Big Companies Losing $258 Million Annually Due to Lack of Cloud Expertise

Large enterprises in Hong Kong could be losing out on revenue as 84 percent of IT decision makers say that they don’t have the required cloud expertise. This comes as large enterprises across the world are losing out on $258,188,279 a year as a result of a cloud skills gap, according to a new report commissioned by Rackspace in collaboration with LSE academics.

"The Cost of Cloud Expertise" report also found that this lack of expertise is stifling creativity, with 80 percent of IT pros saying they could bring greater innovation to their organization with the right cloud insight.

Beyond innovation and growth, 44 percent of IT decision makers believe a lack of skills is causing a lag in their organization’s ability to deploy cloud platforms. The majority (77percent) also believe they need to invest more in their workforce to meet the developmental challenges of cloud computing.

“While the rise of Artificial Intelligence and automation may cause some to think that human insight is less important, our report shows that this is not the case,” says John Engates, chief technology officer at Rackspace.

“With technology and the cloud now underpinning business transformation, the growing technology skills gap means organizations must have a strategy to access the expertise needed. Those that don’t will struggle to be competitive and innovative.”

The realities of modern IT

IT decision makers are seeing the benefits of moving all or part of their IT estate to the cloud. In fact, 54 percent of respondents say their organization has already seen a positive return on investment (ROI) on using the cloud, with a further 30 percent expecting the cloud to deliver positive ROI in the future.

Despite the benefits, both IT pros and IT decision makers appear frustrated at not being able to use the cloud to its full potential. More than half  (54 percent) of IT pros are spending more time than they expected managing daily cloud operations. Half (50 percent) of IT decision makers acknowledge that a lack of expertise is holding their business back.

Meanwhile, most (96 percent) IT pros said that deeper cloud expertise within their organization would help it increase the cloud’s ROI.

Most in-demand cloud skills

Nearly half of IT decision makers (54 percent) find it hard to recruit the right talent to help manage their organization’s clouds. Cloud security (36 percent), automation (34 percent) and Migration project management (32 percent) are the skills IT decision makers find hardest to recruit.

The top barriers to recruitment were: the inability to offer a competitive salary (51 percent); industry competition (41 percent); and the inability to offer sufficient training to prospective recruits (46 percent).

Looking at what IT pros seek in a new role may provide some pointers to businesses in the competition for workers.

While salary and benefits are the top priority (84 percent), having the opportunity to progress in the company (74 percent) and the opportunity to work on interesting projects (32 percent) were also highly rated, showing that businesses must think broader than pay rates to secure top talent.

However, 60 percent of IT decision makers looking to increase their organization’s cloud usage in the next five years, with 46 percent saying that retaining talent is a concern, the challenges associated with recruitment are likely to increase.

This will only be heightened with the majority of IT decision makers (82 percent) saying that it takes “a number of weeks or more” to train new hires, and 26 percent stating that “months” of training and on-boarding are required.

Will Venters, assistant professor of information systems at LSE, said: “Put simply, cloud technology is a victim of its own success. As the technology has become ubiquitous among large organizations – and helped them to wrestle back control of sprawling physical IT estates – it has also opened up a huge number of development and innovation opportunities.

“However, to fully realize these opportunities, organizations need to not only have the right expertise in place now, but also have a cloud skills development strategy to ensure they are constantly evolving their IT workforce and training procedures in parallel with the constantly evolving demands of cloud.

“Failure to do so will severely impede the future aspirations of businesses in an increasingly competitive digital market.”

Navigating the cloud expertise challenge

As part of the report, Rackspace and LSE have provided advice on how organizations can navigate cloud expertise skills gaps in their business:

Splitting the IT function into separate streams – Conceptually dividing IT functions into two parts will allow businesses to focus on the dual priorities of business-focused digital innovation and operations focused innovation – both essential to helping an organization accelerate in a technologically led market.

Developing a cloud skills strategy – Every enterprise IT executive should adopt a Cloud Skills Strategy, which will map current skills in the organization, map future innovation trajectories and changes (both within the business and in cloud), and match these with realistic market analysis of the available talent pool.

Full assessment of the cloud ecosystem – Organizations should adopt an ecosystem approach to the provision of basic cloud services (for example pooling risk by relying on providers). As a result, the dual challenge of both constantly improving and significantly innovating can be greatly improved by relying on a balanced pool of skills and competencies both within and beyond the organizational boundary.

Mariano Mamertino, EMEA economist at global job site Indeed, commented: “Finding, attracting and retaining tech talent is critical to business survival, and yet it is increasingly competitive for companies to find the technical talent they need as demand surges for such skillsets.

“Our data shows there is a global mismatch between the cloud roles advertised versus those being searched by IT professionals, which could accelerate the growth of a cloud skills gap. As this new report spotlights, there is both a financial and innovation gap to be plugged here for businesses globally.”

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