- Business spend on cloud services set to double in 2013 as organisations recognise its value
- Top business concerns centre on cost and complexity of Cloud implementation
- Security and privacy concerns continue to drive adoption of private Cloud services in more regulated sectors
Adapting to, and adopting cloud is more complicated and fraught with problems than many business and IT executives originally anticipated according to a new report, published today by KPMG. However, the concerns are not preventing uptake of cloud-based services, with figures suggesting a doubling of spend over the next year.
“Cloud has moved beyond the hype and into the very fabric of organisations. Yet the transition has been anything but smooth, with one in three executives suggesting implementation costs have been higher than expected. Many are also frustrated by the difficulties of integrating cloud services with legacy systems s and worried about long-term uptake across their supplier base and face challenging times in the adoption of Cloud against a regulatory backdrop,” says Steve Salmon, principal advisor in KPMG’s IT Advisory team.
According to the data, UK executives are concerned about long-term implications surrounding Cloud services, with 29 percent admitting that the ‘lack of visibility into future need’ remains a major stumbling block to full-scale adoption. More than 1 in 4 (27 percent) also focus on the absence of common standards used by providers, suggesting that interoperability is critical if the transition to cloud services is to be eased.
Budget dedicated to cloud and nature of adoption
The report, called ‘The Cloud Takes Shape’, demonstrates that executives’ concerns are not holding back adoption, but need to be better understood and overcome. The data suggests that use of cloud is genuinely dominating Boardroom planning, with 42 percent of UK organisations revealing that at least one-fifth of their total IT spend in the next 12 months will focus on cloud services. With just 20 percent of organisations allocating one-fifth of the IT budget to cloud in 2012, it is clear that senior executives genuinely recognise the value of cloud to their business.
Asked where cloud has already been applied, 56 percent of UK business leaders indicate that their HR functions have already implemented cloud solutions and 46 percent have adopted cloud technology for customer care programmes. Almost half (44 percent) are using cloud services for email and 36 percent, to help manage their supply chain.
Benefits of early adoption
The variety of functions using cloud services is a sign that, despite the challenges, business leaders are beginning to accept its merits and growing maturity. Any problems associated with implementation are being put to one side, with the majority of executives who have adopted cloud services (70 percent) already claiming to have seen cost savings and higher levels of productivity.
Mirroring the situation 12 months ago, cost reduction is still the primary reason for cloud adoption according to nearly half of respondents (48 percent). It is clear, however, that executives are no longer just focused on the short-term benefits. Some, for example, cite the ‘market differentiation’ that adoption offers, with 28 percent arguing that the speed at which they are able to migrate to cloud is important. A similar proportion also claims that cloud enables faster entry into new markets (27 per cent).
Cloud’s ongoing and emerging challenges
KPMG’s report also outlines the challenges executives will face as they seek to reap the rewards of cloud adoption:
Data Loss and hacking: business leaders are beginning to accept that cloud adoption should improve security, not lessen it. However a significant proportion of UK respondents still see security problems as a hurdle that is yet to be overcome (25 percent) and with increasingly frequent reports in the news about hacking, 35 percent fear data loss and security breaches
“Gaining real cost savings from the cloud is about more than simply moving from fixed costs to operating costs; the greatest cost savings – and, more importantly, the transformational business benefits – will come from the longer-term outcomes such as more efficient processes, more flexible operating models and the ability to drive business into new and emerging spheres of influence,” added Steven Salmon.
Mike Petrook, KPMG Press Office
020 7311 5271 (t), 07917 384 576 (m) or firstname.lastname@example.org
Notes to Editors:
About the report
In late 2012, KPMG in partnership with Forbes Insight, conducted a web-based survey of 674 senior executives at organizations using cloud across 16 countries to assess the status and impact of cloud adoption around the world. Countries included in this survey were: Australia, Brazil, Canada, France, Germany, India, Israel, Italy, Japan, China, the Netherlands, Saudi Arabia, Singapore, UAE, the UK, and the US. The report combines survey data with analysis from KPMG’s cloud leaders to deliver a realistic perspective of the challenges and complexities facing today’s organisations.
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 11,000 partners and staff. The UK firm recorded a turnover of £1.7 billion in the year ended September 2011. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 152 countries and have 145,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.