Midmarket companies take the lead on cloud computing adoption

September 21, 2011 Off By David
Grazed from TechTarget.  Author: Linda Tucci.

This year’s Amazon EC2 outage and Dropbox security breach may have put a little scare into companies, but it didn’t completely spook them, according to a recent study on cloud computing adoption. Organizations remain bullish on cloud computing, particularly in the midmarket, where nearly half plan to adopt some form of infrastructure or platform cloud services, the CompTIA study revealed…

The survey of 500 IT and business professionals and 400 IT firms in the United States found that 20% of companies that were using the cloud turned to on-premises solutions after the high-profile Amazon outage and Dropbox security breach.

"I think it is a reaction to, one, ‘I have a pretty good capitalized infrastructure that I am probably not fully utilizing. I can create a great private cloud here.’ So, some people realized they had a cloud and they didn’t know," explained Todd Thibodeaux, president and CEO of Computing Technology Industry Association (CompTIA), which conducted the survey with Research Now. "Then there were those groups that were concerned about redundancy and data security. They maybe couldn’t get the SLAs right."

Cloud computing adoption gets less hazy

CompTIA’s second annual study on trends in cloud computing suggests that in the space of one year, U.S. businesses have become more educated in the cloud computing concept and more interested in what it can mean for them. In addition, early adopters recognize that their cloud strategy needs tweaking.

When asked to self-assess their understanding of cloud computing, respondents from small and large firms reported a 29% increase compared with 2010. Midmarket respondents, who were already "ahead" of their counterparts last year, claimed a 22% increase.

Executives and IT staff reported a tremendous leap in their grasp of the cloud concept, from just 19% in 2010 to 58% this year. Tim Hebert, vice president of market research at CompTIA, said the shift is appropriate — while IT is still driving cloud adoption, business lines are the ones in the field, using the technology and seeing where there are day-to-day needs to be met. These end users are influenced by their peers, not unlike the latest gadget lust, he said.

Still, questions remain, just as with any relatively new concept. This year, 66% of end users reported wanting clearer definition of cloud computing — an increase from 60% last year. Researchers suggest this reflects a desire to know details and doesn’t contradict users’ increased understanding. Most notably, businesses are showing strong interest in security (65%), services offered (53%) and costs over time (52%).

In the year since CompTIA’s initial survey, respondents report an increased comfort with cloud strategy, despite still having questions. Their cloud optimism is based in technical benefits (51%), enabling of other business objectives (50%) and enabling innovation (46%). –Karen Goulart

The adoption of on-premises cloud models has helped companies grow more sophisticated about cloud computing — they understand the nuances of cloud models better, said Tim Hebert, vice president at CompTIA. Seventy-two percent of firms reported feeling more positive about cloud than they did a year ago; half of the positive respondents said they were more convinced of the cloud’s technical benefits. Midsize businesses lead the way in cloud computing adoption, utilizing all three cloud service models — Software as a Service (SaaS), Infrastructure as a Service and Platform as a Service (PaaS). Large companies are more likely to use private or hybrid models. One in five companies do not use cloud systems.

The positive vibe translates into fiscal commitment. Spending increases of 10% or greater are planned by more than half of respondents and 70% of channel firms currently using cloud systems. In addition, compared with last year’s data, companies are expanding their use of cloud from SaaS applications (still the most popular cloud adoption) and moving their infrastructure and platforms to the cloud as well. Of those 20% of companies currently not using cloud systems, most (85%) are considering cloud in the near future. About 50% said they have found that cloud enables other business objectives and more innovation. (See sidebar).

Cloud computing adoption paves the way

The midmarket’s embrace of cloud computing comes as no surprise to John Lauderbach, CIO of Roche Bros. Supermarkets Inc., a family-owned regional chain with 18 stores, about 4,000 employees and online operations. "We need pretty much everything that Kroger or Stop ‘N Shop would need, just not on the same scale to stay in business," Lauderbach said. His shoestring staff of three IT people focuses on enabling the business strategy of the $600 million family-owned chain. As for the rest, Lauderbach said he is taking advantage of cloud offerings — "as much as I can."

"I add no value by running servers, doing backup and restore and software maintenance. Other people can do it better than I can. We need to focus on selling groceries rather than IT infrastructure," he said.

He got rid of servers that held customer credit card transactions for every store, for example, and now uses a cloud provider service for PCI DSS compliance. "We have no credit card information on-site," he said. "That has reduced my scope a great deal." He is moving to a cloud-based SaaS service for printing the ever-changing signs that dot the chain’s supermarket aisles. Stores that were limited to making signs on a single machine now have access to the same solution used by the country’s biggest retailers. "We just push the data up to them and all our stores can access it through the Web, from whatever printer they have," he said, adding that the service is "nothing special to us," but then it doesn’t need to be.

With the use of cloud providers, vendor management is important, of course, and monitoring. "We constantly look at logs to make sure they are holding up their end of the deal that we agreed to," he said. And yes, there are concerns about transitioning to this new model. Lauderbach said he sometimes worries that his providers "don’t have any skin in the game," but the benefits of cloud computing adoption are significant, he said — from not having to hire more people to much more flexibility. "It gives us the option of going in different directions, much more so than if I had a whole host of servers and we migrated to something that those servers did not support."

 
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