4 Reasons Why Enterprise Innovation Will Come From the Cloud

In the wake of COVID-19, the cloud has shifted from an approach for delivering applications to a key driver of business innovation. Juergen Mueller, CTO and member of the Executive Board, SAP, explores the four key benefits of cloud that allow businesses to disrupt, differentiate and innovate.

In 2020, cloud infrastructure spending surpassed on-prem spending for the first time, according to recent research of Synergy GroupOpens a new window , spurred by the changes business had to quickly adapt to due to the COVID-19 pandemic. It’s a trend we’ve seen coming, with businesses acknowledging that the cloud will help them streamline operations and function effectively across industries. 

Once the pandemic recedes, cloud innovationsOpens a new window will remain essential for any business to remain competitive. In other words, adopting the cloud won’t just help a business run better today; it will help that business innovate so that it can continue to transform over time. 

There are four key benefits of the cloud that enable business innovation: agility, connected systems, a cloud-native approach, and fast-tracked experimentation. Here’s why each of these advantages will make the cloud the launchpad of enterprise innovation in the future. 

1. Driving Business Agility

Migrating to the cloud offers a powerful combination of business agility and deep data connectivity that ultimately supports innovation. The scalability of the cloud enables organizations to quickly ramp up for a temporary data overload or add computing power to meet their real-time business needs. Take, for exampleOpens a new window , leading pharmaceutical wholesale distributor AmerisourceBergen (minute marker 23:12). The company implemented a new cloud-based Opens a new window track-and-trace application and a new cloud-based trading partner authorization that has enabled 250,000 messages to be traded per day in their trading partner system and protected 14,000 employees from the burden of new regulations. Not only that, but the system has also provided business continuity for AmerisourceBergen’s $185 billion pharmaceutical supply chain. In a post-pandemic world, the ability to pivot easily and respond to disruptions as AmerisourceBergen did will be even more important than before.

Learn More: 6 Best Practices To Implement Cloud Strategy and Data Protection in the Hybrid Work World

2. Connecting Disparate Systems 

One of the great challenges of running any company is effectively sharing data between applications. Imagine, for example, that a company wants to switch a department from one manager to another. Implementing this plan would require updating two or more cloud application systems. Staff needs to be moved within the HR system, and that means cost objects would also need to be moved within the financial system. Thanks to the use of cloud technologiesOpens a new window , companies can choose an event-driven integration approach that pieces together data and context from disparate cloud applications (HR and Finance), without having to change either core application. 

Porsche wanted to enable top management and dealers worldwide with real-time insights built on a central data governance model. With SAP Analytics Cloud, the German sports car manufacturer experienced central data governance with increased performance and scalability, real-time creation of management and sales reporting (from 3 days to 20 seconds) and a reduction in the total cost of ownership.

Now imagine thousands of these connections being made every day across countless companies and the incredible innovation that will be derived from this process. 

3. The Cloud Native Approach 

A cloud-native approach allows for almost infinite adjustments to scale — a vital element for fueling innovation. Leveraging the scalability delivered by cloud-based applications while breaking down business applications into smaller, logical units that can be scaled up or down can empower teams across the business to shift their workloads quickly in response to changing market demands. This versatility naturally facilitates innovative thinking and speeds up progress.

Bringing the concept to life is OMV, one of New Zealand’s largest liquid hydrocarbon producers and the country’s largest gas producer. The company had previously been bogged down by burdensome and paper-heavy processes that interfered with how efficient the planning and execution of inspections were. Recognizing the need to innovate, the company pivotedOpens a new window to a new cloud-based data management system that let it develop a digital twin based on the latest laser scan technology and a 3D point cloud visualization of the plant. Not only did the technology help reduce planning time and back-office work by 25% as well as cut workflow costs by 10%, but it also helped establish OMV as a digital front-runner in its industry.

Learn More: Head in the Clouds: Unlocking the Missing Component for Call Centers’ Cloud Migration  

4. Fail Fast, Succeed Faster

Perhaps it doesn’t sound like an advantage to fail fast. But as innovators have long realized, a quick failure leads to faster innovation cycles in the long run. It wasn’t long ago that the typical time to create a Minimum Viable Product (MVP), a version of a product with just enough features to be usable by early adopters who can provide feedback, was widely considered to be six to eight months. Today, thanks to the use of the cloud, it’s six to eight weeks. 

Take the company Costain, which works on critical infrastructure in the U.K. Costain needed to take comprehensive operational data from various U.K. national infrastructure projects and synthesize the data onto a common digital platform. By moving to the cloudOpens a new window , the company was able to go from a proof of concept for its Telematics module in October of 2020 to production for the U.K. Department of Transport in just nine months. The Telematics module ultimately led to 30% productivity gains and 66% cost savings on IT infrastructure.

Given this acceleration, I’ve met companies that have even started to omit the step of creating business cases for their innovation ideas. Instead, they directly go for it! They massively reduce overhead, get started with the project, expose their results to end-users and measure the impact in a data-driven way. If goals aren’t met, they iterate quickly or abandon the project – all done faster than the time it would have taken them originally just to dispute the business case internally.

This innovation took place during a global pandemic — the cloud allows companies to easily harness information from many different areas. 

The possibilities of the cloud are massive. Companies that harness its power understand that interacting with the technology drives innovation fast. In the coming months and years, it will be increasingly difficult to get ahead without this differentiator, no matter the industry. That’s why for modern businesses, it’s no longer enough to use technology to keep up with today’s innovations. Moving to the cloud could mean getting ahead of their competition significantly by leading with innovation. 

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