Fact or fiction: enterprises are spending more than ten percent of their IT budgets on the cloud.
That’s fact for almost 60 percent of the 213 respondents in the Everest Group’s 2014 Enterprise Cloud Adoption Survey, said VP Jimit Arora in his presentation at the Cloud Connect Summit at Interop in Las Vegas. Of the remainder, 29 percent spent less than five percent of their IT budgets on cloud solutions and services, and 13 percent spent between five and ten percent. This, he said, is a clear indication that enterprises are realizing the value proposition of the cloud.
When it comes to the cloud, there’s as much hype as there is fact. Vendors want us to believe that it is the panacea for all IT woes. IT worries about security and (let’s face it) the inmates running the asylum when overenthusiastic users sign up for cloud services on their own, without IT input.
However, the research indicates that the cloud is turning into a strategic differentiator that helps enterprises innovate faster. Verticals such as financial institutions and retail are finding that cloud implementations help them manage costs and serve their customers better. According to the survey, cloud helps companies achieve operational excellence and accelerated innovation.
Admittedly, a good look at the sample demographics puts a slightly different spin on the results. Only a quarter of respondents were actual cloud buyers, the rest were either third-party cloud service providers or “advisory professionals” (I’m taking that to mean consultants). Since results are not separated by job description — and, to be fair, the sample sizes are insufficient to do so meaningfully — we’re left with many unknowns. Since some of these findings could be skewed, they should be viewed as raising interesting questions rather than delivering definitive conclusions.
For example, respondents perceive cloud benefits as advantaging specific industries. According to the survey, 45 percent of respondents believe banking, financial services and insurance are among the top three industries driving cloud adoption, with technology coming in second at 37 percent and one third of respondents listing retail and distribution industries as a top adoption driver. At the bottom of the heap, mentioned by a mere six percent of respondents, was travel and transportation. That ranking could be influenced, however, by respondents’ individual industry association, which were not reported.
Other perceived laggards included energy and utilities (identified as a top cloud adopter by 7 percent of respondents), manufacturing (10 percent), public sector (11 percent), and professional services (13 percent). That doesn’t mean these sectors are not adopting cloud, just that they’re not viewed by this group as early adopters.
One myth dispelled by the survey surrounds security. Although people are becoming more comfortable with the cloud, security concerns are NOT history. In fact, the key reason reported for preferring private cloud solutions is their better security and control over assets and data. And given the number of respondents who mentioned that reason (74 percent), security concerns span both users and service providers alike.
However, said Arora, hybrid cloud is the way forward. “Indifference between private and public cloud is growing,” he noted. The report stated the finding even more assertively. It said, “The emerging belief is that as long as business and regulatory requirements are met, the deployment model is irrelevant.” And, said it went on, public cloud providers are putting significant effort into beefing up their security to meet those enterprise requirements (since many of the respondent are cloud providers, this was likely a key initiative for them). Judging from the increasing acceptance of public cloud in business, the tactics are working.
In fact, compared to the 2013 survey results, public cloud deployment is gaining traction. In disaster recovery, archiving and storage, reported enterprise preference for public cloud has more than doubled, leaping from 15 to 34 percent. Email and collaboration in the public cloud jumped from 14 to 33 percent, and web apps and websites grew from 23 to 43 percent, both entirely at the expense of private cloud. If the comparison is not exact — the 2013 sample was more evenly distributed among the three respondent groups, and the lion’s share of them (79 percent) were from North America, while only 66 percent of the 2014 respondents are from North America, and twice as many (15 percent) in EMEA, which would likely influence attitudes — the trend seems clear.
There’s one thing we can’t argue with, however. Contrary to yet another myth, cloud deployment and consumption of any kind is NOT simple. Over two-thirds of survey respondents said they have to get external help because they lack the talent and skills in-house for setup and management of their private clouds. The report noted that cloud solution providers will need to adopt a business process approach while working with enterprises, since the business case for process improvement can trump a focus on deployment models.
We also have to concur with the report’s conclusion that corporate IT’s relevance is actually increasing as cloud adoption grows, again exploding a myth that the CIO is doomed. Although business units are often key stakeholders because many cloud migrations are workloads linked to sales and marketing operations, the report noted that “as cloud adoption matures beyond vanity consumption to mission-critical workloads, business owners are realizing that they cannot work without IT. … We believe it takes just one disaster with business owners using cloud services to understand the value of CIO and the IT function.” Given that, regardless of who commissioned the service, IT usually ends up getting the call to fix the mess when things go wrong, that’s a reasonable conclusion.
“CIOs and enterprise IT are regaining lost ground,” said Arora. “Business users now recognize the need for the active participation of the IT function.” However, CIOs must work with the business in different ways, and assume what the report calls “the thankless job of introducing a sense of sanity in the anarchy of ‘cloud everywhere’.”