Punching Through the Hype of Cloud Computing: Interesting Results of KPMG Netherlands’ 2010 Cloud Computing Landscape Survey
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Given how much hype cloud computing is getting right now you would think there is an abundance of proven results. Ironically, there are not. While there are many success stories from vendors, the fact remains that it is very difficult to isolate the impact of a single technology investment on business strategy results.
I can buy the fact that cloud computing can increase the speed and accuracy of communication, and can enable channel partners to be more informed through CRM applications for example, yet I cannot buy the success stories of double-digit increases in Net Income due to this technology alone. Too implausible, as Net Income is affected by many more factors than just a technology decision. It’s time for vendors to get real and show the good and the bad if they are going to help make cloud computing more credible.
Why Cloud Computing Needs to Earn Trust through Results
It is no surprise that many CIOs and CEOs are skeptical of cloud computing and its many applications are slow to trust it; there just are not enough data points yet.
Vendor-speak, if you will excuse the pun, clouds the market and make it even more confusing.
More independent surveys of what is actually going on with cloud adoption need to be done by impartial firms who are independent of vendors. Questions including what companies are really using it for, how they chose one process over another to automate using cloud-based technologies, how the dealt with security issues, and the specifics of the Service Level Agreements (SLA) need to be discussed far more openly.
When surveys are done, they often deliver conflicting results however. Ray Wang, Partner of Altimeter Group in his blog, A Software Insider’s Point of View has a great post that is worth reading on this topic titled Research Report: How SaaS Adoption Trends Show New Shifts in Technology Purchasing Power.
With these points in mind, the recent release of the report From Hype to Future: KPMG’s 2010 Cloud Computing Survey is provided below. This is a report out of KPMG Netherlands, and has a relative small sample size of 125 decision-makers and business managers. KPMG does not disclose if these are clients or not, yet does provide in the appendix two tables showing distribution of respondents by organization size and sector. The majority of the respondents are in organizations with more than 5,000 computer users (42%).
Here are selected highlights from the report:
- 59% agree that cloud computing is the future of IT in their organizations.
- 45% of the respondent organizations are using cloud computing today and 13% expect to adopt cloud computing within the next 12 months (survey was completed in March and April 2010).
- SaaS is the most common form of cloud computing used (72%) and 7% have private clouds today.
- Application hosting (39%), data storage (32%) and e-mail/messaging (29%) are the three most common cloud-based applications in use as of May, 2010.
- 77% cite greater flexibility and elastic computing potential of cloud computing, cost savings (75%), and better scalability (64%) as being the three dominant drivers of their adoption of cloud computing.
- 76% cite security as the greatest obstacle to getting cloud computing adopted in their companies, followed by legal issues (51%), with compliance and privacy (50%) being the third most mentioned obstacles to adoption.
Bottom line: Understanding how cloud computing makes business strategies more effective, focused, and results-driven is the missing link. Vendors need to step up and deliver real data, not just stacks of diagrams and theoretical discussion if they are ever going to earn trust.
Hi Louis,
Some additional comments on your article:
– KPMG is not a cloud computing vendor, nor an IT-integrator. We are an independent accounting/audit/advisory firm with no links with cloud vendors.
– KPMG comments in the report that while cloud computing is an emerging IT delivery model, its share in the IT spendings is relatively low (less than 5%). On-premise IT will dominate for the time being.
– 45% of the respondents use cloud computing for (parts) of the IT. None of the respondents relied entirely on the cloud.
– Understanding HOW cloud computing makes business strategies more effective, focused, and results-driven is a difficult questions that cannot be answered generally. It depends on the current IT landscape, state of sourcing, CapEx OpEx ratio, depreciation of existing IT resources, importance of IT in the business processes, etcetera etcetera.
– Our survey delivers real data from organizations with their real concerns and expectations, not just stacks of diagrams and theoretical discussion. KPMG does not believe in theories alone, we believe in real practices from real organizations.
Mike Chung
Manager at KPMG, and author of the cloud computing survey
chung.mike@kpmg.nl
Mike,
Thanks for your insightful response.
I think it’s important for more surveys like this to be done by third-party companies to get to the truth of cloud computing adoption. Of the surveys done to this point (excluding yours) they vary in results so widely that the credibility of cloud computing cannot help but be questioned as a result.
The one question on the methodology that I did not see mentioned was how the sample was chosen. Are these all KPMG customers in the Netherlands? Or is this a random sample of businesses in the Netherlands? That would make a difference in the analysis of results as well. Additional demographics on them would also help. Overall I thought your report was a step in the right direction for showing the truth about cloud computing.
Finally, I apologize if you took my comment on stacks of diagrams and theoretical discussion as a criticism. It was not intended that way. I meant that the majority of cloud vendors rely too much on the theoretical and not enough on the real results their early adopters are accomplishing.
Thanks again and it is great to see research being done on early adopters!
Best Regards.
Louis Columbus
Hi Louis,
Thank you for your reply.
The sample was chosen based on our network of clients in the Netherlands and some Dutch affiliates of these companies in Belgium and Germany. Mostly companies with 5000 employees or more. KPMG’s presence in Small and Medium sized companies is relatively low in the Netherlands although we approached them for our survey as much as possible.
So we asked (potential) users/buyers of cloud services for their views and not the vendors. And the majority of the respondents were decision-makers from the business side and not the IT side.
Generally, Dutch companies adopt new IT models/technologies earlier compared to their peers elsewhere in Europe so that is a point that should be taken into account.
Best regards,
Mike Chung
KPMG
Hi Mike,
Thanks for providing the additional information; it makes the findings all the more valuable and interesting. Your explanations have added a new dimension to the data, I appreciate it and my class will find it useful as well.
Best Regards,
Louis Columbus