Cloud value in cash management
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This document discusses the myths and realities of cloud adoption. It presents 7 myths about cloud computing and rebuts each with realities based on research. It then estimates that adopting cloud technologies could provide $1 trillion in value for Fortune 500 companies through cost savings, innovation, and growth. Lastly, it provides examples of banking use cases that could leverage cloud technologies.
Cloud value in cash management
- 1. Webinar Cloud value in cash management Copyright © 2021 McKinsey & Company. All Right Reserved.
- 2. McKinsey & Company 2 Myths Realities 3 Business value of speed, agility, innovation, and scalability swamps potential IT cost reductions The main value of cloud business cases is IT cost reduction 4 Almost all off-premises vulnerabilities result from misconfiguration— security as code is required to enable protection and agility The security I can set up and control in my own data centers is superior to the security on cloud 6 An effective infrastructure organization is even more important off- premises but requires an agile, product-based model Moving to cloud eliminates the need for an infrastructure organization 7 Transitioning high-impact business domains allows for “local critical mass” in achieving agility The most effective way to transition to cloud is to focus either on applications or on entire data centers 2 A range of options exist between lift and shift and complete refactoring, with optimized IaaS and containerization potentially attractive To move to cloud, you must either lift and shift applications as they are today or refactor them entirely 5 Current architectural choices (eg, backhauling) can increase latency off-premises, but different choices yield better results There is greater latency among applications running on cloud providers’ networks than there is on in-house networks 1 Cloud computing costs more than in-house computing Properly architected applications can be less expensive off-premises, but that requires managing ROI carefully McKinsey Academy Virtual Exchange The myths and realities of cloud adoption
- 3. McKinsey & Company 3 Source: Independent third-party research data (OmnicomGroup and Known), industry and McKinsey expert interviews, McKinsey D2020 IT cost benchmarking, McKinsey Global Institute research, team analysis 1. Rejuvenate $430bn 2. Innovate $770bn 3. Pioneer Additional opportunity Early adoption of cloud technology Embracing culture of experimentation with low cost of failure and gaining experience in cloud technology, which is an enabler for early adoption of future tech such as quantum computing, AR/VR/MR (mixed reality), blockchain, and 3D/4D printing IT cost optimization Cost optimization of application development and maintenance and IT infrastructure Risk reduction Improved business resilience of the organization Core operations digitization Implementation of latest technological/digitization achievements in core operations Innovation-driven growth Business growth from new and enhanced use cases in analytics, IoT, and automation Accelerated product development Enhancement of operating-model agility, ease of cloud configuration, and democratized access to computational power Hyper-scalability Access to instant on-demand elasticity in compute and storage capacity to scale across customer segments, geographies, and channels There is an estimated $1 trillion in EBITDA value from cloud adoption across the Fortune 500.
- 4. McKinsey & Company 4 Innovation-driven growth Cost savings in business operations Total 70 170 100–190 50–160 310–610 Value not estimated1 700–1,200 Low case High case Impact of cloud use cases and improvements, Estimated 2030 EBITDA run-rate impact, $ bn Note: Cost of implementation is not included in calculation. 1. Premature to estimate value in 2030. Value driver 2 Improved business resilience 3 1 Cost optimization of application development and maintenance and IT Infrastructure Implementation of latest technological/digitization achievements in core operations via analytics, IoT, and automation use cases 7 Adopting emerging technologies by gaining experience in experimentation at low cost Growth from new and enhanced use cases 6 Leveraging public-cloud hyper-scalability 5 Adopting accelerated product development 4 Source: Independent third-party research data (OmnicomGroup and Known), industry and McKinsey expert interviews, McKinsey D2020 IT cost benchmarking, McKinsey Global Institute research, team analysis II. Innovate I. Rejuvenate III. Pioneer 360–770 340-–430 Almost all value comes from business improvement, acceleration, and innovation.
- 5. McKinsey & Company 5 Function Domain Sanitized use-case description Lever Marketing and sales Customer-service management Automating transaction calls using voice-recognition algorithms and cognitive agents Cost Risk Fraud and debt analytics Enhancing predictive power of traditional early-warning systems in order to reduce cost of credit Cost Marketing and sales Churn reduction Protecting customer loyalty through holistic retention programs and dedicated execution capabilities Revenue Marketing and sales Customer-service management Routing call-center cases based on multimodal data to increase customer satisfaction and reduce handling costs Cost Marketing and sales Customer-service management Real-time voice-recognition algorithms to redirect distressed customer calls to experienced handlers for retention offers Cost Marketing and sales Customer acquisition / lead generation New-client acquisitions by applying targeted digital marketing Revenue Corporate business functions Analytics-driven hiring and retention Identifying key drivers of employee performance and spotting employees with high likelihood of success Cost Marketing and sales Pricing and promotion Boosting fee-based revenues to detect inconsistent practices and poor pricing control Revenue Corporate business functions Analytics-driven accounting and IT Intelligent document recognition to automate document sorting and extraction process Cost Select banking use cases