Cloud native, API first approach separates the best from the rest

PwC’s Accelerating Performance research* identified 11 factors that differentiate the top 20% of companies from the remaining 80%. This article focuses on being ‘cloud native’ and API first. Find out more about Accelerating Performance.

Cloud native: 1.8x more likely to modernise across the back-, middle-, and front-office for improved employee and customer experiences.

API enabled: 1.8x more likely to support connectivity, integration, and value creation, inside and out.

Even in today’s digital world, it can be challenging for business leaders to make the case for disrupting business as usual to upgrade legacy tech platforms - particularly if those platforms are critical to a company’s operations.

However PwC research* shows that Australia’s global top performers (based on a combination of revenue growth and profit margin, adjusted for industry) are almost twice as likely than other Australian companies to take cloud native and API-first approaches.

While some top-performing companies may have been cloud native from the start, many businesses have required a transformation journey from legacy platforms that may have been too slow and costly to respond to their rapidly changing business needs. Our research shows that top performers are almost 1.2 times more likely to have converted their legacy systems to cloud-based ones:

^{Source: PwC’s Accelerating Performance research}

They’re also 1.3 times more likely to use APIs to connect their internal technology systems and data, making their operations more streamlined and efficient:

What’s more, Australia’s top-tier companies are outperforming their international counterparts when it comes to connecting internal systems through APIs (92% versus 84%). 

They’re gaining a competitive advantage as a result: better digital experiences for customers, supported by improved digital experiences for employees; better use of AI, data science, and advanced analytics for improved decision making; and more streamlined connections with external and ecosystem partners.

So what do companies need to do if they want to shift from legacy platforms to a cloud native, API-first approach?

• Set up micro-services

Moving from a monolithic legacy system (that is, anything built using old architectural principles) to an agile API-based, cloud native system requires breaking up functions into stand-alone ‘micro-services’. 

Developers can achieve a strong level of modularity by dividing an application into smaller, self-contained services. Each microservice can be independently developed and maintained, enabling teams to work on different services concurrently. This modular approach also facilitates simpler testing, deployment, and scalability, as modifications to one microservice do not impact the entire system.

To achieve this is no mean feat. Organisations need a deep understanding of the business functions to work out the best combination of tech to meet their needs. The closer a legacy platform is to the core business, the harder it can be to change.

• Embrace a standardised approach
  

Leading companies are ‘letting go’ of what may have previously been regarded as core intellectual property and are instead adopting standardised processes in some areas to to increase agility inside and outside of their organisation. In this way, cloud apps and APIs are like LEGO blocks - standardised components that businesses can configure in a way that best suits their unique capabilities (i.e. coming up with their own innovative LEGO designs).

• Build in cybersecurity from the start
  

Using cloud-based apps and APIs mean that companies need to manage third party risks. Digital leaders embed cybersecurity and data privacy in their processes and in early stages of tech upgrades, ensuring their operating model is secure by design. 

• Reskill and bring your people on the cloud journey
  

Cloud transformation and effective cybersecurity will require rethinking your people strategy as well. To rise to the challenge of fundamentally reskilling existing workers, as well as securing new talent for tech delivery, the best-performing companies include employees as part of the broader strategic change. Of course, not every company can hire and retain all the specialised talent it needs. Those that can’t often look to managed services partners to bridge the gap. Leading Australian companies are in fact 1.2x more likely to turn to managed services partners to gain access to talent and expertise.

^{* PwC surveyed 464 respondents in Australia at director level or above with anonymised responses, in November 2022, from the following industries: consumer markets; financial services; technology, media and telecommunications; industrial, manufacturing and automotive.}