For European companies, the cloud journey presents both significant opportunities and challenges, highlighting the need for a more strategic approach to fully unlock its potential.
European businesses are undeniably embracing cloud technology, with over 90% of companies citing their cloud programs as a priority, as stated in a McKinsey report. More than one-third of these businesses report that they intend to move over half of their workloads to the cloud. These figures reflect an ongoing commitment to digital transformation and operational efficiency. Many have already made significant strides, with almost two-thirds of European companies reporting that they have established a cloud foundation.
The benefits captured so far are notable. A significant 55% of companies report being satisfied with their cloud investments, noting improvements in IT security, operational efficiency, and productivity. Furthermore, 75% of businesses have realized cost savings in IT, while over half have generated new revenue streams from their cloud initiatives. Such outcomes demonstrate that cloud adoption is no longer just about cost reduction; it’s about driving new business opportunities and enhancing competitive positioning.
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The Cloud Transformation Gap
Despite these successes, the broader cloud adoption landscape in Europe reveals a more complex picture. While many companies are capturing value, this value remains isolated and subscale, primarily within specific areas of the business. A staggering 82% of European companies admit that the full potential of cloud is yet to be realized. This shortfall is partly due to a disproportionate focus on IT-centric cloud strategies that center on infrastructure migration rather than driving value in business operations.
This IT-first approach, although common across Europe, is limiting the transformative impact of the cloud. The real potential of the cloud lies in its ability to streamline and enhance business processes. Research indicates that approximately two-thirds of cloud value comes from operational improvements outside of IT—such as process automation, improved customer engagement, and enhanced decision-making. However, only one-third of companies measure outcomes beyond IT, such as cost savings in other departments or new revenue generation. This gap highlights a significant opportunity for businesses to recalibrate their cloud strategies to ensure they are measuring the right metrics for long-term success.
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Embracing the Shift: Business-Centric Cloud Adoption
To unlock the full potential of cloud, European businesses must shift their focus from IT-centric solutions to cloud strategies that drive broader business value. A more business-oriented approach requires embracing cloud’s ability to optimize operations, innovate products, and improve customer experiences. The integration of generative AI (GenAI) into cloud adoption further amplifies this potential, with companies leveraging AI technologies to create personalized solutions, automate complex workflows, and gain actionable insights from data.
One critical step in this transition is recognizing the strategic role of cloud service provider (CSP) and system integrator (SI) partnerships. Beyond traditional vendor relationships, European companies must foster collaborations that align cloud initiatives with business transformation goals. By working closely with CSPs and SIs, businesses can build the necessary capabilities to support their cloud adoption efforts, from migration funding to talent development and operational model design.
Also Read: Sovereign Clouds: Europe’s Answer to Data Privacy Challenges
Optimizing Cloud Spend and Maximizing ROI
As companies scale their cloud adoption, managing costs becomes increasingly critical. The lack of effective cloud spend management, or FinOps, is a common pitfall that many companies encounter. While cloud provides immense value, its costs can spiral without careful oversight. European businesses can learn from their U.S. counterparts, many of which have invested in robust FinOps practices from the outset of their cloud migrations. This early investment in spend management ensures that cloud costs are optimized and aligned with business value.
Additionally, scaling cloud capabilities should focus on achieving measurable ROI rather than simply increasing the number of workloads in the cloud. For example, a Southern European bank was able to achieve significant operational benefits with less than 20% of its workloads in the cloud, thanks to the adoption of cloud-native engineering practices and strategic partnerships with CSPs and SIs. This approach highlights the importance of balancing cloud adoption with ROI considerations to avoid diminishing returns as cloud usage grows.
The cloud journey in Europe is still unfolding, but by adopting a more business-centric approach, companies can unlock the true potential of cloud to drive innovation, optimize operations, and fuel growth. With up to USD 3 trillion in potential value for those who move beyond simple cloud adoption, the opportunity is ripe for those ready to take bold steps and embrace the future of business transformation.
