In 2023, organizations have faced an unprecedented level of pressure to digitally transform, especially with the rise of generative AI as well as imperatives like sustainability, labour productivity and security. The “Cloud Transformation Report,” a new global survey from the IBM Institute for Business Value (IBV), found that many leading enterprises share a common foundation to digital transformation – a clear hybrid cloud strategy.[1] These businesses cite several key benefits to using a hybrid cloud approach to fuel business transformation, including modernization, agility, security, sustainability, and the ability unlock the power of generative AI.

Here is a look at the key drivers that impacted cloud transformation over the past year and what they mean for companies on their cloud modernization journey:

Considerations for Adopting Generative AI

This year, generative AI captured the attention of business leaders – but it also raised many questions, including what’s the right foundation to accelerate and scale impact? For many organizations, the answer is a hybrid cloud approach. The new study found that 64% of hybrid cloud adopters in Canada have already established formal, organization-wide policies to direct their approach to generative AI.

With the rise of generative AI also comes an influx of data. While this can fuel tremendous business innovations, it also requires strategic considerations. When executing an AI strategy, enterprises must consider their current compute capacity, where data resides – in the cloud, on premises, at the edge – how data is accessed, necessary security controls, and how to use existing technology investments effectively. In addition to helping deliver enhanced reliability and performance, a hybrid cloud approach can enable increased agility with the ability to connect cloud and on premises environments, removing barriers to flexible AI workflows.

Addressing Security and Compliance Concerns

When it comes to generative AI, enterprises are also concerned about the potential exposure of sensitive data. 47% of cloud leaders in Canada say concerns about cybersecurity or privacy and confidentiality of data and information are a key obstacle in their push to implement generative AI. In addition, 61% of Canadian cloud leaders cite security or compliance as reasons for moving certain workloads from public clouds to private clouds or on-premises data centres, up a whopping 39% from the previous year.

The findings indicate that highly regulated industries are increasingly weighing risks, like security, when considering the technology. These organizations are less likely to have a formal approach to AI than some other industries, but they are showing progress. At a global level, 57% of banks and financial markets organizations, 54% of insurers, and 54% of life sciences/pharma institutions have adopted a formal approach to the technology so far.

For highly regulated industries that are tasked with safeguarding critical data, there is a lot on the line. To avoid blind spots, a holistic security strategy that provides visibility across an entire hybrid cloud infrastructure is vital to mitigate risk.

Overcoming Skills Challenges

The report also shows persistent obstacles to more widespread cloud adoption – perhaps none as great as the ongoing skills gap. 56% of Canadian decisionmakers say that cloud skills remain a considerable challenge (slightly below the global average of 58%) and 68% of Canadian organizations have created new positions to fulfill the need for cloud skills, just below the global average of 72%. Globally, within individual industries, this deficiency is even greater: 79% in highly regulated industries such as banking and financial markets, as well as 81% in transportation and travel, and 79% in chemicals and petroleum.

Putting Sustainability Initiatives in the Spotlight

Recently sustainability has been tied to broader business goals and become a larger priority for technology investments for organizations across industries. Yet as generative AI grows, the increase in data processing required for AI workloads does too – which can present new challenges for organizations that are looking to reduce their greenhouse gas (GHG) emissions.

With the right tools in place, cloud can help enterprises track, manage and report on sustainability goals — including for partners and third parties. In fact, our findings determined that 42% of Canadian decisionmakers confirm they are already using the cloud to help deploy, track and manage sustainability goals internally.

Looking to the Future

With more enterprises embarking on their AI journeys, it will become critical for these organizations to ensure they have the right infrastructure and talent in place to support these initiatives. Organizations that shift to an agile, secure data structure with a hybrid cloud architecture will likely be the winners of tomorrow – armed with a strong foundation from which to compete in tomorrow’s AI-driven landscape.

View the full IBM Institute for Business Value findings: https://www.ibm.com/thought-leadership/institute-business-value/en-us/report/data-story-hybrid-cloud-ai

Interested in getting started on your transformation journey? Here are some resources:

Learn More about IBM's Hybrid Cloud Solutions
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Connect with IBM Consulting 
Get Started with IBM Cloud Carbon Calculator