Cloud Computing Set to ‘Skyrocket,’ Driven by Economy
October 5, 2011
Grazed from Forbes. Author: Joe McKendrick.
Cloud computing is becoming more than a tactical measure adopted by managers and professionals seeking quick solutions to business and technical problems. It is increasingly being seen as a strategic initiative. Not only are most executives now planning to adopt some form of cloud computing for their organizations, they also expect these technology services to help position their organizations to succeed in today’s rough-and-tumble economy…
These are some of the findings of a new survey of 900 executives released by KPMG International and Forbes Insight. The majority, 81%, say their organizations have already moved at least some business activities to the cloud and expect 2012 investment “to skyrocket, with some companies planning to spend more than a fifth of their IT budget on cloud next year,” the study finds.
Economic factors were cited by 76% as an important driver for cloud adoption, bringing strategic benefits such as transforming their business models to gain a competitive advantage. Other considerations for moving to cloud computing include improving processes to offer more agility across the enterprise (80%), and offering technical benefits that they otherwise could not gain from their own data centers (76%).
Eighty-seven percent of executives feel that the changes delivered by cloud will be “significant.” This view is consistent among companies of all sizes and whether the respondents work within IT functions or business units. KPMG summarized the transformative effects cloud is delivering:
“Cloud is transformative in that it is creating new business opportunities as companies harness its power to efficiently facilitate new revenue, services and businesses. It is breaking down barriers in the supply chain, creating more effective and timely interaction between clients and suppliers. It is delivering speed, agility and cost reduction to IT and other functional areas within the enterprise. The transformative impact of cloud can readily be seen across the enterprise in areas from HR, CRM, and IT infrastructure.”
Almost one-quarter of respondents say their organization already runs all core IT services on the cloud (10 percent) or is in transition to do so (13 percent). Fewer than one in 10 executives say their company has no immediate plans to enter the cloud environment.
Still, many executives feel cloud computing needs to demonstrate a cost savings of at least 10% before they sign on completely. Almost half of respondents (45%) said that, to make cloud worth the investment, IT savings would need to be from 1% to 10% from current spending, 34% said such savings would have to be from 11% to 25%, and some 10% said IT savings would need to be in excess of 25%. Still, as the survey shows, organizations are scarfing up cloud services.
The survey also finds that most cloud adopters get their feet wet with Software as a Service (SaaS) implementations, such as Salesforce.com. Of the respondents, 46% of planned implementations are in a SaaS environment. However, over the long run, the study observes, “private clouds will dominate the most critical functions.”
The results of this survey demonstrate that the implications for cloud computing reach far beyond the walls of IT departments, and into corporate C-suites and boardrooms. Cloud projects often occur as tactical arrangements, either prompted by IT for greater access to tools and platforms, or by lines of business to acquire services or capabilities as needed, and often off-budget. The time has come, however, where cloud needs to be considered as a strategic investment.