12 months

When it comes to cloud technology strategy over the next 12 months, companies in Central and Eastern Europe are in line with their US counterparts: around two-fifths plan to focus more on cloud-native development and around one-fifth are considering adopting an industry cloud solution.

Only 13% of companies in the CEE region will maintain their current focus, and 25% of those are companies that are currently adopting a combined approach. Also, among the organisations keeping their current focus, the share that are highly mature in the cloud is 36%.

Question: How do you think your company’s cloud technology strategy will primarily change over the next 12 months? 
picture 13

Outcomes of cloud technology

Cost savings, increased productivity and improved cyber posture are the main business outcomes of cloud technology that CEE companies expect to drive in the next three years

When adopting cloud technology, different companies plan to drive different business effects. Looking ahead to the next three years, cost savings (34%), increased productivity (32%) and improved cyber posture (29%) are the top outcomes that companies in CEE hope to achieve by using cloud technology. But here we also see a dangerous bias which may create a gap between expected results and real developments: driven by cost-saving efforts, companies may miss other benefits that cloud transformation can bring, e.g. new business opportunities or revenue streams.

Question: In the next 3 years, which business outcomes will be mostly driven by your use of cloud technologies? 
driven by your use of cloud technologies

Barriers to achieving measurable value

Budget constraints, talent gaps and limitations of technology capabilities are the main barriers to achieving value

As everywhere, obstacles are an integral part of the cloud transformation process. For CEE companies, the main barriers to achieving measurable value from cloud technologies are budget and/or investment constraints at 41%, talent gaps (36%) and limitations of technology capabilities (34%). In the US, the top three look different. The main obstacle is the same, budget constraints, cited by 37%, but it’s followed by the inability to effectively measure/quantify returns on investment at 35%, and cloud service provider challenges (33%). These differences may reflect that US companies’ greater maturity in regard to cloud adoption. 

Question: Which of the following have been the biggest barriers to achieving measurable value from cloud technologies?
picture 17

Our region is only speeding up on its way to cloud transformation, and I see prospects for it, especially looking at the eagerness of CEE companies to adopt the cloud. There is a visible disconnect between the low maturity of the market and the highly ambitious targets for the next two years, as a substantial majority of companies who are not all-in on the cloud plan to move a big part of their operations there. Talking about issues, I have to say that from our experience, although finding the talent needed after migration to the cloud is an obstacle to reaching full cloud potential, educating CIOs and CTOs seems to be a problem of equal value.

Andrei Ghiorghiu, CEO, BlueTweak

About the survey

PwC surveyed 389 Technology and Business leaders from seven Central and Eastern European countries across a range of industry sectors (Industrial Products; Financial Services; Energy, Utilities and Mining; Technology, Media and Telecommunications; Retail and Consumer; and Health). The fieldwork was conducted during February and March 2023.

PwC Research, PwC’s global Centre of Excellence for market research and insight, conducted this survey.

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Cloud Business Survey — CEE edition

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Mariusz Chudy

Mariusz Chudy

CEE Alliances Leader, PwC CEE Technology Alliances Leader, PwC Central and Eastern Europe

Gabriel Voicilă

Gabriel Voicilă

Partner, Advisory Services, Romania

Petr  Ložek

Petr Ložek

Lead Partner, Consulting, PwC Czech Republic

Tel: +420 724 258 609

Przemysław Galiński

Przemysław Galiński

Director, PwC Poland

Tel: +48 519 507 833

Paweł Kaczmarek

Paweł Kaczmarek

Director, PwC Poland

Tel: +48 509 287 983

Jeffery McMillan

Jeffery McMillan

CEE Director of Brand, Marketing & Communications, PwC Central and Eastern Europe

Tel: +48 519 506 633

Marta Laskowska

Marta Laskowska

CEE Digital Marketing & Brand Manager, PwC Central and Eastern Europe

Tel: +48 519 505 529

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