Global professional services firm Deloitte recently published a report asking whether data modernization is driving cloud adoption or vice versa. Deloitte defines "data modernization" as moving from legacy databases to modern databases that can handle unstructured data.

According to the report, "data modernization efforts offer substantial cost savings over previously used data management strategies." A lot of the cost savings come from cloud databases, which provide the usual cloud benefits plus lower database-related overhead.

As Deloitte points out, cloud providers offer a lot more than storage and compute these days, they also offer modern databases and analytics capabilities that take advantage of AI. While data warehouses aren't going away anytime soon, businesses are doing more in the cloud than ever and the trend will continue.

"This year, more respondents placed a higher premium on AI to drive business results, specifically with AI automation," said Chris Jackson, private company technology leader at Deloitte. "Predictive analytics and legacy modernization are two of the top investment priorities. The companies using predictive analytics to forecast business results or customer behavior has jumped 65% percent over the last five years."

91% of the 504 survey respondents said their companies are primarily storing data on cloud platforms. 55% said data modernization is driving their cloud migration, which is slightly behind security and data protection at 58% as factors. Companies are realizing that it's easier to understand customer journeys, monitor customer experiences and make the "next best offers" in cloud environments using cloud-based analytics tools and machine learning versus using comparatively limited on-premise analytics solutions.

Need for a coherent cloud and data modernization strategy

Traditionally, cloud and data modernization strategies have been implemented separately. However, particularly in the context of digital transformation, a unified cloud and data modernization strategy is essential. For one thing, the cloud makes it faster and easier to adopt new capabilities and experiment. In addition, cloud flexibility and economics tend to lower the cost of moving beyond an organization's core competency.

"If you think about the future of health, it’s going to be driven by a lot of interoperable data," said Jackson. "Walmart built a clinic in Atlanta. [That gives them] data from the retail side and data from the healthcare side that can be leveraged from a strategy standpoint for preventive wellness instead of treating disease."

Companies in various industries are using cloud to optimize processes and innovate. 57% percent of Deloitte survey respondents said they're operating in the cloud now which means their data and important applications are in the cloud.

"Almost all data management approaches will likely be modernized and almost all data and applications will be in the cloud," the report states. While companies are moving more storage, compute, applications and analytics to the cloud, enterprise software and tool vendors are stoking the fires by encouraging data center customers to move to the cloud. Typically, a comparison of data center and cloud offerings shows that the latter has fewer constraints.

Meanwhile, cloud vendors continue to offer compelling new services that enable customers to do more in the same environment. Having a coherent combined cloud and data modernization strategy helps advance a company's business objectives.

"Companies are moving to the cloud to speed time to value for their customers," said Jackson. "We need to align data strategies and cloud strategies, but you have to keep the priorities in mind. Are you looking at how quickly I can get information to the customer in an intimate manner and maintain and grow that relationship, or am I taking data from sensors in a supply chain process to track the movement of something?"

Companies that have not yet aligned their cloud and data modernization strategies should do so now, because the companies reaping the most benefits have a three-to-four year lead. Those companies have moved past the initial experimental stages and they've learned a lot along the way. The longer a company waits to implement a coherent cloud and data modernization strategy, the harder it will be to compete effectively.

Chris Jackson, Deloitte

“In an environment where everything is constantly changing, you have to work more together across teams in an integrated manner and much faster than we've done historically,” said Jackson. “It makes you more agile.”

Getting to a unified strategy

Operating differently requires organizational adaption as enabled by people, processes, and technology. Companies are seeking out specific types of expertise and also upskilling their existing talent across departments and at all levels of the organization to affect smoother and more strategic transformations.

"C-suite roles have been changing over time," said Jackson. "'CMO' has taken on a different meaning because CMOs have learned enough about technology to be dangerous and they also understand the customer aspect of things."

In some cases, chief digital officers are being placed over CIOs that have been masters of IT operations but not necessarily visionaries. Jackson said CFO roles are embracing a private equity mindset, looking at business opportunities, products, and portfolios that need investment. Regardless of what the C-suite makeup looks like, it’s important to have a common vision to which the entire organization is aligned.

A unified cloud and data modernization strategy helps organizations realize their strategic goals faster and more efficiently.