2023 will be the Breakthrough Year for Business Transformation as a Service in the Cloud

Navigating geopolitical uncertainties is challenging. While we can predict trends, we also need to be prepared for the unpredictable in the business environment. As companies map out their strategy for the year, here is a fact that organizations can count on: the cloud continues to be a powerful business transformation engine in 2023 with tangible economic, environmental, and social impacts. ?The global management consulting firm McKinsey estimates that cloud adoption could deliver a $3 trillion EBITDA value across Forbes Global 2000 companies across all industries by 2030.

Existing adoptions show that companies operating in a cloud ERP environment are better equipped to adapt to unpredictable events and move to more sustainable business models. The number one reason for migrating to a cloud-based infrastructure is increasing the speed of innovation.

Cloud adoption provides organizations with the infrastructure and distributed services they need to adapt to changes quickly. It also gives them the opportunity to re-design their business processes, move to more circular business models and drive innovation with a clean core.

As the cloud becomes even more ubiquitous in 2023, cloud platforms, technologies, and services are evolving. Here are some of the most important cloud trends that I foresee shaping businesses and our world in 2023.

Business Transformation as a Service with the Cloud

Gartner predicted that more than 85 percent of organizations will embrace a cloud-first strategy by 2025, and 95 percent of new digital workloads will be deployed on cloud-native platforms.

More and more companies will want new services for the cloud, rather than migrating existing applications to cloud platforms in the traditional “lift and shift” approach.

2023 will be a breakthrough year for this cloud-first adoption curve for one reason: the availability of Cloud ERP and business transformation as a service, ERP systems that are specifically designed for the cloud.

Cloud-native platforms (CNPs) can deliver distributed services and infrastructure for today’s geographically dispersed and constantly changing hybrid work environments and accelerate business innovation. Based on EY research , CIOs are using the cloud for its speed and agility to drive innovation, while reducing costs, which was not possible with traditional technologies.

Customed-Tailored Cloud Paths and Experiences

Like it is with every adoption curve, not every company is completing its cloud transformation journey at the same time. Organizations have vastly different legacy systems, data residency, and compliance needs. The good news is that in 2023 organizations will have more choices than ever to find the right fit for their cloud deployments. We are moving towards a cloud à la carte menu, a deployment of choice based depending on companies’ level of standardization, enabling companies to move to a secure cloud ERP environment on their own terms using their preferred infrastructure and data center.

Here is one key shift to keep an eye on in 2023: the on-premise infrastructure will become more cloud-like. We are moving towards a tailored private cloud environment, offering a customized private cloud SaaS experience. Expect to see more service-centric, elastic, and highly scalable cloud paths and models.

Automation, Automation, Automation

Generative AI frameworks and models, such as OpenAI’s ChatGPT, unlock a spectrum of new possibilities from marketing to product development. And, before you ask, while I tested different tools in the past weeks, this blog was not written with any AI tool.?

Nevertheless, AI is a key driver of business innovation, partly enabled by the cloud by providing these AI frameworks with the IT infrastructure to analyze massive amounts of images, texts, codes, and other forms of content.

At the same time, the cloud machine learning (ML) and artificial intelligence (AI) are also being used successfully in managed cloud environments to streamline and automate processes for higher productivity and reliability. Examples include the automation of purchase orders or the automatization of customer service and support with AI-based chatbots.

IDC predicts that AI-enabled automation will safeguard consistent digital infrastructure configuration, performance, cost, and security by lowering the need for human operations intervention by 70% and improving service level objectives (SLOs).

Reinforcing Security

Automation is also one contributing factor to safeguard data and operations in the cloud. Upgrade IT and security had catapulted to the top of priority list of CIOs in 2022 according to a CIO Magazine survey . Based on conversations with customers, I expect security and data privacy to remain a top priority in 2023.

Regrettably, human behavior is still the weakest link in companies’ security systems, such as the decision to open an attachment or link from a disguised source. Automation will help to increase the maturity of identity management and security management systems to safeguard operations and data in a cloud environment.

Decarbonization

The 2022 Good Tech Awards by The New York Times include climate tech start-ups that bring climate-friendly technologies to market. Technology innovation helps companies to become more sustainable and move to a more circular business model. One area is decarbonization.

A great example of how this can be done has been demonstrated by Climeworks . They are scaling technology for direct carbon removal, wherein machines vacuum greenhouse gasses out of the year. Recently they?successfully took carbon dioxide out of the atmosphere and put it underground to be locked away permanently.

Gartner expects carbon footprint measurement technologies to see significant adoption as organizations want to increase transparency on their carbon emissions and measure progress on meeting carbon reduction goals for their entire supply chain.

With cloud-enabled solutions, such as SAP Product Footprint Management , companies can measure and track their decarbonization progress, adhere to legislative requirements and get the insights they need for sourcing and product development decision making. ?

Cloud Talent

Innovation is driven by people and technologies. Behind every innovation milestone stands a team of highly skilled and passionate people. For cloud transformation journeys, this highly specialized technical talent team typical includes full-stack developers, data analysts, cloud engineers, cloud-security specialists, identity and access-management specialists, as well as business analysts and industry experts.

For 2023 Gartner flagged the existing IT skills crisis as a key concern and hurdle for infrastructure modernization initiatives.

One way to overcome this hurdle is by tapping into the skills and talent available through business partner networks . By working with partners, companies get access to technical and industry skills while building cloud capabilities. For example, our team supports our customers with technical expertise at every step along the way, in close collaboration with SAP’s large ecosystem of partners. With good governance systems and a shared purpose in place, the lines between in-house and partner teams will continue to blur in 2023. Skills levels already have become more important than the location of team members.

Looking ahead, 2023 will be a breakthrough year for companies using business transformation as a service with the cloud.?It could also become the year in which having a clean core becomes a new business imperative. Companies that use cloud adoption as an opportunity to redesign business processes and keep a clean core will be able to drive innovation, to not just this year, but in the future. And with that, be better equipped to navigate the unpredictable.