The Time To Switch To cloud Computing Is Now, Says KPMG Report

The KPMG global survey – conducted in 15 countries, hearing 806 corporate executives who use or plan to use cloud computing as well as 123 executives from service providers in cloud computing – shows that 76% of both groups of respondents cited economic factors as an important stimulus to the adoption of such technology.

However, several other factors proved to be equally or more important: 80% said that the migration to cloud computing was driven by efforts to improve processes, offering more agility across the organization, 79% of users and 76% of professionals said considering that the cloud offers technical benefits, in some cases, and improvements that otherwise could not be obtained from its own data processing centers, and 76% said that the use of cloud computing would bring strategic benefits, possibly including the transformation of their business models to gain competitive advantage.

Most users who responded to the survey by KPMG (81%) said they were evaluating cloud computing, or planning to implement, already having adopted a strategy and timeline for the use of cloud computing for their organization. Almost a quarter of those 81% indicate that their company already performs all major IT services in the cloud (10%) or is in transition to operate on that platform (13%). Less than 10% of executives say their company has no immediate plans to enter the cloud environment.

For Steve Hill, vice president of Strategic Investments at KPMG in the United States, the adoption of cloud computing is rapidly changing the level of competitive advantage for a finding of operational necessity, enabling innovation that can create new business models and opportunities. “As this rapid adoption curve continues to gain momentum, even in the midst of a global economy in crisis, it is important that business leaders, principals and boards of directors are informed and involved in strategic discussions on the impact of the cloud on their competitiveness and their opportunities for long-term growth”, says the executive.

Hill also highlights the role of leading enterprise cloud computing which remains controversial. IT executives consider migration to the Cloud as their initiative, while operating executives believe the CEO should lead the change. “Enter the Integration Director (Chief Integration Officer), since the traditional role of the CIO expands to break down potential barriers and integrate the needs of internal and external business systems and partners”, says Hill.

Expectations Differ Moderately

Executives whose companies utilize a cloud computing strategy agree that there will be a significant increase in costs in coming years. According to the KPMG survey, 17% of business executives say that spending on cloud technology would be more than 20% of the total IT budget in 2012-2013.

IT executives at companies that have been or will be adopted cloud computing, 50% believe that security is the challenge and the most important concern, compared with 42% of executives from the business units. Moreover, 51% of the members of the community provider of cloud technology declare that security is at the top of their lists. The executives of the business unit (29%) shared the same concerns about performance with their IT counterparts (30%).

Other Points Highlighted In The Study:

  • IT governance was identified as the main challenge among 22% of IT leaders, being, however, cited by only 17% of business users;
  • Almost a fifth (19%) of IT executives said they consider the loss of control over customer data as a major challenge, compared with 14% of respondents among their colleagues operations;
  • The regulatory compliance was indicated as the main challenge among 16% of corporate executives, compared with only 10% of IT leaders.

Tax Considerations

The survey also revealed that nearly 45% of respondents had not assessed the tax implications of cloud computing, or do not know if these factors are being evaluated. “Ignoring tax issues has never changed the liability of the taxpayer, which makes taxation a critical issue for those wishing to assess all the environmental implications of cloud computing,” said Hill.

Need For Cost Savings

The respondents agree that cloud computing should offer several benefits before it gains full strength in organization. For example, 75% of respondents worldwide said they need to provide cost savings to justify the migration to the cloud. Executives from Asia-Pacific (86%) are the most demanded reduction in costs compared to their counterparts in Europe, Middle East and Africa (72%) and the Americas (71%).

Almost half of respondents (45%) said that to make cloud computing worth the investment, reducing IT costs need to be 1% to 10% of current costs, 34% stated that this reduction would be 11 % at 25% and about 10%, this reduction would be more than 25%.

Pravin Ganore

Pravin Ganore

SME at ESDS Software Solution Pvt. Ltd.
Passionate journalist specializing in IT. Graduated from the University of Pune, specializes in communications and digital media.
Pravin Ganore