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Cloud nine

Cloud maturity in CEE is lower than in the US. Time to catch up

May 23, 2023

7 min read

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May 23, 2023

By

7 min read

As many as 73 per cent of executives in Central and Eastern Europe have begun their cloud transformation journey, according to a new report from PwC CEE. 

The PwC CEE Cloud Business Survey also reveals however that cloud maturity across the region is low compared to the US: 35 per cent of companies in CEE have adopted cloud in all or most parts of their business, compared with 78 per cent in the US.  

The new PwC report outlines the state of business transformation to the cloud in the region and is one of the biggest about cloud adoption in Central and Eastern Europe so far. 

Despite the fact that CEE companies are lagging behind in terms of cloud maturity, they do have an opportunity to use this delay as an advantage and implement the latest 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than in the US, this presents a unique opportunity to implement cutting-edge cloud solutions without being held back by outdated practices.  

“Transformation is very high on the agenda of business leaders, as our ever-changing world stimulates constant adjustments and new ways of driving value,” says Mariusz Chudy, Partner, Technology Alliances Leader, PwC CEE. 

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 per cent) plan to be there in the next two years, and a similar proportion (44 per cent) expect 50 per cent or more of their operations to be on the cloud over the same period. 

“Sooner or later, we are all moving to the cloud,” adds Chudy. “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.” 

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

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 per cent) 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 per cent of companies in the CEE region, while in the US this option is supported by 38 per cent of organisations.  

Among CEE companies that have a holistic approach to cloud, 52 per cent 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.  

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 (34 per cent), go to market faster (32 per cent), develop better decision-making (31 per cent) and increase productivity (30 per cent).  

The four leading value areas in the US differ from those in CEE: improved decision-making is a top theme for 52 per cent, followed by enhancing customer experience (49 per cent), cost savings (47 per cent) and increased productivity (47 per cent).  

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 one per cent of CEE executives said their companies were achieving measurable value across all areas identified in the survey.  

‘Every product and service has a digital footprint’ 

Turning to the expectations CEE companies have for the next 12 months, around half of companies are expecting to achieve measurable value during this period — this is applicable to all benefit areas. But 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. 

“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,” says Paco Salcedo, General Manager Enterprise, Central and Eastern Europe, Middle East and Africa, Microsoft.  

“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.” 

For CEE companies, the main barriers to achieving measurable value from cloud technologies are budget and/or investment constraints at 41 per cent, talent gaps (36 per cent) and limitations of technology capabilities (34 per cent).  

In the US, the top three look different. The main obstacle is the same, budget constraints, cited by 37 per cent, but it’s followed by the inability to effectively measure/quantify returns on investment at 35 per cent, and cloud service provider challenges (33 per cent). These differences may reflect US companies’ greater maturity in regard to cloud adoption. 

Cloud-powered companies are driving more value from their transformation 

Running part of a business in the cloud is not the same as being cloud-powered.   

To identify cloud-powered companies, PwC 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. PwC identified 77 of the 389 companies it surveyed as cloud-powered companies. 

Accordingly, PwC says that cloud-powered companies 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.  

Cloud-powered companies are almost twice more likely to take a multi-faceted cloud approach, and are almost three times more likely to be all-in on cloud. They are also more likely to be prioritising almost all of their cloud capabilities in the next 12 months, and their C-suite executives consistently collaborate at the planning stage across all areas. 

“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,” says Andrei Ghiorghiu, CEO of BlueTweak, a Romanian firm which makes helpdesk software. 

“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. ​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.”  

Craig Turp-Balazs

Craig Turp-Balazs

Craig Turp-Balazs is head of insight and analysis at Reinvantage.

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