Few cost savings reported, time for a closer look?
The cloud has been the source of clever headlines for a years now, but what are the experiences of the early adopters? Research firm TNS surveyed 3,645 IT decision makers around the world to find out.
The study, sponsored by CSC, found that the primary driver for moving to the cloud is not cost based, but a need for the business to be able to access information from anywhere on any device. A third of respondents cited this, or mobility, as the prime driver, with only 17% saying that cost was the driver. This reflects a larger trend towards consumerization of business as workers use a variety of devices to manage their daily work.
Interestingly only 14% of respondents downsized their IT workforce following an adoption of the cloud, and 20% hired more cloud experts. Perhaps because cost was not the main driver for adopting cloud services, many companies reported no cost savings, or minimal savings. Almost half of US small businesses and a quarter of US businesses reported no savings.
Differences in cost savings are marked, region-to-region, with Brazil reporting the biggest savings, with over 90% of businesses reporting savings and an obvious correlation in the research is that Brazilian companies prepared their employees best for the move, providing information and training. Security is perhaps not the huge issue that the industry believes, with only a quarter of businesses more concerned about security after adoption. Almost half of the well-prepared Brazilians are less concerned about security after adopting the technology.
The business opportunities for cloud are clearly in the small and medium business area, where the benefits are clearer and the resistance to the change is less but it is also an area where telcos are not in their comfort zone, according to a consensus at a recent STL Partners gathering.
Whether large companies, including telcos are themselves adopting cloud services is still being examined. Certainly, the risks involved in telcos outsourcing critical processes to the cloud will not happen overnight. Just because almost half of US Government agencies report that they have moved some processes to the cloud – as part of their ‘cloud first’ policy – does not mean that large companies generally are leaping onto the bandwagon.
It is interesting, and will be of concern to some, that the cost saving argument for cloud adoption appears to be flawed. There are, of course, those industry veterans who witnessed the same phenomenon when outsourcing was the ‘next big thing’ some years ago. For large companies, unless the processes being considered for outsourcing are working well do not go ahead, outsourcing a problem seldom works and as one European IT manager from a decade ago remarked “why add legal problems to technical ones – that is all you are doing?” Or is it?