Tackling the cloud computing landscape in enterprise IT Cloud computing adoption trends and costs
Tackling the cloud computing landscape in enterprise IT Cloud computing adoption trends and costs
Page 1 of 23
Tackling the cloud computing landscape in enterprise IT:
Cloud computing adoption trends and costs
Contents
IT pros see promise of cost savings, efficiency in cloud computing
Pump the brakes on cloud adoption, except SaaS
To find cloud cost savings, all you need is a little patience
Why CIOs have problems with cloud computing: Sunk costs in legacy IT
Top 10 public cloud services businesses want to buy
Enterprises choose to adopt public cloud services or build a private cloud for various reasons that align with their company goals.
The TechTarget survey results gave a glimpse into these motivations, uncovering underlying cloud adoption trends and cost analyses.
IT pros see promise of cost savings, efficiency in cloud computing
Few technologies have affected the IT industry as profoundly as cloud
computing, which delivers computing as a service or utility. Part of cloud's
appeal is clearly financial; it allows organizations to shed at least some of
their expensive IT infrastructure and shift computing costs to more
manageable operational expenses.
The cloud also eases much of the technological burden involved with IT
systems support and maintenance, helping companies focus on the
productive business use of their workloads rather than on underlying systems
and software. Regardless of the motivation, business owners and data center
managers are increasingly turning to cloud for vital computing services.
This report examines key findings of a recent TechTarget survey about cloud
adoption and services.
Cloud interest up, despite hesitation amid midsize companies
In the third quarter of 2012, approximately 1,500 IT professionals responded
to a TechTarget survey examining the use of cloud computing and cloud
services in the enterprise. And the numbers suggest a growing exploration
and adoption of cloud technologies.
Approximately 61% of respondents reported they use some form of cloud
services, while 39% said they do not use cloud services within the enterprise.
Page 2 of 23
Tackling the cloud computing landscape in enterprise IT:
Cloud computing adoption trends and costs
Contents
IT pros see promise of cost savings, efficiency in cloud computing
Pump the brakes on cloud adoption, except SaaS
To find cloud cost savings, all you need is a little patience
Why CIOs have problems with cloud computing: Sunk costs in legacy IT
Top 10 public cloud services businesses want to buy
The proliferation of cloud offerings -- SaaS, Iaas, PaaS -- that give IT
professionals an array of options could be behind an increased interest.
So, who's using cloud? Small and large companies are implementing cloud
services more readily than midsize companies (Slide 1), primarily due to
differing business needs.
Small companies, for example, typically have more modest, in-house IT
resources, which make it easier for them to look to less traditional IT
methods such as cloud computing. Larger companies primarily approach
cloud services as a cost-saving strategy for offloading non-mission-critical
workloads or those exempt from compliance requirements. By comparison,
midsize companies tend to be victims of inertia -- significant investments in
internal IT resources and procedures make it difficult to justify the technical
modifications and financial demands of a move to cloud.
Page 3 of 23
Tackling the cloud computing landscape in enterprise IT:
Cloud computing adoption trends and costs
Contents
IT pros see promise of cost savings, efficiency in cloud computing
Pump the brakes on cloud adoption, except SaaS
To find cloud cost savings, all you need is a little patience
Why CIOs have problems with cloud computing: Sunk costs in legacy IT
Top 10 public cloud services businesses want to buy
Consumers split among cloud computing models
Cloud computing can be divided into three general models: public cloud,
private cloud and hybrid cloud. Public cloud consists of independent, third-
party service providers that rent or lease cloud computing resources to
external clients, such as businesses or government agencies. A private cloud
represents the deployment of on-premises cloud services, generally building
upon an existing virtual data center infrastructure with self-service portals,
chargeback or showback models and additional services, such as automated
provisioning or resource scalability. A hybrid cloud connects both public and
private cloud services, allowing a business to use both environments
simultaneously while shifting workloads between private and public cloud
facilities on demand.
The use of each cloud model among respondents is fairly evenly split, with
40% using public cloud, 30% using private cloud and another 30% of
respondents reporting the use of hybrid cloud services. And all three cloud
models will see increased use over the next six months, as survey results
show in Slides 2a and 2b. In Slide 2, for example, 90 respondents using
public cloud currently have 25% to 50% of their data center infrastructure in
the cloud.
Page 4 of 23
Tackling the cloud computing landscape in enterprise IT:
Cloud computing adoption trends and costs
Contents
IT pros see promise of cost savings, efficiency in cloud computing
Pump the brakes on cloud adoption, except SaaS
To find cloud cost savings, all you need is a little patience
Why CIOs have problems with cloud computing: Sunk costs in legacy IT
Top 10 public cloud services businesses want to buy
Public cloud computing. Of survey respondents using public cloud, 73%
point to cost savings as the primary motivating factor. Approximately 65%
note public cloud computing fits the business' computing needs.
While there are numerous benefits to public cloud, 60% of respondents using
this cloud model cite improved availability for computing workloads as the
biggest benefit. About 57% list workload scalability, which allows users to
adjust IT resources to accommodate changes in computing demands, as the
main perk for public cloud.
But public cloud isn't always the answer. In addition to real and perceived
benefits, public cloud also presents challenges. Fifty-five percent of
respondents say application suitability can be a problem, forcing
administrators to rewrite or convert a workload codebase for the specific
cloud provider to which the enterprise subscribes. In addition, 29% note that
a lack of interoperability or integration between cloud-based and local
Page 5 of 23
Tackling the cloud computing landscape in enterprise IT:
Cloud computing adoption trends and costs
Contents
IT pros see promise of cost savings, efficiency in cloud computing
Pump the brakes on cloud adoption, except SaaS
To find cloud cost savings, all you need is a little patience
Why CIOs have problems with cloud computing: Sunk costs in legacy IT
Top 10 public cloud services businesses want to buy
workloads can present problems. Public cloud provider support also ranks as
a concern for 35% of respondents.
Private cloud computing. Money is the root of all decisions. So it may not
be surprising that the principal driver for moving to private cloud was identical
to that listed for moving to public cloud -- cost savings.
Sixty-seven percent of survey respondents using private cloud do so to save
money. Approximately 57% choose private cloud because it automates IT
tasks, and 53% say a private cloud model meets their business' computing
needs.
Of respondents that implemented a private cloud, 59% note a more efficient
use of IT resources, while 53% benefit from workload scalability. However,
62% of respondents using private cloud note that some applications can be
problematic when they're run in the cloud. Forty percent of respondents also
note support is a challenge.
Hybrid cloud computing. Of respondents using hybrid cloud, 63% expect
cost savings to be the biggest advantage; 56% expect the hybrid cloud
model will best fit the business' computing needs.
With a hybrid cloud in place, 59% of users report more efficient use of IT
resources, while 58% cite the benefit of workload scalability. As with private
cloud computing, the emphasis is on maximizing business agility and
ensuring that computing resources are efficiently allocated and optimized.
Hybrid cloud users also echo the concerns of private cloud users, with 61%
of respondents suggesting problems with application suitability and 39%
noting a lack of interoperability or integration between private and public
clouds. These concerns may pose serious issues when moving workloads
among cloud providers or using local applications and data with cloud-based
workloads.
As cloud services infiltrate the modern enterprise, it's important to keep all
three principal cloud models in the proper perspective. Public, private and
Page 6 of 23
Tackling the cloud computing landscape in enterprise IT:
Cloud computing adoption trends and costs
Contents
IT pros see promise of cost savings, efficiency in cloud computing
Pump the brakes on cloud adoption, except SaaS
To find cloud cost savings, all you need is a little patience
Why CIOs have problems with cloud computing: Sunk costs in legacy IT
Top 10 public cloud services businesses want to buy
hybrid cloud computing all have a unique role in enterprise IT. However, they
aren't mutually exclusive, allowing IT planners and administrators to realize
the benefits of each model to fit the overall needs of the business. And,
certain functions such as storage, collaboration tools and application
development are taking the lead as primary benefactors of cloud computing.
Pump the brakes on cloud adoption, except SaaS
At times it seems like there is no one in the IT world -- analyst or journalist,
PR flack or marketer -- that is not talking about cloud applications. But that
does not mean businesses are buying into cloud adoption.
About 39% of respondents to the 2012 TechTarget CloudPulse survey said
that they do not use any cloud services or applications and 45.2% added that
they do not expect to use any cloud services or applications in the
foreseeable future. Those that are in the cloud are using Software as a
Service (SaaS) as their primary cloud vehicle.
"It isn't surprising that 45.2% of the respondents have no plans to adopt
cloud strategies and solutions in the 'foreseeable future' given all of the
confusion and uncertainty which still surrounds the cloud concept," said Jeff
Kaplan, managing director of Wellesley, Mass.-based consultancy
THINKstrategies. "I think this percentage will drop quickly as more customer
success stories become available which make the benefits and use cases
clearer."
Paul Burns, president of Fort Collins, Colo.-based Neovise, was surprised by
how high the numbers were, especially given the widespread popularity of
things like Web-based email. But, he did believe that there is a contingent of
people who are against cloud in all circumstances.
"There are definitely a lot of people out there who are against cloud, period,"
he said. "They are worried about job loss, that sort of thing. They don't want
things to change so much."
Page 7 of 23
Tackling the cloud computing landscape in enterprise IT:
Cloud computing adoption trends and costs
Contents
IT pros see promise of cost savings, efficiency in cloud computing
Pump the brakes on cloud adoption, except SaaS
To find cloud cost savings, all you need is a little patience
Why CIOs have problems with cloud computing: Sunk costs in legacy IT
Top 10 public cloud services businesses want to buy
While some are clinging to the past, those that are investing in the future are
doing it in one key area -- SaaS. Of the 352 respondents engaged in public
cloud, nearly two-thirds were using SaaS applications. Within six months,
37.6% of all respondents said more than half of their applications will use the
SaaS model.
"Most organizations adopt SaaS solutions as the first step in moving down
the cloud path," Kaplan said. "They start by experimenting with front office
and end-user-oriented SaaS applications, such as CRM and collaboration.
They then explore back-office SaaS apps, such as financial management
and ERP."
Burns believes the number is high because of the large investment startups
have made in SaaS applications over more expensive on-premises setups.
"That strikes me as a little high. SaaS spending and adoption is higher than
something like IaaS, but that seems a little bit high," he said. "[At] enterprise-
level [companies] that would be shocking, but smaller companies saying that
I wouldn't be surprised. I'm probably that way, half or more."
More apps, more problems
Moving more business applications into the cloud has solved some problems
but created news ones. Respondents were happy with SaaS applications'
low costs (21.3%), faster implementation (22.8%) and ease of use (19.3%),
but said that they need help dealing with application integration (34.2%), data
integration (26.2%) and customization (34.2%).
"Integrating multiple SaaS applications with legacy systems and data
sources can be a big challenge," Kaplan said. "Fortunately, there are a
growing number of APIs, integration tool providers and system integration
firms which can help organizations overcome these challenges."
Kaplan references Informatica, Pervasive Software, Dell Boomi,
IBM/CastIron and SnapLogic as cloud integration tools that are being used
by some to fix integration problems. He also notes that some enterprises can
Page 8 of 23
Tackling the cloud computing landscape in enterprise IT:
Cloud computing adoption trends and costs
Contents
IT pros see promise of cost savings, efficiency in cloud computing
Pump the brakes on cloud adoption, except SaaS
To find cloud cost savings, all you need is a little patience
Why CIOs have problems with cloud computing: Sunk costs in legacy IT
Top 10 public cloud services businesses want to buy
kill two birds with one stone -- fixing integration and customization problems
with Platform as a Service (PaaS).
"Today's Platform-as-a-Service development tools are also making it easier
to build and customize SaaS apps," he said. "Salesforce.com's Force.com,
Google [App] Engine and Microsoft Azure are the major PaaS players.
Cordys, TrackVia and LongJump are leading independent players."
Burns believes people investing in SaaS need to accept the realities that they
can't have everything both ways when it comes to convenience and
customization.
"I definitely hear that complaint -- it's a two-edged sword," he said. "You can
save time and money on SaaS, but then it varies by offering how much you
can configure from there. Some people have a lot of need or in some cases
are just used to configuring [their applications]."
To find cloud cost savings, all you need is a little patience
Corporate IT execs are locked in debate over whether their companies can
really save money by moving some applications to the cloud.
The IT community is riddled with stories of companies that launched a public
cloud app, only to build a private cloud once costs flew out of control.
So does cloud computing really save money? And how do you choose the
cloud platform best for your needs?
When Brickfish, a Chicago-based social media marketing software provider,
moved its headquarters from San Diego to Chicago in 2009, the company
switched from an on-premises data center to Rackspace Hosting's managed
service model. But it found the cost savings to be negligible.
Renting servers with Rackspace still cost the company about $47,000 to
$52,000 a month, said Michael Mullarkey, CEO of Brickfish. When it was
Page 9 of 23
Tackling the cloud computing landscape in enterprise IT:
Cloud computing adoption trends and costs
Contents
IT pros see promise of cost savings, efficiency in cloud computing
Pump the brakes on cloud adoption, except SaaS
To find cloud cost savings, all you need is a little patience
Why CIOs have problems with cloud computing: Sunk costs in legacy IT
Top 10 public cloud services businesses want to buy
time to renew its Rackspace contract, Mullarkey thought he could cut
expenditures and improve Brickfish's ability to innovate if he moved the
company's entire technology stack to NaviSite's NaviCloud.
The shift also allowed Brickfish to partition off certain virtual machines for
some of its larger clients that wanted their own virtual private clouds for
security reasons. One such company was retailer Vera Bradley, which used
Brickfish's social marketing app to create a page on Facebook that features
its housewares products.
With the cloud migration to Navisite, Mullarkey saw significant cost
reductions. Brickfish went from spending just under $700,000 hosting and
maintaining boxes with Rackspace to under $200,000 with NaviCloud.
Mullarkey was able to pump that $500,000 in savings back into Brickfish's
own research and development.
Others do agree that there are cost savings from the cloud, although not
necessarily immediate.
Bluebird Auto Rental Systems, a Dover, N.J.-based firm that handles credit
card transactions for auto rental centers worldwide, needed a cloud provider
with PCI DSS certification. Shortly after Amazon Web Services (AWS)
became PCI DSS-certified, Phil Jones, vice president at Bluebird, said the
company jumped from hosting physical servers with OpSource to AWS EC2
public cloud.
By simply eliminating the server-leasing fees it had with OpSource, Bluebird
cut costs from 60% to 70%. However, the money saved from moving to EC2
didn't magically stream in.
"After we were in the cloud for about six months and were sure this was the
way we wanted to go, we took advantage of [AWS EC2] reserved instances
and now get a much lower rate," Jones said. "The break-even point is about
six months. That's where we're saving money for the rest of the three-year
term."
Page 10 of 23
Tackling the cloud computing landscape in enterprise IT:
Cloud computing adoption trends and costs
Contents
IT pros see promise of cost savings, efficiency in cloud computing
Pump the brakes on cloud adoption, except SaaS
To find cloud cost savings, all you need is a little patience
Why CIOs have problems with cloud computing: Sunk costs in legacy IT
Top 10 public cloud services businesses want to buy
Cloud value isn't just about the almighty dollar
The cost savings of moving to a public or private cloud is one thing, but
you're getting much more value than cold, hard cash, said Mitch Greenwald,
CEO of CloudBakers, a Chicago-based integrator. The trick is to choose the
right cloud service model and cloud provider in order to get that value.
"SaaS offers an extremely high value proposition, and PaaS [offers]
accessibility," he said. And while IaaS has its benefits for some companies,
it won't necessarily reduce capital expenditures.
"With Rackspace or AWS, you still need to manage servers, monitor your
network and maintain it -- even though it's a cloud," Greenwald added.
Why CIOs have problems with cloud computing: Sunk costs in legacy IT Are customers scared of cloud security breaches? Absolutely. Are they
uncomfortable with their lack of control over cloud providers' infrastructure?
You bet. But do businesses see these two issues as their biggest problems
with cloud computing? Not exactly, according to a new TechTarget survey.
More enterprises and small to medium-sized businesses (SMBs) say they
are delaying public cloud adoption because they've sunk too much money
into legacy IT, according to TechTarget's recent Cloud Pulse survey, which
polled 1,497 IT professionals about their use of and attitudes toward cloud
services.
If cloud providers want to overcome this problem, they should stop marketing
their services as replacements for IT infrastructure.
Of the 569 respondents who reported they were not currently using cloud
services, the plurality (38.1%) said they have delayed any adoption of cloud
services and applications because they have "too much capital already
invested in internal IT infrastructure." Concerns about security took second
Page 11 of 23
Tackling the cloud computing landscape in enterprise IT:
Cloud computing adoption trends and costs
Contents
IT pros see promise of cost savings, efficiency in cloud computing
Pump the brakes on cloud adoption, except SaaS
To find cloud cost savings, all you need is a little patience
Why CIOs have problems with cloud computing: Sunk costs in legacy IT
Top 10 public cloud services businesses want to buy
place (36.4%) while "not enough control over the environment" trailed closely
behind in third place (33%).
Those issues and the order they're in roughly match what Bluelock LLC, an
Infrastructure as a Service (IaaS) provider based in Indianapolis, hears from
enterprises and SMBs, according to Pat O'Day, Bluelock's chief technology
officer.
These sunk costs in IT are still depreciating, O'Day said. "This happened in
virtualization too because a lot of companies started off when virtualization
was really scary; the benefits were reasonably clear, but the risks were seen
as high."
Eventually, most enterprises adopted a "virtualization first" policy for new
deployments, and O'Day suspects they'll do the same with cloud.
But even when those risks are mitigated or that legacy infrastructure fully
depreciates, businesses dedicate no more than a quarter of their IT budgets
to public cloud services, according to Tom Nolle, president of CIMI Corp., a
consultancy in Voorhees, N.J. That's partly because some cloud services
can wind up being 2.5 to 3.5 times more expensive than on-premises
deployments, he said.
"Nobody wants to write a story that says, 'Almost every application that is not
hosted [in the cloud] today is not going to be hosted [there] in the future for
the same reason it's not hosted today,' which is that it's not cost effective to
do so," Nolle said. "But that doesn't mean the cloud isn't going to succeed.
It's going to succeed differently."
Cloud can't just be 'IT replacement'
One of the biggest problems with cloud computing is how it's marketed
today. Providers are touting it as "an IT replacement," Nolle said. This stokes
the argument from customers concerned about legacy IT investments. The
bigger opportunity for providers is in the "service cloud," meaning new
applications and services that happen to run on cloud platforms but aren't
necessarily marketed as cloud services, per se, he said.
Page 12 of 23
Tackling the cloud computing landscape in enterprise IT:
Cloud computing adoption trends and costs
Contents
IT pros see promise of cost savings, efficiency in cloud computing
Pump the brakes on cloud adoption, except SaaS
To find cloud cost savings, all you need is a little patience
Why CIOs have problems with cloud computing: Sunk costs in legacy IT
Top 10 public cloud services businesses want to buy
Examples of cloud-based "service applications" in the consumer market
include Verizon and AT&T's residential monitoring services, which run on
cloud platforms. However, carriers don't market these services as cloud,
Nolle said. On the enterprise side, mobile device security scans could be
served to customers via the cloud but not marketed explicitly as a cloud
service.
"If you believe that the cloud is a different way of doing what we already do in
the data center, you're doomed to disappointment," Nolle said. "The cloud
provider who thinks that the failure of their sales process is [due to the fact
that] the buyer is dumb and needs to be re-educated is looking in the wrong
direction. They're the dumb ones that need to look in the mirror to
understand the real value proposition in the cloud."
Enterprises that once came to the cloud for cost savings are increasingly
interested in using it to extend existing applications or deploy totally new
ones, according to Jonathan King, vice president of cloud solutions at Savvis,
a cloud and managed hosting provider based in Town and Country, Mo.
"There was a time when the reason people were talking about cloud was
capex to opex," he said. "But that fell from grace. It has not stayed in the top
list of why people are looking at cloud."
A large rental car company recently told King that it didn't want to move its
core reservation application into the cloud because it didn't make technical or
financial sense to move it off of the company's legacy, on-premises
infrastructure. It was interested in moving pieces of a new mobile application
into the cloud, however.
"They're not going to move large chunks of the technical componentry that
would enable the mobile application; it's not going to leave their data center,"
King said. "However, it's a new application, and components of the mobile
app -- middleware and other components of the application -- can and should
be in the cloud."
Page 13 of 23
Tackling the cloud computing landscape in enterprise IT:
Cloud computing adoption trends and costs
Contents
IT pros see promise of cost savings, efficiency in cloud computing
Pump the brakes on cloud adoption, except SaaS
To find cloud cost savings, all you need is a little patience
Why CIOs have problems with cloud computing: Sunk costs in legacy IT
Top 10 public cloud services businesses want to buy
Savvis and other cloud providers believe hybrid cloud models will enable this
approach.
Hybrid cloud: Solving biggest problems with cloud computing?
Cloud providers say they have accepted that customers aren't going to throw
away legacy IT investments and move every application into the public cloud.
But that's not necessarily bad news for cloud providers, King said. "That's
where we see hybrid solutions to be relevant," he said.
Microsoft is drawing on its years of experience running consumer Web-based
applications -- such as MSN, Bing and Hotmail -- with its heritage in on-
premises software to support hybrid cloud for Windows Azure customers,
according to Helene Love Snell, director of Microsoft's server and tools
business.
"We understand that each of our customers is unique in regards to their
needs and priorities," Love Snell said in an email interview. "We believe that
many of our customers will live in a hybrid cloud world -- a mix of on-
premises and off-premises solutions -- and we're making it easy for them to
employ cloud technologies in their own way, at their own pace, in order to
help them minimize loss on previous IT investments."
Top 10 public cloud services businesses want to buy As businesses expand their use of public cloud services beyond short-
term testing and development projects, overall adoption of cloud
services is gaining traction, according to the results of TechTarget's
new survey, Cloud Pulse, which asked 1,497 IT professionals about
their use of and attitudes toward public, private and hybrid cloud.
Respondents say they're drawn to the public cloud due to several
advantages it has over on-premises deployments, including infrastructure
availability, scalability and cost management; additionally, IT spending for
nearly all types of cloud services is expected to grow. When asked which
public cloud services they plan to adopt in the next six months, the
Page 14 of 23
Tackling the cloud computing landscape in enterprise IT:
Cloud computing adoption trends and costs
Contents
IT pros see promise of cost savings, efficiency in cloud computing
Pump the brakes on cloud adoption, except SaaS
To find cloud cost savings, all you need is a little patience
Why CIOs have problems with cloud computing: Sunk costs in legacy IT
Top 10 public cloud services businesses want to buy
responses from 569 IT pros clearly indicated that cloud adoption is maturing
beyond just test and development.
Check out the top 10 cloud services that customers want to buy, listed from
least to most popular, and find out if you're ready to meet cloud adopters'
needs.
No. 10: Hybrid cloud integration
Integrating hybrid cloud isn't on any standard Anything as a Service, or
XaaS, product list, but private/public cloud integration is becoming more of
an essential feature for many customers.
Coming in at No. 10 in our survey, demand for hybrid cloud integration
services likely stems from a collective cloud adoption hangover among early
cloud adopters. That is, during the first wave of hybrid cloud adoption IT pros
encountered several unanticipated challenges around application suitability,
interoperability and integration between private and public clouds, application
modification, and hybrid cloud security issues. Customers tend to consider
hybrid cloud for cost savings or because it complements their business'
computing needs, but they can't achieve these goals without help on the
integration side. Whether that assistance is built into the original price or sold
separately as professional services, businesses are increasingly looking to
service providers for guidance.
No. 9: Database as a Service
For database administrators, Database as a Service has one major allure:
reduced maintenance. Among other benefits, Database as a Service allows
companies to ditch the burden of installing and managing transactional
databases locally, thereby relieving admins from having to configure on-
premises database management systems.
One potential barrier to adoption, however, is regulatory compliance
requirements. Businesses in various industries face a litany of rules and
regulations around how they maintain and secure databases, causing some
anxiety among customers who could lose control over data stored in a cloud
provider's facilities. As the cloud once again comes under the microscope
Page 15 of 23
Tackling the cloud computing landscape in enterprise IT:
Cloud computing adoption trends and costs
Contents
IT pros see promise of cost savings, efficiency in cloud computing
Pump the brakes on cloud adoption, except SaaS
To find cloud cost savings, all you need is a little patience
Why CIOs have problems with cloud computing: Sunk costs in legacy IT
Top 10 public cloud services businesses want to buy
with companies that fear losing control over infrastructure, cloud providers
must learn how to address these concerns if interest in Database as a
Service will ever match adoption of it.
No. 8: Cloud BI and data management services
Customers are attracted to cloud-based business intelligence because it
helps them monitor trends and respond quickly to market changes. Cloud-
based BI has picked up momentum as more corporate users feel comfortable
incorporating cloud computing and Software as a Service (SaaS) into their BI
strategies. As with many cloud services, customers eying cloud BI are
attracted to the prospect of reduced IT and data center management costs,
faster deployment times and increased flexibility as business needs change.
On the other hand, cloud BI services are still somewhat low-end in nature,
which customers take into account.
When it comes to data management, cloud technologies are emerging as
alternatives to traditional on-premises software -- something customers are
starting to embrace.
The main selling points of cloud-based data management services are that
they can accelerate technology deployments as well as reduce capital
expenditures and system maintenance costs. They can also provide
customers with more flexibility to help meet evolving business requirements.
Customers' main concerns lie in data security, often hesitating to outsource
sensitive data away from the monitoring capabilities of the corporate firewall.
No. 7: Collaboration software tools
Demand is growing for social collaboration software in the era of Bring your
own device. Employees want access to their work files regardless of where
they are or what device they're using. Consumer, cloud-based file sharing
and collaboration services give employees the freedom to store their data
files and access them on any device they choose.
Security and data leakage are major concerns for customers considering
cloud-based collaboration. Administrators are worried their data could
Page 16 of 23
Tackling the cloud computing landscape in enterprise IT:
Cloud computing adoption trends and costs
Contents
IT pros see promise of cost savings, efficiency in cloud computing
Pump the brakes on cloud adoption, except SaaS
To find cloud cost savings, all you need is a little patience
Why CIOs have problems with cloud computing: Sunk costs in legacy IT
Top 10 public cloud services businesses want to buy
become compromised if insecure public servers and platforms come into the
mix.
In response to this, some cloud providers have built or are reselling Unified
Communications as a Service (UCaaS), a package of cloud-based UC
applications that often includes collaboration software tools. To its credit,
UCaaS addresses the need for enterprise-grade, cloud-based UC, and
analysts have identified several benefits with this new delivery model.
However, the UCaaS market has been slow to develop. Earlier this year,
Gartner declared that most UCaaS offerings are not ready for primetime -- at
least among large enterprises -- since they often lack a full suite of UC
functionality or don't scale for large deployments.
No. 6: DRaaS and business continuity
Conventional disaster recovery has been a tough sell when it comes to small
and medium-sized businesses because they can't always afford to pay for
what-if scenarios. But because of the upfront cost savings of cloud-based
DR, also known as DR as a Service, DRaaS is starting to become an
attractive alternative for SMBs.
When we asked IT pros which cloud disaster recovery (DR) services they
were currently using, 69% said they were using the cloud to store their IT
resources and services, but still kept these separate from their conventional
backup data. Respondents were allowed to select more than one answer,
and another 46% said that in the event of a disaster, they can perform DR in
the cloud by switching users over to cloud-based resources -- as opposed to
first transferring everything needed for DR and business continuity from the
cloud, via the Internet, and back to the corporate data center.
If companies are willing to dabble with DRaaS by just storing data and other
IT resources in the cloud and then transferring them back when needed, they
may later be willing run DR directly in the cloud if things go smoothly. This
ability for customers to try varying levels of commitment to DRaaS and then
upgrade once they're comfortable is likely to spark adoption of cloud-based
DR services.
Page 17 of 23
Tackling the cloud computing landscape in enterprise IT:
Cloud computing adoption trends and costs
Contents
IT pros see promise of cost savings, efficiency in cloud computing
Pump the brakes on cloud adoption, except SaaS
To find cloud cost savings, all you need is a little patience
Why CIOs have problems with cloud computing: Sunk costs in legacy IT
Top 10 public cloud services businesses want to buy
No. 5: Platform as a Service
PaaS providers still find themselves explaining PaaS application
development and how it works -- hindering adoption rates as this
technology's uses are not yet fully understood.
Platform as a Service (PaaS) is gaining ground with enterprises and
developers that want to develop their own applications using a provider's
existing cloud platform. PaaS promises cheaper application development,
faster deployment, a reduced need for application infrastructure
administration, easier integration and more effective deployment of in-house
IT resources.
Providers can use their own cloud application platforms as building blocks for
developing, integrating and delivering SaaS applications or they can build
revenue by selling on-demand access to their platforms to customers. The
latter opportunity enables cloud providers to capitalize on their expertise in
other areas of service delivery, such as billing and operations.
One reason we may see SaaS rank higher on our survey is that it requires
the least amount of effort on the customer's end to get an application
running, limiting overall administrative work. PaaS, comparatively, needs
more manual efforts because it requires a customer to build their own
applications on the provided platform.
Still, research suggests that the PaaS model offers the largest total
addressable public cloud services market for providers, as it may potentially
capture nearly 60% of total cloud market opportunity.
No. 4: Infrastructure as a Service
In fourth place, Infrastructure as a Service is one of the first cloud services
enterprises are willing to try, but IaaS happens to be the lowest revenue
producer for cloud providers. But a positive IaaS experience may encourage
customers to consider additional services higher on the cloud food chain.
Although the IaaS market is vast -- populated by telecom carriers, data
center operators and managed service providers -- Amazon has stolen the
Page 18 of 23
Tackling the cloud computing landscape in enterprise IT:
Cloud computing adoption trends and costs
Contents
IT pros see promise of cost savings, efficiency in cloud computing
Pump the brakes on cloud adoption, except SaaS
To find cloud cost savings, all you need is a little patience
Why CIOs have problems with cloud computing: Sunk costs in legacy IT
Top 10 public cloud services businesses want to buy
spotlight due to its early entrance in the market, simple provisioning and
bargain-basement prices.
However, Amazon has suffered several embarrassing outages in its cloud,
and it's gained a reputation that, well, you get what you pay for. Alternative
IaaS providers -- including Bluelock, CSC, IBM, HP, Savvis and Terremark --
are starting to gain traction as businesses seek more enterprise-grade
services with higher reliability, tighter security and stronger service-level
agreements.
No. 3: Testing and development
Testing and development was one of the first use cases for the cloud that
customers wholeheartedly embraced. Developers were attracted to the
flexible and fast provisioning, and the rest of enterprise IT could take solace
in knowing these deployments would be short-term and contain no sensitive
data or critical applications. It probably comes as no surprise that it takes the
bronze medal in our survey.
Despite the fact that enterprises are moving more production apps into the
cloud and are experimenting with more sophisticated cloud services, cloud-
based test and dev still has (and will likely continue to have) staying power.
Cloud providers could think of it like running a restaurant: You can put Kobe
beef with French truffles on the menu, but people will never stop ordering
hamburgers.
No. 2: Cloud storage services, or Storage as a Service
Let's face it: Storage is cheap. But when it comes to up-front investments
and management costs, Storage as a Service is often cheaper and it's
always elastic. These two perks have helped cloud storage gain popularity
among small and medium-sized businesses that otherwise lack the funding
or staffing to maintain their own storage systems.
Some enterprises want to unburden themselves of the stresses associated
with in-house backups. They may not be backing up tier-one applications, but
they're also not giving cloud storage the cold shoulder. Storage as a Service
relieves customers of managing backup applications as well as managing
Page 19 of 23
Tackling the cloud computing landscape in enterprise IT:
Cloud computing adoption trends and costs
Contents
IT pros see promise of cost savings, efficiency in cloud computing
Pump the brakes on cloud adoption, except SaaS
To find cloud cost savings, all you need is a little patience
Why CIOs have problems with cloud computing: Sunk costs in legacy IT
Top 10 public cloud services businesses want to buy
tapes and disks -- freeing up IT pros to focus on long-term projects. Backup
tools and staffing are expensive, so customers see this service as a money-
saver.
Because cost savings are a big adoption driver, many cloud storage
providers have been engaged in price wars -- trying to undercut each other in
a race to the bottom. Providers that do this, however, run a big risk: turning
their cloud storage into a commodity. Fortunately, there are ways to make
cloud storage pricing both economical and profitable.
When customers opt to outsource backup data to the cloud, they want to be
sure their data can be safely and easily transferred back and forth, and it's up
to cloud providers to assure them this will be a nonissue.
No. 1: Software as a Service
The envelope, please. And the winner is: Software as a Service.
Software as a Service (SaaS) adoption is primarily driven by its fast
implementation time, usage-based pricing model, simple provisioning and
minimal management requirements. Compared with IaaS and PaaS, SaaS
displaces the most costs for customers; therefore, it often holds the most
value.
On the other hand, cloud providers looking to compete in this market will
have to address some of the existing challenges around SaaS integration,
migration and performance. These issues have started to incite some distrust
and skepticism among enterprises and small and medium-sized businesses,
which may be why our survey shows that SaaS adoption is expected to
decrease over the next six months. Integration issues especially continue to
plague customers as more companies seek SaaS alternatives for a wide
range of on-premises business applications.
Although SaaS ranks as the top-selling service among enterprises and
SMBs, it's the only service in our survey that showed adoption slowing down
-- going from 63.9% to 55% over the next six months -- underscoring the
urgent need for SaaS providers to address customer concerns.
Page 20 of 23
Tackling the cloud computing landscape in enterprise IT:
Cloud computing adoption trends and costs
Contents
IT pros see promise of cost savings, efficiency in cloud computing
Pump the brakes on cloud adoption, except SaaS
To find cloud cost savings, all you need is a little patience
Why CIOs have problems with cloud computing: Sunk costs in legacy IT
Top 10 public cloud services businesses want to buy
Page 21 of 23
Tackling the cloud computing landscape in enterprise IT:
Cloud computing adoption trends and costs
Contents
IT pros see promise of cost savings, efficiency in cloud computing
Pump the brakes on cloud adoption, except SaaS
To find cloud cost savings, all you need is a little patience
Why CIOs have problems with cloud computing: Sunk costs in legacy IT
Top 10 public cloud services businesses want to buy
More resources from SearchCloudComputing.com
Storage and PaaS shine in cloud computing adoption spotlight
Cloud computing benefits may trump public cloud security fears
Is OpenStack the great cloud hope or just hype?
Page 22 of 23
Tackling the cloud computing landscape in enterprise IT:
Cloud computing adoption trends and costs
Contents
IT pros see promise of cost savings, efficiency in cloud computing
Pump the brakes on cloud adoption, except SaaS
To find cloud cost savings, all you need is a little patience
Why CIOs have problems with cloud computing: Sunk costs in legacy IT
Top 10 public cloud services businesses want to buy
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