- SMEs drive adoption of new technology as they attempt to drive down costs
- Popularity of cloud grows as a route towards reducing licensing and infrastructure costs
- Cloud technology market expected to grow 18% before end of 2012
- Attempts made to reduce financial burdens as customers demand ‘downtime’ penalties in contracts
As the impact of a double-dip recession takes hold, the increasing need to curtail costs is driving a growing number of businesses to adopt cloud-based solutions to their IT needs. Latent concerns over security, stability and suitability are also not enough to stop growth – but causing businesses to focus on more stringent service level agreements, contract terms and governance.
According to KPMG’s latest Technology Issues Monitor, the dominant model in cloud computing is now ‘Software as a Service’ (SaaS) which provides businesses with on-demand software, eliminating the need to install and maintain programmes or pay for licences. It is a market worth $12.3 billion, worldwide in 2011, with projections to reach $14.5 billion before the end of 2012.
Steve Watmough, partner in KPMG’s CIO Advisory team, says: “As the current tight economic conditions are felt across the globe, tight IT budgets are pushing demand for cloud computing services. The attraction, especially for the smaller business, lies in organisations no longer needing to find funds for infrastructure, deployment or training.
“And with an increasingly mobile workforce, there is a greater need to access data from smart-phones or tablets. SaaS allows for the integration of powerful business apps on mobile devices meaning that it is only likely to increase in popularity with the corporate environment. The technology ensures employees can work on the same documents in real-time from anywhere on any internet-connected device – and all for a monthly subscription, which can be adjusted with ease.”
KPMG’s analysis shows that as the demand for SaaS grows, service providers are competing to launch new offerings and add new capabilities, with many trying to differentiate themselves by introducing industry-specific solutions. However, a number of high profile problems have ensured that customers still have four key concerns – security, network stability, the limited integration with their existing systems and the time it takes for organisations to implement new technology.
Watmough concludes: “The need for security means businesses are pushing for stricter governance controls around cloud computing and SaaS. But security is not where concerns stop and customers are also increasingly emphasising ‘uptime’ and performance in their negotiations with suppliers. They want opt out clauses which weren’t so easy to secure with infrastructure investments and suppliers would be well advised to take these concerns seriously or lose out to the competition.”
Mike Petrook, KPMG Press Office
020 7311 5271 (t), 07917 384 576 (m) or firstname.lastname@example.org
Notes to Editors:
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.