January 19, 2022 | Article
Despite a shortage of cloud talent, top companies are finding ways to get past table stakes and build the capabilities needed.
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Cloud has emerged as one of the most important battlegrounds for tech talent. Despite the fact that there is more than $1 trillion of new value at stake in the cloud,organizations are struggling to capture those benefits because they don’t have the right talent in place.
That reality became clear when a global mining company shifted to cloud. While the business achieved a two-thirds reduction in infrastructure provisioning time, it wasn’t able to take advantage of the change, because it didn’t have experienced cloud professionals and leaders who could pinpoint issues or knew what changes were really required to unlock value. The result was that product delivery took longer than before.
While investment in cloud transformations tripled between 2017 and 2021,1 this example underscores a prevailing issue: companies have not matched that pace on the talent front. Companies with high cloud aspirations often don’t have the right talent or culture to help them navigate complex cloud economics, operating-model changes, and the technical requirements needed to make cloud value a reality. In fact, 95 percent of respondents in a recent McKinsey survey cited lack of cloud talent and capabilities as one of the biggest roadblocks they face.2
Companies that have prioritized cloud talent, on the other hand, have seen a profound impact. A utility company experiencing a 40 percent surge in contract volumes, for example, managed to launch a new digital customer-service channel on cloud six times faster than originally planned because technology leaders knew how to spot and remove key cloud delivery hurdles.
An airline reported it was able to save more than half its IT cost when it was hit by a sudden business downturn after cloud engineers built controls to scale back underutilized workloads.
When a telecom’s product team changed some offering terms and conditions to increase revenues, service utilization spiked. The cloud team’s FinOps experts did a rapid cost attribution, which revealed expenses that negated the incremental revenue gain—something that the business quickly addressed.
In our experience, companies that put in place the right cloud-talent approach as part of the development of a comprehensive cloud transformation engine can capture similar benefits (Exhibit 1).
Drawing on our research and experience working with hundreds of organizations on their cloud transformations, we have identified six practical actions that can help companies build a top cloud-talent bench and operating model.
1. Find engineering talent with broad experience and skills
Effective talent management starts with a clear understanding of the cloud skills companies need. There are three broad categories of talent: engineers, who typically determine which cloud services can be consumed and how to do so safely and reliably; developers, who focus on piecing together those services to deliver innovative outcomes; and nontechnical staff, who typically focus on enabling maximum cloud benefit while retaining the core value their function typically brings, such as how to manage risk.
More important than understanding the types of talent needed is hiring those with experience. The most valuable cloud engineers and developers in many established enterprises don’t necessarily have loads of certifications. Instead, they bring extensive experience in IT-infrastructure organizations and have at least five years of experience working in cloud, hands-on development skills, and a habit of lifelong learning. For industries with complex technical requirements, such as defense or telecommunications, practitioners need additional specialist skills and knowledge.
In fact, more than 80 percent of cloud professionals in the United States and Australia have held at least five technology roles during careers spanning ten years or more.3 Their skills profiles are likely to be “M-shaped”—that is, generalists with some deep specializations—and they are unlikely to have occupied a hyperspecialized role immediately before shifting to cloud but may well have occupied one or more such roles earlier in their career.
Experience working in traditional IT-infrastructure organizations is important because it gives cloud professionals an understanding of the range of fundamental design choices (for example, eventual data consistency across application instances, infrastructure platforms, and geographies) that need to be addressed to develop an application or platform. Blending this traditional expertise with deep cloud-specific knowledge and experience is critical to achieve robust, scalable, and secure solutions. Furthermore, top cloud service providers (CSPs) have developed so many capabilities and services that cloud developers and engineers can do many tasks themselves. Cloud developers and engineers don’t need the specific hyperspecialized technical knowledge—such as in hardware or different configuration languages—that is needed to manage on-premises environments.
2. Balance talent maturity levels and team composition
As many CIOs can tell you, cloud engineers with broad experience, knowledge, and multiple areas of specialization are scarce. What’s more, companies often spend too much time trying to land engineering stars, which delays getting the actual work done—or worse, drives them to rely too heavily on the talent they have.
Organizations can address this talent shortfall by balancing engineers with different maturity levels, sourcing strategies, and the team composition. When it comes to maturity levels, McKinsey research indicates that many successful IT organizations have about 30 percent of their engineers in the top “expert” and “proficient” tiers, 50 percent in the middle tier (“capable”), and 20 percent in junior tiers (“novice” and “advanced beginner”) (Exhibit 2).4 Leading companies focus on recruiting anchor leadership roles and entry-level positions as well as training and working with partners (see more on these topics in the sections that follow).
Engineers with less experience can still bring value to a cloud team as long as the team has a balance of engineers with complementary backgrounds and skills (Exhibit 3). By having a clear view of the specific skills gaps at the team level, companies can better target how to build up their overall cloud capabilities more quickly.
3. Build an upskilling program that is extensive, mandatory, and focused on need
New hires are not only hard to find but also two to three times more likely to leave than those already on the payroll.5 For this reason, most of the cloud workforce will need to come from within the existing organization, though not without upgrading their skills.6With the right approach, upskilling in-house talent can close the gap and cost less than half as much as hiring. But companies aren’t approaching their cloud training programs with enough urgency. While nine out of ten organizations are training their tech talent on cloud, for example, most of this training is voluntary and confined to engineers building core cloud platforms. Furthermore, our analysis shows that 44 percent of nontechnical functions are materially impacted by cloud, yet only 25 percent of companies are training the individuals in these roles to respond.7
Engineers need to learn new coding techniques, engineering approaches, and design patterns. They also need to understand how to optimize costs, create value, and manage both risk and security. Given the increasing need to work closely with business leaders, engineers will also need to learn how to collaborate effectively and be intimately familiar with business priorities. The best companies handpick their high-potential talent and create specific opportunities for them to accelerate their path to technical leadership. To ensure broad participation in upskilling programs, they also build in incentives, including mandatory and tailored cloud learning journeys supported by individual performance evaluations (Exhibit 4).
This cloud education needs to extend to senior leaders as well as to nontechnical functions such as finance, procurement, product management, and risk. At the senior-leadership level, training should be focused on developing a deeper understanding of the tech and business implications of cloud to deliver on a company’s strategy. Targeted cloud training can help nontechnical people understand how their function should adapt to the speed and flexibility of cloud. Upskilling programs for procurement teams, for example, should focus on how cloud pricing works, what drives demand, how to assess it, and how to bring cost-management efforts to teams using cloud.
4. Build an engineering culture that optimizes the developer experience
Executives in a recent series of in-depth discussions said that nearly 95 percent of their IT processes got in the way of unleashing cloud talent (and keeping them from leaving) (Exhibit 5).8
For instance, traditional IT architecture often requires every solution to be reviewed and approved. Typically, however, the standards for approval aren’t clear. Architects use the equivalent of “case law,” or precedent, to provide guidance, which ultimately may not be approved by a review board and can take months to get to an outcome. Many architects focus on why new solutions are problematic and clash with their carefully crafted intentional architectures rather than on the value potential in doing things differently. As one public-sector executive noted, “The hardest part wasn’t getting teams to understand what’s possible with cloud but changing the mindset from ‘why you can’t do this’ to ‘how you can.’”
Building a culture where cloud talent thrives requires supporting them with a new operating modelin which teams have autonomy to continually work on discrete products and platforms and automation reduces toil. Engineers need to ensure they’re building platforms that prioritize developer experience by providing easy-to-consume self-service capabilities that take care of all default configurations and security controls automatically as table stakes. Keeping cloud talent focused on important work, away from toil and meetings, and valuing hands-on work also helps retention. When one large bank found engineers were spending as little as 30 percent of their time on tools, it set up a dashboard to measure “engineering toil” and introduced a productivity team. By reducing process waste, increasing automation, and improving the developer experience, the bank achieved a 12-point improvement in engineer satisfaction.
The hardest part wasn’t getting teams to understand what’s possible with cloud but changing the mindset from ‘why you can’t do this’ to ‘how you can.’Public-sector executive
A cultural shift is also needed among supporting functions (such as risk, cyber, architecture, and procurement) to provide the collaboration and tools needed to deliver products safely and quickly. Advanced organizations define cybersecurity policies and standards programmatically so they can be implemented automatically in the code used to provision cloud systems (security as code), and compliance is automatically checked when code is committed. Cloud talent can then get on with the job of building business innovations rather than waiting for and chasing approvals. Psychological safety (such as instituting “blameless” post-mortems, implementing mechanisms for feedback and input, and providing safe environments for experimentation) has emerged as particularly important in building an engineering culture, as has “inner sourcing” (the ability for developers to freely examine cloud-platform code, make adjustments if they see opportunity for improvement, and create pull requests so the code owners can review).
That improvement in the developer experience should be complemented with a mindset of shared responsibility. Developers should understand that their objectives aren’t just to get new features delivered but to do so securely and within regulatory bounds. They also need to understand the business context, the user personas, customer journeys (both current and future state), and product adoption so that the products and platforms they deliver support the organization’s broader digital strategy.How companies can win in the seven tech-talent battlegroundsRead the article
5. Consider using partners to accelerate development, and assign your best cloud leaders as owners
A third of today’s cloud talent is employed by professional-services companies,9 so most organizations will struggle to meet their cloud-talent needs without partnering. Our recent analysis indicates, however, that many partnerships don’t work well.10The challenges range from partners driving simplistic “lift and shift” migrations to delivering complex policy as code that can’t be maintained with in-house skills.
The starting point for effectively working with partners is to move past vendor-management table-stakes practices, such as bringing organizational context, providing support to navigate internal politics, and collaborating on third-party vendor negotiations. Instead, top companies work with a partner to not only benefit from its cloud capabilities but also build up their own capabilities along the way. Since working with partners has proven to be one of the most effective ways to train talent, in fact, capability building should be a core element in commercial arrangements.
With this in mind, leading organizations favor working with fewer, more-expert cloud-partner resources and set higher productivity and capability expectations for them. In the most successful relationships, partners help to inform key decisions and provide context and insight from other organizations. Both parties are equally invested in collaboration and reducing provider churn to maintain delivery consistency.
When we prioritized our top IT talent to work with the partner, we ended up with a reliable environment, scaled benefits, and our talent upskilled to be cloud proficient.Insurance-provider executive
An important element of the relationship is assigning a cloud-specific leader as the owner. This differs from traditional partner-management roles in that the cloud leader not only ensures partners meet their commitments but also leads the cloud efforts and makes certain that internal capabilities are developed at the right pace to keep up with what the partners are delivering.
This can entail, for example, influencing work allocation to ensure that the engineers most in need are coached by partner experts, and managing a schedule of knowledge-sharing sessions. This role also owns key decisions that underpin cloud value (for example, cloud operating model, talent development, architecture, security policy, deployment patterns, and guardrail exceptions).
Given the important role cloud partners play, it pays to have the best IT talent work with them. One insurance provider noted, “When we prioritized our top IT talent to work with the partner, we ended up with a reliable environment, scaled benefits, and our talent upskilled to be cloud proficient.”
6. To keep top talent from leaving, focus on what motivates them
Fewer than half of cloud professionals occupy their roles for more than two years.11 So how do you keep them longer? Our analysis shows that compensation, access to cutting-edge tech, the work environment, and professional development are their biggest motivators.
When sales and marketing teams dictated the choice of tech vendors and tools, our cloud engineers constantly battled to marshal suboptimal solutions through antiquated processes. Morale was terrible, and our best people kept leaving. But now that our engineers choose our tools and technologies, they are deeply engaged.Telecommunications executive
For this reason, top companies ensure that their top talent can not only work with the most advanced technologies, languages, frameworks, and tools to evolve their skills but also develop the necessary experience to continue to be successful in the organization and industry. In the same vein, they give their leading people the freedom to experiment with new services and solutions by reducing managerial red tape and providing funding (within clear guidelines). One telecommunications executive explained, “When sales and marketing teams dictated the choice of tech vendors and tools, our cloud engineers constantly battled to marshal suboptimal solutions through antiquated processes. Morale was terrible, and our best people kept leaving. But now that our engineers choose our tools and technologies, they are deeply engaged.”
Finally, with remote work an increasing fact of life, organizations should institutionalize an operating model that allows employees to work remotely. That includes scaling collaboration tools, security protocols, and remote-friendly teamwork approaches. This can not only help drive retention but also be a tool in attracting talent.
Without cloud talent, the value that cloud offers is simply unattainable. Companies can win the war for cloud talent, however, when they combine a clear understanding of what talent they really need, a culture where that talent can thrive, and a commitment to practical changes so they can capture cloud value quickly.
ABOUT THE AUTHOR(S)
Brant Carson and Dorian Gärtnerare partners in McKinsey’s Sydney office, where Keerthi Iyengar is an associate partner; Anand Swaminathan is a senior partner in the Singapore office; and Wayne Vestis an expert in the Melbourne office.
The authors wish to thank Oliver Bossert, Jayne Giemzo, Martin Harrysson, Lawrence Hunt, James Kaplan, Ranja Reda-Kouba, Angelika Reich, Pamela Simon, Megha Sinha, and Suman Thareja for their contributions to this article.