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Cloud is still a relatively small investment for the UK’s largest organisations and is failing to meet IT leaders’ expectations, according to a new study by sourcing advisor Alsbridge plc.
While the vast majority (92 per cent) of companies are using cloud, more than twice as many have adopted the traditional Software-as-a-Service (SaaS, 70 per cent) as the second most popular category, Platform-as-a-Service (PaaS, 32 per cent). Infrastructure as a Service (IaaS) is falling far behind with only 20 per cent compute- and 14 per cent storage-based adoption.
The research also reveals that externally managed cloud computing accounts for just 20 per cent of annual IT budgets on average.
John Sheridan, director and head of IT outsourcing (ITO) at Alsbridge, comments: “Cloud has been hyped up by consultants and suppliers alike for many years, but in truth there is still caution around its wider adoption beyond SaaS and ‘sand-boxed’ platforms.
“Cloud may be a good fit for a small to mid size business model, but our study reveals that IaaS cloud adoption at a large corporate level is in fact still relatively low.”
Great Expectations
Cloud initiatives are failing to meet IT leaders’ expectations: companies are getting speed and flexibility but at a price.
The greatest mismatch between expectations and results is seen in operational cost savings (74 per cent expected versus 41 per cent gained), efficiency (59 per cent versus 35 per cent) and software cost savings (74 per cent versus 63 per cent).
Sheridan continues: “In our experience, many organisations have a technology-driven view of cloud and as a result of this, operating models are not fit for purpose and business objectives are not being met.
“Suppliers and IT leaders need to see cloud as part of a hybrid business operating model – not just technology – and work together to define and understand objectives, a realistic change journey and achievable targets.”
Trouble Ahead
IT leaders plan to increase their spend on outsourced cloud to 26 per cent of annual IT budgets on average in the next twelve months.
When asked about the barriers to cloud adoption in their company, two thirds (65 per cent) ranked data sovereignty and privacy as their top concern while one in ten said legacy applications (10 per cent) and one in twenty cited integration with existing systems (5 per cent) and a lack of skills (5 per cent).
Sheridan adds: “What concerned me most was the limited recognition of key risk factors. Based on our experience of the primary challenges, IT leaders are seriously underestimating the job of migrating to the cloud.
“Suppliers and IT teams need to approach this as a major business programme and prepare for the changes needed in key areas such as business operations, demand management and commercial management structures.”
