clearing the roadblocks to cloud computing
DESCRIPTION
Middle market executives report moving full steam ahead with transitions to cloud-based system, though not without challenges.TRANSCRIPT
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Clearing the Roadblocks to Cloud Computing
SEPTEMBER 2013 1
key findingsWhen executives opt for cloud computing services, they typically expect to see cost savings but may overlook some transition costs. So far, many organizations have been duplicating existing services or using traditional financing products, preventing cloud from fully delivering on its promises. Just as the first roads were paved over cow paths, today’s cloud-based systems and services are built upon existing IT infrastructure and processes. Costs will likely fall significantly as companies transition more fully; meanwhile, careful planning may minimize surprises.
Seeking greater insight into the views and plans of midsize (under $1 billion in annual sales) organizations, Forbes Insights, in association with CIT Group Inc., executed a survey of more than 250 senior middle market executives to gauge their views on cloud computing services.
Key findings included:• Close to half of respondents use public cloud services, and more
than a third have private clouds on their premises. Another one-seventh report using some combination of the two (hybrid clouds).
• One-third of public cloud users say their cloud services have been more costly than they initially expected. One-twelfth have been surprised on the upside, with lower-than-expected costs.
• More than two-thirds of private cloud users have built their projects by virtualizing or extending their current data centers. In the process, more than two-thirds report, their spending on IT infrastructure equipment (servers, storage, networking) increased.
• One-third of private cloud users failed to anticipate this additional spending. One-twelfth saw spending levels decrease more than they originally anticipated.
2 SEPTEMBER 2013
Cloud is here to stay: a majority of Companies use Cloud in one form or another
publiC Clouds
keeping it private
46% of middle market executives say they currently use—and 26% are considering the use of—public cloud services, 36% use (26% are considering the use of) private clouds, and 15% use (25% are considering the use of) hybrid clouds. 76% of companies using public cloud have been subscribing to these services for less than two years. 67% of companies with private clouds say these clouds are less than two years old.
77% of executives using public cloud are replacing at least some of their existing IT assets or applications. Public cloud services being adopted include 74% subscribing to Software as a Service (SaaS), 34% using Platform as a Service (PaaS), and 24% using Infrastructure as a Service (IaaS). From public clouds, 64% seek lower operational costs, 43% expect more availability of applications and systems, and 41% hope for better overall performance.
More than two-thirds of private cloud users, 68%, have built their projects by virtualizing or extending their current data centers. 24% say their private clouds are entirely new systems. A majority of executives using private cloud, 73%, say they do so to gain greater data security and privacy, 65% want more control over application features, and 49% look for greater control over long-term costs. (Among hybrid cloud users, 52% also seek lower operational costs, and 49% want improved performance. )
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SEPTEMBER 2013 3
Where’s the money Coming from? most private Cloud funding Comes right out of the it department budget.
laCk of funding, fear of unexpeCted Costs and seCurity ConCerns hold baCk Cloud adoption
private Cloud Computing has Cost more than many Companies have expeCted
77% of private cloud users say funding comes out of their IT budget; only 8% have a chargeback mechanism by which departmental usage can be metered. Most companies have not altered their financing and accounting approaches for the cloud phenomenon. 52% of surveyed executives say they fund cloud services and systems with the same financing and accounting mechanisms as they use for standard IT systems.
When asked about issues that concern them, 49% of public cloud users point to vendor pricing and unforeseen costs. 51% of private cloud users worry about the costs of maintaining or adding to existing systems, and 44% say their projects are being hampered by unforeseen costs. Another 43% of executives overseeing private clouds say it’s difficult to get the funding they need to modify their data centers for virtualized, private cloud settings. Other challenges to adoption: security, cited by 80% of public cloud users and 41% of hybrid cloud users; data ownership and accountability, a concern among 57% of public cloud users; and performance issues, cited by 54% of private cloud users and 46% of executives at hybrid cloud sites.
67% of middle market executives using private cloud say that spending on IT infrastructure increased because of transition to or buildup of a private cloud. Only 8% have seen a decrease in their IT costs as a result of the move to private cloud. 35% of private cloud users say these services have been more costly than expected. 75% of all surveyed executives say it will take more than a year until they start seeking a payback from their cloud implementations.
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About Forbes InsIghts
Forbes Insights is the strategic research and Thought Leadership practice of Forbes Media, publisher of Forbes magazine and Forbes.com, whose combined media properties reach nearly 50 million business decision makers worldwide on a monthly basis. Taking advantage of a proprietary database of senior-level executives in the Forbes community, Forbes Insights conducts research on a host of topics of interest to C-level executives, senior marketing professionals, small business owners and those who aspire to positions of leadership, as well as providing deep insights into issues and trends surrounding wealth creation and wealth management.
Bruce Rogers ChIeF InsIghts oFFICer
Brenna Sniderman senIor DIreCtor
Hugo Moreno eDItorIAl DIreCtor
Brian McLeod mAnAger, north AmerICA
Lawrence Bowden mAnAger, emeA
Curtis Bergh DePutY DIreCtor, APAC
Joe McKendrick rePort Author
Charles Brucaliere DesIgner
60 Fifth Avenue, new York, nY 10011 | 212.366.8890 | www.forbes.com/forbesinsights
About CIt
Founded in 1908, CIT (NYSE: CIT) is a bank holding company with more than $35 billion in financing and leasing assets. It provides financing and leasing capital and advisory services to its clients and their customers across more than 30 industries. CIT maintains leadership positions in small business and middle market lending, factoring, retail finance, aerospace, equipment and rail leasing, and vendor finance. CIT operates CIT Bank (Member FDIC), its primary bank subsidiary, which, through its online bank BankOnCIT.com, offers a suite of savings options designed to help customers achieve a range of financial goals.
www.cit.com/perspectives
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CIT Press InquIrIes
Curt Ritter
Director of Corporate Communications
Matt Klein
Vice President, Media Relations
CIT BusIness InquIrIes
Dan Infanti
Senior Vice President, Marketing and Advertising
David Fields
Assistant Vice President, Marketing
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