Home Cloud Lack of cloud expertise costs enterprises $226.84m in lost revenue: study

Lack of cloud expertise costs enterprises $226.84m in lost revenue: study

A lack of cloud expertise and skills in delivering cloud services could be costing Australia’s large enterprises $226.84 millon in missed revenue, according to a new report commissioned by managed cloud provider Rackspace in collaboration with London School of Economics academics.

The study, sponsored by Intel, also found that the lack of expertise is stifling creativity, with 64% of IT professionals saying they could bring greater innovation to their organisation with the right cloud insight.

The Cost of Cloud Expertise report looks at the wider implications of the cloud skills gap and provides a route for businesses to tackle the realities of modern IT and the resulting skills gap – and surveyed IT decision makers and 950 IT professionals around the world, including 100 in Australia.

Beyond innovation and growth, 46% of Australian IT decision makers say they believe a lack of skills is causing a lag in their organisation’s ability to deploy cloud platforms, while exactly half (50%) believe they need to invest more in their workforce to meet the developmental challenges of cloud computing.

John Engates, chief technology officer at Rackspace, says that while the rise of artificial intelligence and automation may cause some to think that human insight is less important, the report shows that this is not the case.

“With technology and the cloud now underpinning business transformation, the growing technology skills gap means organisations must have a strategy to access the expertise needed. Those that don’t will struggle to be competitive and innovative,” he cautions.

According to Rackspace, the study shows IT decision makers are seeing the benefits of moving all or part of their IT estate to the cloud, and 42% of Australian IT business leaders say their organisation has already seen a positive return on investment through using the cloud, with a further 30% expecting the cloud to deliver positive ROI in the future.

In fact, it notes that Australia is leading the way when it comes to improving ROI and efficiency.

On average, local businesses are seeing an 11% increase in ROI through third-party cloud management services, and time spent managing cloud technology has decreased by an average of 18% through the use of managed service providers.

Despite the benefits, the study reveals that both IT professionals and IT decision makers in Australia appear frustrated at not being able to use the cloud to its full potential:

  • Forty per cent of IT professionals are spending more time than they expected managing daily cloud operations, averaging 11.99% of their activities;
  • Forty-six percent of IT decision makers acknowledge that a lack of expertise is holding their business back; and
  • One in ten (10%) Australian IT professionals are not confident that they will have the right expertise to manage or use their company’s cloud technologies in five years.

In addition the study revealed that one in four (26%) Australian IT business leaders find it hard to recruit the right talent to help manage their organisation’s clouds. Migration project management (30%) and cloud security (24%) are the skills IT decision makers find hardest to find along with expertise in DevOps, security and testing (all 20%).

And Australian IT workers agree, with three out of four (78%) learning new cloud skills on the job, while major gaps in cloud expertise include DevOps, with less than 5% of local IT workers surveyed identifying it as a skill they hold, while just 6% are skilled in automation, and 8% in cloud security.

Looking at what IT professionals seek in a new role may also provide some pointers, observes Rackspace.

Almost three quarters (74%) of Australian IT professionals prioritise salary and benefits when considering a role. Other top considerations include company culture (46%), the opportunity to progress in the organisation (42%) and the opportunity to work on interesting projects (34%).

But, with two-thirds (66%) of IT decision makers looking to increase their organisation’s cloud usage in the next five years, and 56% saying that retaining talent is a concern, Rackspace says the challenges associated with recruitment are likely to increase. This will only be heightened with the majority of IT decision makers (66%) saying that it takes “a number of weeks or more” to train new hires, and 34% stating that “months” or more of training and on-boarding are required.

Will Venters, assistant professor of information systems at LSE, said: “Put simply, cloud technology is a victim of its own success. As the technology has become ubiquitous among large organisations — and helped them to wrestle back control of sprawling physical IT estates — it has also opened up a huge number of development and innovation opportunities.

“However, to fully realise these opportunities, organisations need to not only have the right expertise in place now, but also have a cloud skills development strategy to ensure they are constantly evolving their IT workforce and training procedures in parallel with the constantly evolving demands of cloud. Failure to do so will severely impede the future aspirations of businesses in an increasingly competitive digital market.”

As part of the report, Rackspace and the LSE have provided advice on how organisations can navigate cloud expertise skills gaps in their business:

  • Splitting the IT function into separate streams – Conceptually dividing IT functions into two parts will allow businesses to focus on the dual priorities of business-focused digital innovation and operations-focused innovation – both essential to helping an organisation accelerate in a technologically led market.
  • Developing a cloud skills strategy – Every enterprise IT executive should adopt a cloud skills strategy, which will map current skills in the organisation, map future innovation trajectories and changes (both within the business and in cloud), and match these with realistic market analysis of the available talent pool.

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).