A significant step change in enterprise cloud adoption is underway with businesses increasingly building  applications and services optimised in the cloud, to make the most of Platform as a Service (PaaS).

The findings are contained in a new study from Capgemini.

About 15 per cent of new enterprise applications are cloud native today with adoption set to increase rapidly in the next three years, jumping to 32 per cent by 2020.

The study included than 900 senior professionals working in both IT and the wider business, from 11 countries across Europe, the Americas and Australia.

Franck Greverie, Cloud and Cybersecurity Group Leader at Capgemini said, “This is an exciting shift in our industry. We predict that cloud-native architectures will become the default option for customer-facing applications by 2020, driven by a need to continuously deploy innovations at an accelerated pace and enhance the customer experience. “

He said businesses that delay adopting this approach will struggle to make up the gap with cloud-native competitors.

“Organizations need to listen to their CIOs and understand the huge potential of cloud-native technology to deliver business benefits and innovation. CIOs must also address culture and skills gaps within their own organizations on the road to being cloud-native leaders,” he said

The authors of the study also argue that developing a clear roadmap to cloud which includes the move to cloud-native application development can dramatically improve the reputation across the business of IT, and therefore the CIO by extension.

They offer six recommendations:

1.        Assess the application portfolio and identify priorities for cloud-native development

2.        Build credibility by demonstrating a cloud roadmap and ability to deliver growth

3.        Start small, and then scale up to develop a skilled team

4.        Adapt the IT operating model to support both business agility and stability

5.        Be pragmatic in selecting technologies

6.        Incubate a culture of innovation, collaboration, testing and learning

A number of factors are driving the shift to cloud adoption including a desire to improve business agility (74 per cent), increase collaboration with external partners (70 per cent) and deliver better customer experiences (67 per cent).

It identifies a small group of ‘leader’ organizations that are already committing to cloud-native applications – those with more than 20 per cent of their new enterprise applications developed in this way – with these leaders almost twice as likely to report increases in organizational revenues attributable to cloud-native applications than slower adopters (84 per cent vs 44 per cent).

Compared with the where less than 10 per cent (and as low as 0 per cent) of new applications are built using a cloud-native approach. Cloud-native leaders also:

  • Are more likely to describe their approach to software development as agile (69 per cent to 37 per cent), deployment as automated (78 per cent to 46 per cent), and DevOps teams as integrated (69 per cent to 38 per cent)
  • Display a more growth-focused attitude towards IT functions, with improving the customer experience (90 per cent), business agility (87 per cent) and scalability (85 per cent) viewed as higher priorities than reducing costs (79 per cent)

As adoption increases, CIOs at organizations leveraging or planning to leverage cloud-native applications expect IT to become even more central to supporting business ambitions, including the development of new business models (67 per cent), rapid scaling of the business (72 per cent), quicker updating of products/services (71 per cent) and adopting new routes to market (68 per cent).

Many CIOs, however, are facing challenges in building business cases to invest in cloud-native apps from business leaders that see cost reduction as the priority for IT teams.

These challenges range from the organizational, including battling an ingrained culture that is opposed to the nature of cloud-native working (65 per cent) and a skills shortage when developing cloud-native apps (70 per cent), to the technical, such as difficulties integrating with legacy infrastructure (62 per cent) and being locked in to vendor contracts (58 per cent).

Just over a quarter of high-tech firms (26 per cent) and almost a third of manufacturing firms (29 per cent) are cloud-native leaders, compared with just 11 per cent of banking providers, 18 per cent of insurers and 22 per cent of CPRD firms.

Priorities are changing as a result of the digital challengers: 10 per cent is the average across all banks surveyed, including leaders, late adopters and laggards. of their new applications using a cloud-native approach, while almost half of insurers (47 per cent) and almost one-third of consumer products, retail and distribution (CPRD) firms (27 per cent said that cloud native forms a core part of their technology strategies.

All three groups – banks, insurers and CPRD firms – plan to spend considerably more on PaaS in three years than they do today (41 per cent, 44 per cent and 41 per cent respectively).

On behalf of Capgemini, Longitude Research conducted a survey of 902 professionals about their views on cloud-native software development, and the progress their organization has made in adopting this approach.

Respondents were evenly split between IT and non-IT and were based in 11 countries in Europe and the Americas plus Australia. Respondents came from a range of sectors, with the largest numbers working in banking, insurance, consumer products, and retail and distribution companies. A copy of the report can be downloaded here.

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