Survey: cloud interest grows triple-fold; cost may not be main factor

Why are enterprises moving to cloud computing? Cost cutting may not be the main reason.
Written by Joe McKendrick, Contributing Writer

Everyone figures that companies are buying into cloud to save money. A new survey says otherwise. But why are companies adopting cloud?

A new study (PDF link) commissioned by Avanade shows a 320% increase over the past nine months in respondents reporting that they are testing or planning to implement cloud computing. Avanade claims this is the first time a survey has documented a global embrace of cloud computing in the enterprise.

The study also found that while companies are moving toward cloud computing, there is little support for cloud-only models (just five percent of respondents utilize only cloud computing). Rather, most companies are using a combination of cloud and internally owned systems, or hybrid approach.

Okay, the survey confirms what we've been seeing anecdotally. That is, there's been a huge uptick in cloud interest. And apparently, this has been taking place during an economic downturn. But here's where it gets interesting: Only 13% said the onset of a tougher economy helped push them toward the cloud. A majority, 58%, say economic conditions had nothing to do with it.

While Avanade didn't seem to read anything into this, another observer, Paul Miller, thought this finding was a real eye-opener, suggesting that contrary to what everyone assumes, cloud computing decisions are not being driven by cost-cutting needs:

"Also interesting was the relatively small impact of the economic situation upon Cloud adoption, with only 13% suggesting it had ‘helped’ adoption plans and 58% reporting ‘no effect.’ In my conversations with Nick Carr and others, there’s been an underlying presumption (on my part, as well as theirs) that cost-saving arguments with respect to Cloud Computing would prove persuasive and compelling.  It would appear not. This would suggest, of course, that enterprise adopters are taking to the Cloud for reasons other than the budget sheet…"

If it isn't its low entry costs, then why is cloud computing so popular? Avanade says half of the companies surveyed that have migrated to cloud computing technologies use it to "manage and deliver business applications such as customer relationship management (CRM) and human resources (HR) services." Forty‐six percent of respondents are also using cloud computing for data storage.

Speaking of greater flexibility and agility, the Avanade survey suggests that the service model is taking over as the prevailing IT value proposition. As Avanade puts it, the "online services model is beginning to fundamentally change how IT services are consumed and provisioned in large organizations. More than half of respondents report that they are currently using Software as a Service applications. In the United States, that number increases to more than two-thirds (68 percent)."

And many of these deployments are internal cloud. Avanade says that globally, "there is a 2:1 ratio of respondents who prefer SaaS delivered internally (or as private services) versus from third-party service providers. There is an even greater dissparity in the United States, with a 4:1 ratio in favor of internal SaaS deployments."

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