Battening down? Here’s the cloud investments that can help build financial resilience
Managing Director, Customer Value and Transformation Advisory, Google Cloud
Whatever the future holds, economically or otherwise, smart technology investments have shown their worth time and again.
Worried about a recession next year? Who isn’t, at least on some level? And yet, there’s important steps you can take now that could dramatically strengthen your organization — no matter the economic outlook or outcome ahead.
All the warning signs are there. First came the post-pandemic challenges with supply chains and labor markets, and now organizations are facing the highest inflation rates in four decades, rising energy prices, and the continued economic impact of the Russia-Ukraine War.
Many organizations are already “battening down the hatches” in response to the latest macroeconomic headwinds as we confront yet another period of economic disruption. This isn't the first time we've all experienced such volatility, and it won't be the last. So how do we prepare for these moments in advance and maintain a level of financial resilience that helps us more effectively navigate these times, wherever the economy might take us?
It turns out now may be exactly the time to continue investing in innovation. As business leaders review their strategic plans, they want to determine how to both draw out the maximum value from their investments and optimize operational spend in the shortest time possible.
According to Harvard Business Review (HBR), a cohort of companies were actually able to flourish during the past three global recessions.
These companies strategically lowered their costs by reducing waste in time, effort, and materials while continuing to invest in capabilities that drive future growth. In other words, the most effective strategies for achieving resilience tend to focus on boosting operational efficiency and finding opportunities to extend value — not exclusively on cutbacks.
With that in mind, the financial resilience strategies of the past may not fit with the dynamic, digital economy of today. IT spending is now more critical than ever to propel a company to growth.
A recent Gartner survey found that executives identified technology investments for improved efficiency and scalability as one of the very last areas to face cuts in organizations, with only 23% of CEOs and CFOs placing technology in their top two choices for cuts. New technologies like cloud computing, predictive analytics, artificial intelligence (AI), and machine learning (ML) are now seen as core business drivers, enabling companies to adapt quickly — especially in unpredictable conditions.
But can your IT investments streamline processes, accelerate value creation, and drive competitive advantage while still balancing spend?
We have identified three foundational pillars for building financial resilience in the digital era, anchored around optimizing technology, embracing AI, and empowering the workforce. We outline these three pillars below, or you can go deeper in our research paper, “Restructuring IT to overcome economic adversity and become more resilient.”
Pillar #1: Optimize your technology costs
Investing in technology to accelerate business value is important, but it’s equally crucial to consider how those same technology investments can help reduce IT costs. Cloud capabilities can enable you to manage peaks in demand, unify data to establish visibility, proactively protect against threats, and develop new financial management capabilities and culture to monitor and retain control over cloud costs.
For example, payments industry powerhouse PayPal migrated its payment platform to Google Cloud so it could scale its data infrastructure up and down to meet spikes in transactions while also modernizing its data analytics systems to get real-time insights for faster decision making.
After migrating 20 petabytes of data and 3,000 users into Google Cloud’s highly scalable data warehouse, BigQuery, the company was able to handle 5.3 billion transactions during the final quarter of 2021 and delivered 20% in cost savings compared to its legacy data warehouse.
Among the areas where cloud can help optimize cost are:
- Managing demand scalably: Take advantage of autoscaling features and flexible, consumption-based pricing to reduce costs and match real-time demand without taking on the operational burdens of resource management.
- Unifying disparate data systems: Centralizing data systems, management, and access helps to optimize spend by reducing the total cost of ownership. It also breaks down data silos to provide a 360-degree view of what’s happening in the business and make it easier to gain insights that enable faster response to disruption.
- Investing in security: Safeguard existing and future IT investments by investing in practices like Zero Trust security solutions and global networks that rely on defense-in-depth layers to embed security into all your processes so you can effectively protect against threats and prevent configuration errors.
- Proactively monitoring cloud spend: Adopt cloud management tools that allow you to optimize costs intelligently and provide the visibility needed to make decisions about resource utilization, from selecting the right machine types to gaining a detailed understanding of current cloud costs and how they will trend in the future.
- Adopting FinOps across your organization: FinOps practices deliver the maximum business value from the cloud by helping organizations establish cost visibility, optimize cost efficiency, forecast cloud consumption, and set metrics to quantify the value of their cloud investments.
Pillar #2: Enhance operational effectiveness with Data and AI
Too often organizations turn to cost reduction to realize savings without first looking at ways to boost operational efficiency. The key is understanding where the greatest, or easiest, opportunities are for improvement and finding ways that technology can help ease the biggest pain points slowing you down.
Technologies like advanced data analytics, AI, and machine learning help organizations to tackle these challenges head on, enabling them to make the most of their data. Implementing robust AI and machine learning solutions enables teams to drive efficiencies for a variety of specific use cases, whether it’s accurately forecasting inventory to mitigate supply chain risk or improving conversion across marketing and sales or reducing call center workloads.
Whether the financial future is sunny or stormy, the right technology investments can greatly enhance operations, profits, and innovation
Many forward-thinking companies are building data clouds to adopt and scale these use cases. Data cloud technologies empower companies to act on their enterprise data in real time while unlocking AI and ML capabilities to improve decision-making and increase employee productivity.
The Home Depot, for instance, was able to reduce call abandonment by 20% and speed up resolution time by 5% by replacing its legacy interactive voice response (IVR) solution with a self-service voice solution powered by Google’s data cloud. Prior to the switch, customers could spend more than 90 seconds struggling to navigate the old system before eventually redirecting to the service desk. Altogether, it’s helped The Home Depot save 173 years in customer time spent trying to get answers from the old IVR solution and delivered significant cost savings — a $67M reduction in annual costs.
Pillar #3: Empower your people with the right tools and data
In today’s hybrid world, technology plays an ever-present role in how people connect, work, and collaborate together. It not only underpins safe and flexible working environments, it also determines how fast products and services are delivered, the quality of employee experiences and engagement, and even impacts your ability to retain talent. Research shows that teams with low-engagement typical experience turnover rates up to 43% higher than highly engaged teams.
Cloud-based collaboration tools like Workspace, for instance, solve many of the headaches of remote interactions, enabling workers to communicate, create, meet, and collaborate wherever they are in the world and in real time. After migrating 28,000 users to Workspace, Colgate-Palmolive saw immediate changes in the way their people interacted and worked together, whether they were in the office or not. Over 94% of users were actively using Google Drive after only three months and logged more than 57,000 hours on Google Meet in one month alone.
Three foundational pillars can help organizations build financial resilience in the digital era: optimizing technology, embracing AI, and empowering the workforce.
In addition, low-code development apps like AppSheet streamline and digitize manual processes, making the development process easier for more users. Adopting AI and ML automation helps cut down on repetitive tasks like emails or searching for information that often take time away from more productive and valuable activities. A Google-commissioned IDC report found that when employees use Workspace, they have 36% more time for creative work and cut time spent on routine or administrative tasks by 24%.
The right technology enables employees to be more productive in their daily work and ensures they can connect from anywhere on any device, securely. Over time, this translates to higher rates of employee satisfaction, productivity, and engagement — all factors that influence innovation and increase revenue.
As the world becomes more connected and agile, it’s critical we begin to reimagine the role of IT and the opportunities it offers to help transform how our organizations operate and become more resilient.
With the right approach, existing and future technology investments can help balance out tough decisions during a downtown. Technologies like cloud can be the key to establish financial governance and real-time visibility for optimizing costs, increasing operational efficiency, and empowering your people wherever they work. Such efficiency can even help you protect against more drastic cost-cutting measures, such as slashing R&D budgets, cutting sales and marketing spend, or letting go of valuable talent.
The cloud is now a fundamental ingredient for building financial resilience, so you’re prepared to survive, even thrive, through whatever challenges lie ahead.