In 2023, organizations faced an unprecedented level of pressure to digitally transform with the rise of generative AI as well as imperatives such as sustainability, work productivity and security. THE “Cloud Transformation Report“, a new global survey from the IBM Institute for Business Value (IBV), reveals that many large companies share a common foundation when it comes to digital transformation: a clear hybrid cloud strategy.¹ These companies cite several key benefits related to using a hybrid cloud approach to power business transformation, including modernization, agility, security, sustainability and the ability to unlock the power of generative AI.
Here’s a look at the key factors impacting cloud transformation over the past year and what they mean for businesses on their cloud modernization journey:
Considerations for Generative AI Adoption
This year, generative AI has captured the attention of business leaders, but it has also raised questions, including: What is the right foundation for accelerating and scaling impact? For many organizations, the answer lies in a hybrid cloud approach. The new study finds that 68% of hybrid cloud adopters have already established formal organization-wide policies to guide their approach to generative AI.
The rise of generative AI is accompanied by an influx of data. While this can fuel huge business innovations, it also requires strategic considerations. When executing an AI strategy, businesses should consider their current computing capacity, where data resides (in the cloud, on-premises, at the edge), how data is accessible, what security controls are needed, and how to effectively use existing technology investments. In addition to helping improve reliability and performance, a hybrid cloud approach can enable increased agility through the ability to connect cloud and on-premises environments, removing barriers to flexible AI workflows.
Address security and compliance concerns
When it comes to generative AI, companies are also concerned about the potential exposure of sensitive data. For example, 45% of cloud leaders cited concerns about cybersecurity or data and information privacy as the biggest barrier to their desire to implement generative AI. The findings indicate that highly regulated industries are increasingly considering risks, such as security, when considering technology. These organizations are less likely to have a formal approach to AI than some other sectors, but they show progress: 57% of banks and financial markets organizations, 54% of insurers, and 54% of life sciences institutions /pharma have adopted a formal approach. to technology so far.
For highly regulated industries tasked with protecting critical data, there are many challenges. To avoid blind spots, a comprehensive security strategy that provides visibility across an entire hybrid cloud infrastructure is essential to mitigate risks.
Overcoming skills challenges
The report also reveals persistent barriers to broader cloud adoption, perhaps none as significant as the current skills gap. For example, 58% of global decision makers say cloud skills remain a significant challenge and 72% of organizations have created new positions to meet the need for cloud skills. Within individual sectors, this deficit is even larger: 79% in highly regulated sectors such as banking and financial markets, as well as 81% in transport and travel, and 79% in the chemical and petrol.
Putting sustainable development initiatives in the spotlight
Recently, sustainability has been linked to broader business goals and has become a major technology investment priority for organizations across all industries. Yet as generative AI grows, so does the increase in data processing required for AI workloads. This can present new challenges for organizations seeking to reduce their greenhouse gas (GHG) emissions.
With the right tools in place, the cloud can help businesses track, manage and report on their sustainability goals, including to partners and third parties. In fact, our results determined that 42% of global decision-makers confirm they are already using the cloud to help them deploy, track and manage their sustainability goals internally.
Looking to the future
As more and more companies embark on the AI journey, it will become critical for these organizations to ensure they have the appropriate infrastructure and talent to support these initiatives. Organizations that adopt an agile and secure data structure with hybrid cloud architecture will likely be tomorrow’s winners, armed with a solid foundation to compete in the future AI-driven landscape.
View full Results from the IBM Institute for Business Value. Do you want to embark on your transformation journey? Here are some resources:
 This study was conducted in partnership with Harris Poll, an independent research company.
General Manager, IBM Cloud Product and Industry Platforms
Senior Associate, Global Offering Leader: Personalized and Exponential Technology HCM