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Cloud adoption rising says North Bridge and GigaOM in latest survey

Cloud computing adoption continues to rise in 2013 with 75% of 855 c-level executives at corporates, vendors and IT decision-makers questioned by North Bridge Venture Partners and GigaOM Research for their ‘Future of Cloud Computing Survey’ reporting its use. This is up from 67% in last year’s survey.

The 2013 ‘Future of Cloud Computing Survey’ was supported by 56 collaborating organisations and technology companies such as Reval and others, who shared sales figures and cloud computing uptake data to help North Bridge Venture Partners and GigaOM Research reach their conclusions. This year’s survey was the largest to date, say the partners, and examined viewpoints on drivers, inhibitors and opportunities in cloud computing across a variety of industries from treasury to banking.

News Analysis
The growth in cloud computing adoption is consistent with forecasts from GigaOM Research, which expects the total worldwide addressable market for cloud computing to reach $158.8bn by 2014, an increase of 126.5% from 2011.

Much of the growth is probably due to the financial constraints placed on companies, especially banks, since the 2008 crash with IT budgets slashed and capital expenditure funds scare, meaning essential work or upgrades are often outsourced to a cloud computing vendors as it represents less upfront cost. Those that do have the money - like treasuries at large multinational corporations (MNCs) - are typically hoarding the money due to the parlous economic situation unless a clear return on investment (ROI) case can be made.

“Reval brought its cloud-based Software-as-a-Service (SaaS) offerings to market in 2001 to meet the complex needs of treasury and risk management for large and medium-sized corporations,” said one of the participants in the survey, Reval’s chief technology officer (CTO), Philip Pettinato. “…hundreds of companies have followed our early adopters.”

This year’s 2013 survey finds several important shifts in why and how cloud computing is being used, the obstacles to adoption, where cloud decision-making resides within organisations, and how the vendor landscape is changing. It also serves as a barometer for the industry’s progression. Feedback from across the different categories of respondents was consistent, signalling a convergence of vendor and user needs. Further, the 2013 survey reveals that business is driving the revolution deriving clear benefits from cloud adoption in the form of continuous innovation and business agility to yield competitive advantage.

Survey highlights included:

• Business is dominating the use of cloud technology
Organisations average 52% current use of applications that advance business priorities, compared with an average 36% that use applications that advance IT priorities. This underscores the increasing value placed by organisations on facilitating the delivery of services beyond IT, such as cash management reporting or bank customer processing, via the cloud. Over two-thirds (68%) of the 855 respondents view greater migration to the cloud as bringing equal or better total cost of ownership (TCO) benefits to the organisation.

• Software-as-a-Service (SaaS) leads
SaaS remains the most popular form of cloud-delivered service, used by 63% of surveyed organisations, up from 55% last year. The top cloud companies cited are the usual brand name infrastructure players, such as Amazon, Microsoft, Google and Rackspace, but 300 companies had less than 2% of responses each, indicating that there are a large number of up and coming companies, and no single company has captured all of the momentum towards the cloud as yet.

• Agility and scalability are the primary drivers for cloud adoption

The need for cloud services to support mobility, however, and the ability for continuous innovation to drive competitive advantage via more integrated business processes are all key drivers as well. More than half of the 855 respondents cited business agility (54.5%) and scalability (54.3%) as the main attractions of the cloud.

Cost is close behind with 48% citing it as a driver towards cloud computing usage. Cloud application processing interfaces (APIs) are also cited as important in the 2013 survey as users look to move beyond stove pipe applications to more integrated business services

• Security is starting to lose its label as the primary inhibitor to cloud adoption
While concerns about a loss of security in moving towards the cloud are dissipating, 46% still cite it as their biggest worry, but this figure is down from 55% last year.

• Changes to the model
In five years, more than three-quarters (76%) of respondents expect hybrid clouds to be the core of their cloud strategies, overtaking the adoption of public and private clouds. Nearly 40% of respondents expect to increase their training investment as well in order to better support a cloud computing expansion within their organisation.

“Clearly, even in the 3rd year of our survey, we're still very early in the cloud-computing revolution,” says Michael Skok, a general partner at North Bridge Venture Partners. “Yet the cloud formations we identified in last year’s survey are on an unstoppable rise. Self-empowered consumers and businesses are taking the lead, and in many instances, regardless of IT [departments]. But IT is investing heavily too in both adapting internal infrastructures and adopting public infrastructure to respond ‘on demand’, while managing the inevitable issues of compliance and regulation through hybrid approaches.

“To realise the promise of the cloud, there is a clear call for the industry as a whole to help reduce complexity, and provide better interoperability,” he added.

According to David Card, vice president of research at GigaOM, technology buyers expect cloud adoption to make managing IT increasingly complex, “yet the plurality also expect overall better cost of ownership. That's either wishful thinking or an intriguing opportunity for suppliers and systems integrators".