PwC US Cloud Business Survey

74%

of business leaders are engaged in cloud strategy

56%

of executives see cloud as a strategic platform for growth and innovation

53%

of companies have yet to realize substantial value from their cloud investments

The good news

Business leaders across the C-suite see cloud’s critical role in both defining and achieving their company’s growth and operational ambitions. And they have high expectations.

Now, the bad news: Few companies are positioned for cloud to fully deliver on its exceptional promise. This gap between possibility and reality is clearly reflected in PwC’s inaugural US Cloud Business Survey. Given cloud’s transformational potential for organizations, the survey explores what cloud means for business and technology executives in seven distinct leadership roles, including the chief information officer (CIO), chief operating officer (COO) and board member.

This cross-functional view is essential to capitalizing on cloud, and the survey findings can help companies identify critical areas to address so they can more fully capture value. And it’s not too late. We’re still in the early stages of a cloud sea change, a change in which thinking, doing and innovating are accelerated across the business. After all, “the cloud” is not a singular destination — it’s a dynamic fabric that drives resiliency, agility and lasting transformation.

Business leaders agree that cloud is now both an integral part of corporate strategy and day-to-day operations. Regardless of where they sit in the organization, cloud has become a unifying force for CEOs, strategy heads, and business unit and functional leaders. In fact, when looking across 11 dimensions related to cloud strategy and implementation, functional leaders emerge as active decision-makers.

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As with any business transformation decision, leaders from across the business play a critical role in cloud. For example, there’s a high degree of shared ownership across the C-suite for cloud investment decisions (74% of executives are involved). And looking at individual roles, it ranges from a high of 88% for CIOs to an engaged 62% for tax leaders. Our survey also indicates that the COO is emerging as a key business transformation and cloud leader across all areas.

Who’s leading cloud? The entire C-suite

Company-wide strategy and defining the business outcomes and value we expect

Investment decisions, budgeting and value realization

Developing products, services and other customer-facing capabilities

CIO

CFO

Tax leader

COO

CRO

CHRO

Board member

Q: Which of the following aspects of your company’s cloud transformation are you responsible for or involved in? Decision-making responsibility or ownership – in conjunction with others/independently. Source: PwC US Cloud Business Survey. June 15, 2021: CIO base of 109, CFO base of 84, Tax leader base of 53, COO base of 67, CRO base of 70, CHRO base of 84 and Board member base of 57

Understand the cloud value gap — and four paths to close it

Cloud in its many forms is a critical enabler for broader business transformation. It helps connect systems, data, devices and emerging technology in ways that can help companies respond more quickly, agilely and innovatively. The majority of executives in our survey, 92%, say their companies are “all-in” on cloud or have adopted it in many parts of the business.

As such, cloud has become a rallying point for the C-suite. While that’s a positive development — and a necessary one if companies are not only to deliver on strategy but accelerate it — executives aren’t getting the value they’ve been hoping for.

What business outcomes are executives after through cloud? Topping the short list are improved resiliency and agility (34% say their companies pursue this goal), better decision-making (34%), and product and service innovation (33%). However, when asked whether they had realized substantial value in 12 target areas, only about half of companies had on average.

Cloud value: Is your company getting the payback you expect?

Target business outcome

Realized substantial value

Improve resilience and agility

Improve decision-making through better data analytics

Innovate our products and services

Create better customer experiences

Increase profits

Improve talent retention and recruitment

Improve employee experience

Reduce costs

Enhance brand and reputation

Ensure business continuity

Combat new industry entrants

Disrupt our own industry or other industries

Average value realization gap of

53%

between companies seeking specific business outcomes and those realizing substantial value from their investments

Q. To date, which of the following business outcomes have you been trying to achieve through your cloud transformation? Q. To what extent have you realized substantial value in those areas to date? Source: PwC US Cloud Business Survey. June 15, 2021: base of 524

This unrealized value is significant, but it only begins to speak to cloud’s untapped potential to propel strategy. Those companies that use cloud as a springboard to truly change how they think, operate and do business can see even greater payoffs.

Most executives will wonder where their own company falls on the value spectrum. But given what’s at stake, equally important questions are: Why do investments fail to deliver? What can we do about it?

Four actions to help close the cloud value gap

1. Align on strategy choices and value

Our survey reveals disconnects in the C-suite when it comes to defining and quantifying cloud value. Among executives, there’s no dominant definition of value. About a quarter equate it with faster innovation, while slightly fewer measure it in improved resilience or increased revenue. By role, CIOs and board members are most focused on innovation (39% and 23%, respectively), and CFOs and COOs prize improved resilience (25% each). While cloud can and should deliver value across many dimensions, differing views on value can be symptomatic of the fact that many companies haven’t made clear strategic choices in cloud investments.

Additionally, almost half of business leaders (49%) see the inability to measure value as a key barrier to achieving value, and almost as many CFOs (48%) say they lack confidence in their ability to measure the return on cloud investments.

Likewise, executives within a single company may see the organization's cloud evolution quite differently. Half of survey respondents characterize their companies as highly mature, with cloud scaled throughout the business, perhaps because cloud has been in use as on-demand software and data storage for years. But that assessment changes when you poll different executives. Sixty-six percent of tax leaders say their companies are mature, while 43% of risk management leaders and 50% of CFOs agree. These executives are likely considering maturity very differently, and some may not be fully aware of cloud’s potential to drive transformation and change every facet of the organization.

Now is the time for executives to coalesce around a broader definition of cloud and the value it can bring to drive business transformation.

How companies are measuring cloud value

Faster innovation and delivery of new digital products and services

Improved operational resilience, safety and soundness

Increased revenue

Ability to execute on our strategy to fundamentally change the business

Cost savings and efficiencies

We are not specifically measuring value because cloud is seen as a necessary business foundation

Unsure

Q: How is your organization primarily measuring value realized from cloud? Totals may not add up to 100% due to rounding. Source: PwC US Cloud Business Survey. June 15, 2021: base of 524

What companies can do

Develop the value story. Many executives recognize that cloud is not just an infrastructure or technology play, but their company’s cloud strategy is not part of its business strategy. This requires making specific choices about how cloud will help you differentiate your business — what digital and technology capabilities you’ll develop, the customer problems you will solve, and the role your company plays in industry or other ecosystems. In short, how can you embed cloud capabilities to enable end-to-end digital transformation? The CFO can play a leadership role here along with the CEO, scripting and sharing the company’s cloud value story, working with other business leaders to zero in on where cloud can best drive strategy and jointly developing an investment thesis.

An enterprise cloud transformation mentality isn’t about technology — it’s characterized by customer centricity, agility and reimagining everything.

Embrace new mental models. Crucial to realizing cloud value is a fundamental shift in both how the organization works and how quickly it can deliver new products, services and experiences. It’s a product versus project mindset that focuses on sprints and outcomes. As with earlier tech transformations, applying cloud to existing processes and structures will yield only limited gains. Business leaders should commit to rethinking how work is done. That applies to market-facing innovation as well as internal processes. For example, have you modernized your finance approach to technology so that you’re anticipating and optimizing spend or are you merely replicating the approach used with on-premises systems?

Team strategically. Tax leaders in particular can be key players in the cloud conversation, working in step with the CIO, CFO and other executives. Take, for example, their insight around using cloud-related R&D tax credits to offset the cost of innovation funding. We’ve seen companies achieve a significant cost reduction (typically ranging from 8% to 20%) when this is properly planned and accounted for — yet only 38% of CFOs say they’re very confident their company is taking advantage of R&D tax credits for cloud investments.

2. Get in front of the next digital talent divide

Businesses today already face severe talent challenges that are a byproduct of digital transformation. The shift to cloud has only intensified things. And it will take the full power of the C-suite to address these people impacts — impacts that could have long-lasting consequences. We could face a future of corporate haves and have-nots when it comes to the talent needed to compete.

The digital talent divide affects not just tech specialists, but employees and business leaders who have the skills and mindset to thrive in a cloud-empowered world.

The divide is likely to be more pronounced this time because of cloud’s intrinsic ability to accelerate innovation and growth. Digital native companies, including tech startups and many established powerhouses, already operate this way and are proof of cloud’s competitive advantage. Likewise, companies that fully transform through cloud, especially those evolving their people strategies, are likely to propel ahead of others that don’t take a holistic approach.

Many business leaders are beginning to raise concerns here. In our survey, 52% of executives cite lack of tech talent — such as skills in cloud architecture, cybersecurity or DevOps — as a barrier to realizing cloud value. For COOs and CIOs, that number is even higher. Likewise, 47% of business leaders worry about their ability to upskill people in line with the new ways of working that cloud demands. Here again, COOs and CIOs are even more concerned, along with tax leaders and CHROs.

Talent concerns among key barriers to realizing cloud value

_{Q: To what extent have the following presented barriers to achieving that value? Source: PwC US Cloud Business Survey. June 15, 2021: base of 524}

What companies can do

Start or expand digital upskilling for all employees. Continuous learning, sometimes called a flywheel approach, is needed so that the organization can continually refine its capabilities and its business model. This starts with digital upskilling for all employees, which many companies have put in place — or are just now adopting. Your program should address both tech skills and new ways of working and include creating learning pathways. It should also free up time for people to engage in upskilling and provide opportunities for them to try out new cloud-related skills. Since changes to a company’s systems and processes have a ripple effect on every business area and role, take a comprehensive look across the organization. Are you upskilling internal auditors, for example, so that they are equipped to evaluate new internal controls or remediate new risks?

Develop programs to cultivate cloud skills. For tech talent, upskilling is especially critical. For example, you can start with cloud training that’s designed to work with a cloud vendor’s certification program. Or consider other ways to develop a learning culture, such as mentorship opportunities where junior talent with strong foundational cloud skills are paired with more experienced IT employees who lack them. At the same time, continue to recruit experienced tech talent, including those well versed in artificial intelligence (AI) and other emerging tech. You might also consider how third-party partners with deep technical experience can help with learning and development. Those service providers might also be part of your upskilling plan — building apprenticeship-type models into engagements, for instance, allowing in-house resources to learn by doing alongside specialists.

Upskill the C-suite. Developing better cloud business understanding among your executive team and board members is also important. This includes a shared understanding of the company’s business goals, how cloud enables them through a new mindset and how value will be measured. This is an area where CIOs often take the lead, working to build the knowledge and confidence of other business leaders. While education sessions at board meetings and other forums are often part of such an approach, it can be especially effective for CIOs to work one-on-one with a handful of peers to help them better connect cloud to business strategy. An executive-level upskilling program might also include sessions with external partners and cloud service providers.

3. Start early to address risk and build trust

Our survey results are encouraging in that executives view cloud through the lens of “what it can do” for an organization, as opposed to simply the threats that it may introduce. Notwithstanding, 17% of respondents do define cloud as a security and business risk that needs to be addressed, and 50% see this risk as a significant barrier to realizing cloud value. And that has been a compelling discussion point at the board level for the last several years.

Said another way, moving data outside the organization’s four walls and relying on third-party cloud services could increase vulnerabilities and erode trust with customers, employees and other stakeholders. The flip side, though, is that cloud-based cybersecurity can strengthen a company’s defenses and help accelerate enterprise cloud transformations. For these reasons, it’s an incredible growth area and the one that tops the list of the kinds of future cloud capabilities CIOs, CISOs and tech leaders are pursuing for their organizations.

As we see in our work with clients, companies are not always attuned to the full picture related to risk and cybersecurity and may be too slow in implementation to reap the full benefits and avoid extra costs. This was borne out in our survey as well. A scant 17% of CROs and chief audit executives tell us that they’re brought in to cloud projects at the planning stage, with many coming to the table much later during requirements gathering. Risk-related issues need to be considered early as companies look to optimize their cloud efforts and lay the foundation to scale.

Too little, too late: cybersecurity and compliance are often afterthoughts

During the planning phase

During technical requirements gathering

During business requirements gathering

During migration

Post-migration

Unsure

Q: At which stage of the project does your company start considering security and compliance? Source: PwC US Cloud Business Survey. June 15, 2021: CRO base of 70

What companies can do

Revisit customer commitments. Consider how moving to cloud affects your compliance obligations and customer commitments. If you’re a financial services provider that’s now processing transactions via cloud, for example, have you introduced any new risks or are you in breach of any contractual obligations? If your company currently issues SOC-1 (internal controls) or SOC-2 (security requirements) reports, reevaluate the scope and approach to demonstrate to customers that the trust they enjoyed in an on-premises world can be sustained. In addition, does your internal controls team fully understand the shared responsibilities that are part of your cloud service provider’s agreement and how to assess compliance there? Does your team consider trust an ongoing effort because cloud service providers are continually updating their offerings and adding new functionality such as AI and other emerging technology?

Considering trust angles at the earliest stages of a cloud initiative can also be an opportunity to enhance trust with customers or differentiate products and services.

Build trust in cloud-powered services. We’ve seen some companies issue trust-based attestation reports that can provide comfort to customers that a new product or service has been thoroughly reviewed and certified by a third party. This is an approach the 32% of executives who say their companies plan to innovate their products and services through cloud over the next three years should consider.

4. Advance your ESG goals with cloud

Cloud can be instrumental in accelerating your efforts around environmental, social and governance (ESG) issues, issues that we expect will be pivotal for businesses going forward. In our Consumer Intelligence Series survey on ESG, 75% of respondents indicate they’re more likely to purchase from or work for companies that share their values. And 76% tell us they’d discontinue relations with companies that treat employees, communities and the environment poorly.

As business leaders take a stronger role in addressing issues like climate change and decarbonization and improving diversity and inclusion, some are considering technology’s role, particularly as it relates to transparency and disclosures. About a third of business leaders in our survey say they have an understanding of how cloud impacts the E, S and G. A similar number are beginning to use cloud to inform their ESG strategies and reporting. COOs, understandably, are particularly focused here, with 70% actively looking at or implementing how cloud can support their ESG strategy.

Business leaders look to cloud to accelerate ESG progress

_{Q: For each of the following areas, to what extent is your company considering the intersection of your cloud transformation and the environmental, social and governance (ESG) goals of your company? Source: PwC US Cloud Business Survey. June 15, 2021: base of 524}

What companies can do

Standardize and automate ESG reporting. One of the most obvious ways cloud can support ESG is through cloud-based data management and reporting. This can help automate the process and standardize the data, as well as provide greater transparency within the organization. Much of the data underpinning a company’s ESG reporting often lives throughout the organization — the chief sustainability officer, for example, might own the data about carbon emissions. Yet the CFO is beginning to take a lead role here in establishing credible metrics and reporting in a more consistent manner.

A lesser-known way that cloud can support ESG efforts has to do with the quest to achieve net zero greenhouse gas emissions by 2050.

Look at how your CSP advances your green goals. While most companies recognize that moving their data to a third-party cloud service provider (CSP) can help them reduce their carbon footprint (as emissions from a data facility are typically considered scope 1 or scope 2 level emissions), some are also looking at how to incorporate their CSP’s emissions in their carbon reduction strategy. With net zero commitments specifically, companies will look to identify indirect emission sources across their value chain, known as scope 3, including from suppliers, both physical and virtual. Scope 3 reporting is a complicated endeavor that many companies are not yet ready to tackle. But if your CSP is also making progress on its own green goals, such as by generating 40% of its energy through alternatives, its customers will also benefit and can account for that progress in their own scope 3 reporting.

Consider cyber and privacy goals too. Similarly, a company’s data privacy and cybersecurity, often considered as part of the social or governance component of ESG, might be bolstered through a CSP arrangement. A CSP, for instance, may demonstrate a significant level of investment in these areas compared with what your company may have done in an on-premises data center.

The bottom line

Our survey makes it clear that cloud will be the next competitive frontier. Today’s value gap and return shortfalls will likely be nothing compared to tomorrow’s missed opportunities. Whatever your title, you have an integral role to play alongside your C-suite peers in defining, shaping and realizing cloud’s promise. Don’t just tie cloud to your business strategy; make it the change agent that can secure your future.

About the survey

Between May 5 and May 12, 2021, PwC surveyed 524 US executives including CIOs, CTOs, CISOs and technology leaders (21%); CFOs and finance leaders (16%); CHROs and human capital leaders (16%); risk management leaders, including CROs and CAEs (13%); COOs and operations leaders (13%); corporate board members (11%); and tax leaders (10%). Respondents were from public and private companies in six sectors: industrial products (27%); consumer markets (25%); financial services (17%); technology, media and telecommunications (16%); health industries (7%); and energy and utilities (7%). Ninety-three percent of respondents were from Fortune 1000 companies.

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Jenny Koehler

Partner, US Cloud & Digital Leader, PwC US

Ali Khan

Financial Services Advisory Principal, PwC US

Sundar Subramanian

US Strategy& Leader, Chicago, IL, PwC US

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