State of Cloud Applications and Platforms:The Cloud Adopters' View
This article first appeared in Computer magazine and is brought to you by InfoQ & IEEE Computer Society.
A recent survey of organizations with experience using cloud applications and platforms reveals that they are more bullish on the technology and more aggressive in their adoption plans than the overall market.
In our experience during the past four years helping more than 200 enterprises adopt the cloud, organizations that have used cloud applications and platforms have different beliefs about the technology than those evaluating the cloud or just getting started.
Most cloud computing surveys, including those by Gartner and Forrester Research, focus on the overall market, which is still evolving. Other surveys evaluate cloud computing as a theory, without considering the experience of actual practitioners, or focus on cloud infrastructure. We saw the need for a new perspective - that of adopters of leading public cloud applications and platforms.
Working with an online market research firm, we surveyed IT decision makers at more than 150 mid- to large-size North American companies that had already adopted at least one software-as-a-service (SaaS) or public cloud application. Why did they adopt cloud solutions? What real results have they achieved? What problems have they faced and what challenges do they see on the horizon? What are their plans for future cloud adoption?
By better understanding the experiences and challenges of those using cloud applications and platforms in their organizations, we can all better prepare for a future in which cloud solutions will play a larger and more significant role. In many cases, the differences between what cloud adopters report and what other market surveys reveal are stark.
We worked with Itracks, a world-leading expert in online market research and the patent holder for online qualitative applications, to host and administer the survey. All respondents came from Itracks’ online IT decision-maker panels.
The survey took place over two weeks in August 2010 and received responses from 155 distinct companies. We focused on companies with more than 500 employees - 65 percent had more than 1,000 employees - that had currently deployed at least one of the following market-leading SaaS/cloud applications:
- Google Gmail/Calendar,
- Microsoft Dynamics,
- Oracle CRM On Demand,
- Workday, or
- a custom application on Force.com, Google App Engine, or Windows Azure.
Within these companies, we specifically focused on IT personnel either directly involved in purchasing or recommending cloud solutions.
Cloud adopters view things differently. IT decision makers who have adopted one or more cloud applications are more bullish on the technology and more aggressive in their near-term and long-term adoption plans than the overall market.
- More than 60 percent of survey respondents said cloud solutions are better than on-premises applications in terms of availability, total cost of ownership (TCO), and time to value (TTV).
- Twenty-eight percent said concern about security is the number one misconception about cloud solutions.
- Sixty-eight percent said they will have most of their applications and platforms in the public cloud within three years.
IT skeptics have become advocates. While IT was the driver of many of the misconceptions about the cloud in the past, it is becoming cloud computing’s biggest supporter.
- Thirty-six percent of respondents singled out their IT leadership as the primary source of past misconceptions about the cloud.
- Seventy percent agreed cloud solutions have changed the role of IT within their business.
- Seventy-nine percent said they expected to drive future cloud decisions.
Cloud computing impacts the business, not just IT costs. IT decision makers are implementing public cloud applications and platforms more for business agility than IT cost reduction, and cloud solutions are changing the way respondents run their business.
- Fifty-nine percent of respondents said business agility was among their top three reasons to consider cloud solutions, versus 47 percent for TCO reduction.
- Eighty-three percent agreed cloud solutions have helped them "respond faster to the needs of the business."
- Twenty-nine percent strongly agreed that cloud solutions "have changed the way we run the business."
- Thirty-nine percent said cloud adoption would be part of an overall business transformation going forward.
New challenges are emerging for cloud adopters. While basic problems like security and manageability remain at the top of the list, meeting new challenges including SaaS silos, cloud-to-cloud integration, and mobile access are also a priority.
- More than 75 percent of respondents said cloud-to-cloud integration and better mobile access are important priorities (more than 80 percent said they are still focused on security and manageability).
- Sixty-five percent said enhancing existing cloud applications is a high or essential relative priority.
- Only 4 percent said they had fully integrated their cloud applications.
Adopters Bullish On Cloud Computing
Because of their first-hand knowledge, companies that have already adopted one or more cloud applications view cloud solutions very differently from those researching or piloting cloud solutions. Most general market surveys find that enterprises buy into the TCO and time-to-market advantages of cloud applications and platforms but have concerns about security, vendor lock-in, customizability, reliability, and availability.
As Figure 1 shows, survey respondents who compared their cloud solutions with on-premises counterparts did not share these concerns. Most found that cloud solutions not only deliver better TCO and TTV but are somewhat or significantly better when it comes to availability, ease of deployment, ease of integration, reliability, and security.
Figure 1. Cloud adopters’ perception of cloud applications versus on-premises applications. Percentages do not add up to 100 because "about the same" responses are excluded.
Given their experience, it is not surprising that cloud adopters believe that many common fears about cloud solutions - poor security, difficulty of integration, lack of customization, and dependence on vendors - are unfounded. In fact, 28 percent of survey respondents identified security concerns as the number one misconception about cloud applications and platforms.
Cloud adopters are bullish about the technology’s future within their businesses. Eight-four percent of respondents said that 10 percent of their organization’s IT was in the cloud, and 23 percent put that figure at more than 50 percent. As Figure 2 shows, 45 percent of respondents expected more than 50 percent of their company’s IT to be in the cloud within a year; 68 percent expected to reach that milestone within three years.
Figure 2. Percent of IT in the cloud over time.
General market surveys typically report far lower percentages. For example, a recent Sand Hill Group survey found that 70 percent of enterprises are spending less than 3 percent of their IT budget in the cloud; within three years, 80 percent of businesses anticipate increasing that spending to between 7 and 30 percent of the IT budget.
Although our survey results are a qualitative assessment rather than a budget estimate, they nevertheless demonstrate a remarkable vote of confidence in the cloud by adopters.
IT: From Skeptics to Advocates
Even among cloud adopters, IT decision makers admit to having been skeptics. Thirty-six percent of survey respondents identified themselves and their leadership teams as being primarily responsible for cloud misconceptions such as lack of reliability. In addition, 83 percent of respondents believed that such misconceptions were rooted in their own organizations, while only 17 percent placed the blame on media, analysts, or traditional IT vendors.
For those who have begun their cloud journey, this skepticism has turned into advocacy. Adopters have seen the powerful impact cloud services can have on business and IT, and in many cases they have found that cloud applications and platforms are superior to inflexible on-premises applications, which have prevented them from responding quickly to business needs. Almost 70 percent of survey respondents somewhat or strongly agreed that cloud applications and platforms have "changed the role of IT within the business - IT is now seen as a true business enabler."
Another stark difference between general market surveys and the cloud adopters’ perspective captured by our survey is the role of IT in the decision-making process. Cloud applications have long been portrayed as a way for business to circumvent IT. However, 70 percent of our respondents reported that IT was a driver in the decision-making process, in contrast to the line of business (37 percent), end users (34 percent), and C-level executives (30 percent).
Respondents expected their role to only increase moving forward. While they will make many cloud computing decisions jointly with business managers, executives, and end users, IT leaders saw themselves as increasingly integral to the decision-making process.
Business Agility a Bigger Driver Than IT Cost
Reducing IT’s TCO remains among the top four reasons that companies adopt cloud applications, but business agility has moved to the top: twenty-five percent of survey respondents identified business agility as the main driver, while only 18 percent chose TCO reduction.
Our survey also found that exploiting the latest technology and supporting mobile workers are increasingly significant factors in the decision to move to cloud applications. Lower on the list were "respond to request from the business" (12 percent), "convert capital expenditures to operating expenses" (10 percent), and "scale consumption up and down" (9 percent).
These results reflect not only the shift in the value proposition of cloud computing toward business impact but also a macroeconomic shift in business priorities from cost cutting to revenue growth. With the improvement in economic conditions, companies are looking to support growth and innovation in their businesses and see cloud solutions as a way to help.
Survey respondents reported that cloud adopters have realized these expectations in actual results. Most somewhat or strongly agreed that cloud solutions
- "enabled us to respond faster to the business" (80 percent),
- "helped us achieve a specific business objective" (82 percent),
- "are significantly quicker and easier to deploy" (81 percent),
- "changed the way we run our business" (77 percent),
- "helped us significantly lower our IT spending" (77 percent), and
- "changed the role of IT within our business" (70 percent).
Only 5 to 10 percent of respondents somewhat or strongly disagreed with any of these statements about the actual impact of cloud computing.
Given the impact cloud solutions have on the business and on the perception of IT within the business, IT decision makers plan to build more comprehensive cloud strategies in the future. Going forward, more than half of survey respondents said they intended to build cloud roadmaps, and 65 percent saw these as part of a broad IT evolution. Almost 40 percent viewed cloud solutions as part of an overall business transformation.
While adopters are strong advocates of cloud solutions and plan to make these solutions a core part of their IT strategies, all is not rosy in the cloud. Adopters have overcome common market misperceptions about cloud solutions, but they continue seeking improvements to the security, manageability, integration, and data quality of their cloud solutions. These fundamental requirements will always be at the top of IT’s priorities list.
At the same time, a new set of challenges is emerging, mainly around the issues of cloud-to-cloud integration, bringing information to mobile devices, reducing SaaS silos, and improving user productivity. Addressing these challenges is critical to cloud adopters. More than 65 percent of survey respondents said that enhancing their cloud applications was a high priority or essential in the context of their broader objectives.
In spite of this, as Figure 3 shows, few cloud adopters have made progress addressing priorities such as cross-cloud integration. More than 75 percent of respondents said that integrating cloud applications was important, but only 4 percent had fully integrated their cloud applications, and almost half had at best basic levels of integration such as single sign-on.
Figure 3. Cloud adopters’ priorities for improving cloud applications, with emerging challenges highlighted.
Most respondents indicated that they would like their cloud applications to be much more tightly integrated within 12 months, with more than 50 percent saying that they planned to have integrated data, process, and user experience across their cloud applications. Whether this dramatic shift is possible in a year remains to be seen.
Who better to ask about the cloud than companies that have already started down the path to cloud adoption? These companies have a different set of concerns and are focused on a different set of opportunities than the market at large. As enterprise adoption of cloud applications and platforms accelerates, it is these early adopters that the entire industry must learn from if we are going to look beyond today’s challenges. Accelerating enterprise adoption of the cloud means both helping today’s cloud adopters with their journey and helping more companies join their ranks. Insights from cloud adopters are critical to shaping the products and services offered to the market. We will continue to take the pulse of this fast-paced market through future surveys, ecosystem research, and day-to-day work on the ground with cloud leaders. Our next survey will differentiate respondents by the type of cloud solution they have implemented (SaaS versus PaaS) and size of organization (midsize versus enterprise), as well as add a control group of non-cloud adopters.
About the Authors
Balakrishna Narasimhan is senior director of corporate strategy at Appirio, a cloud solution provider based in San Mateo, California. His research interests include cloud computing’s impact on the enterprise and on the structure of the technology industry. Narasimhan received a BS in physics and mathematics from Williams College, Williamstown, Massachusetts. Contact him at email@example.com.
Ryan Nichols is vice president of product management at Appirio. His research interests include the technology to connect and extend cloud platforms. Nichols received an MBA from the Stanford Graduate School of Business. Contact him at firstname.lastname@example.org.
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