Cloud has immense potential, but most companies are only scratching the surface. Recent research by McKinsey clarifies where the value lies—and how to capture it before competitors do.
Moderna CEO Stéphane Bancel made the decision to build his mRNA research-and-development platform on public cloud to create what he calls “software for life.” He used the cloud as a means to accelerate therapeutic discovery and development. When the COVID-19 pandemic hit, this strategy proved prescient. The company was well positioned to quickly design research experiments and to harness its automated laboratory and manufacturing processes and enhanced drug-discovery pipeline.
Moderna runs its Drug Design Studio, a proprietary web application, on cloud and leverages cloud’s scalable compute and storage infrastructure to analyze and quickly design mRNA sequences for protein targets. Scientists and engineers also use fully managed cloud data-warehousing services to integrate insights from multiple experiments running in parallel and quickly refine the design and production cycle. Moreover, the adoption of cloud principles, such as infrastructure as code (IaC) and security as code, helped to automate good-practice (GxP) compliance processes so the organization can move quickly while staying secure and compliant. Thanks in part to cloud, Moderna was able to deliver the first clinical batch of its vaccine candidate (mRNA-1273) to the US National Institute of Health for phase one trials just 42 days after the initial sequencing of the virus, “because you don’t have to reinvent everything, you just fly,” Bancel said.
More companies are starting to see the real benefits of cloud, which has been long heralded as a catalyst for innovation and digital transformation, thanks to its ability to increase development speed and provide near-limitless scale. While Moderna’s success illustrates the business opportunities that cloud makes possible, it only scratches the surface of the potential value at stake. A detailed review of cloud cost-optimization levers and value-oriented business use cases foresees more than $1 trillion in run-rate EBITDA across Fortune 500 companies as up for grabs in 2030 (see sidebar, “About the research”), a number that will grow as cloud facilitates the adoption of emergent technologies such as augmented reality and blockchain. This $1 trillion is less a prediction than an estimate of what should be possible, provided companies aggressively pursue the cloud opportunity—and a call to action, because early adopters will capture a disproportionate share of the total value.
The emergence of this immense value pool comes at a time of increasing competitive pressure on companies. Fast-moving digital players are creating a fluid business landscape and accelerating the pace of change. For CEOs, cloud adoption is not just an engine for revenue growth and efficiency. Its speed, scale, innovation, and productivity benefits are essential to the pursuit of broader digital business opportunities, now and well into the future. Yet an overly narrow view of cloud-value economics and where value exists often keeps companies from achieving the desired outcomes.
The good news is that many companies across a range of industries have successfully implemented public cloud to achieve impressive results. These companies follow three best practices. First, they execute a well-defined, value-oriented strategy across IT and businesses and install a cloud-ready operating model. Second, they develop firsthand experience with cloud and adopt a much more technology-forward mindset than their peers. And finally, they excel at developing a cloud-literate workforce.
Our research identifies the pools of value for cloud adoption across three dimensions—rejuvenate, innovate, and pioneer—as well as the drivers of that value across the first two dimensions. It also highlights likely avenues for growth in the pioneer dimension. CEOs can begin their journey by working with their tech leadership to focus on four actions: set ambitious targets, pursue a hard-headed economic case, adopt cloud-native ways of working, and invest in standardized, automated cloud platforms.
Download the full report at https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/clouds-trillion-dollar-prize-is-up-for-grabs
