Ecosystem innovation series When the sky’s no longer the limit: Innovating in the cloud

How do you quantify the value of innovation that we can’t yet imagine? It may be impossible to put a figure on future innovation, but that doesn’t mean you can afford to stand still.

Everyone knows the world is changing at an eye-watering rate and none of us know what will be thrown at us next.

But many companies now have a clear date with destiny as the world’s biggest software providers move their operations into the cloud.

Historically, businesses big and small stored their data and software on their own hard drives, servers, and systems. However, the surge in cloud computing is enabling these companies to migrate their applications, infrastructure, and data to cut costs, enhance security, boost resilience, innovate, and scale up their operations. EY teams are co-designing with our clients to build strong business cases to take advantage of cloud.

Take just one example. On 31 December 2027, SAP will stop providing mainstream maintenance for its legacy Business Suite 7 product. Tens of thousands of corporations must now move away from monolithic, on-premises legacy systems to cloud-based digital platforms that offer the flexibility of frequent releases and rapid access to improved features and functions.

SAP is one of EY global alliance and ecosystem partners that our teams work with to help our clients transform with certainty at speed and scale by moving to SAPs S/4HANA cloud solutions. Leveraging SAP’s Business Technology Platform (BTP) integration and extension suite delivers the capabilities EY clients need to differentiate, and positions them to innovate faster and disrupt other businesses.

Business leaders are often told that the cloud will support more agile, resilient, and innovative enterprises. But what does that really mean?

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Scale, speed and seamless services

The cloud itself may be something of a nebulous term, but its value is solid. Cloud-native modular building blocks enable businesses to scale, take advantage of continuously improving tech capabilities, adapt their processes at speed, and to seamlessly integrate data and services.

One obvious area is sustainability, where government regulation, consumer expectations and corporate leadership are evolving at lightspeed. We know there will be new reporting regulations and standards across nearly every aspect of business – and this will require new technical capabilities to disclose greenhouse gas information. We just don’t know what this quite looks like yet, and the requirements are expected to continue to evolve. SAP has announced that its investments in green ledger and new transactional carbon accounting capabilities will only be available to cloud customers.

Innovations around customer experience are another example. We can expect rapid advances in hardware – think drones, headsets, and other wearables. When these are combined with new AI capabilities and improvements in 5G networks, (which accelerate the speed and volume of data to the device) the sky is no longer the limit. Expect new and as-yet unimagined opportunities to engage with consumers, build brands and provide new services to emerge.

Unless businesses make the choice to move to the cloud, they will remain frozen in time. Yes, they can make slow, costly bespoke adjustments to their on-premises systems. But they can’t take advantage of the millions of dollars that cloud providers invest into their platform each year, nor tap into the talents of tens of thousands of developers responding to real-world business challenges across every sector of the global economy.

Companies that are in the cloud receive regular updates and the “latest and greatest” releases, rather than staying stuck with technology that hasn’t been state-of-the-art since the day it was installed.

The reasons for client reluctance are entirely reasonable. Many have spent up big on large-scale transformation projects over the last decade and still bear the scars. Technology may deliver rich rewards, but it is human leaders who shoulder the risk when they champion large-scale, challenging transformation projects.

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Look up and look out

The truth is every technology transformation project is hard and shifting to the cloud will not be easier simply because it is essential.

What is different, this time, is the endless possibilities after the transformation that will allow businesses to move in entirely new directions. New revenue streams will flow, whether that is by digitizing a product or service, monetizing data or content, leveraging existing platforms or streamlining processes.

There’s another angle to transformation that wasn’t around a decade ago. Consumers have been trained to expect regular updates of every technology interface. This expectation of technological evolution doesn’t stop with their mobile phones.

The latest EY Future Consumer Index is food for thought, with 63% of consumers across the Asia-Pacific believing that any organization that doesn’t keep up with advancing technologies “will not succeed,” and 70% excited about the technological advances occurring in their workplace.

The deadline for SAP’s cloud migration may be more than four years away, but most enterprises will need at least two years to plan for and lay the foundations for change. At EY, we start with what we call “Phase 0” as we build a business case that aligns cloud technology with an enterprise’s current strategy and future ambitions. This always uncovers areas of unrealized value – but we know there are far more currently hidden from view.

Tomorrow’s innovations are being created in the cloud. But business leaders should do more than look up. The EY Tech Horizon research found nearly half of all businesses are using ecosystems as a vehicle to foster creativity and innovation. Therefore, business leaders should look outward to the ecosystems that are already established and that can help them transform traditional value chains into collaborative networks ready for rapid innovation and disruption.

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The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.

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Consulting at EY is building a better working world through the power of people, technology and innovation. EY member firm partners Kerrie McGrath, Chee Kong Wong and Kellie Simpson contributed to this series. To read more thought leadership and news about our ecosystem, please follow EY Ecosystems on LinkedIn.

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