ey norwegian cloud maturity survey 2018 · ey norwegian cloud maturity survey 2018 5 cloud maturity...

EY Norwegian Cloud Maturity Survey 2018 1

EY Norwegian Cloud Maturity Survey 2018Current and planned adoption of cloud services

EY Norwegian Cloud Maturity Survey 20182

It is still early days for cloud adoption in Norway, and the complexity of migrating the legacy applications is still holding the adoption backCloud maturity and current usage of cloud-based services are still relatively lowCloud maturity is still relatively low in Norway. The technology, media and telecommunications (TMT) and transportation sectors have the highest cloud maturity. This can be attributed to the impact of technology disruption in the Technology, media & telecommunications sector and emergent adoption of Internet of things (IoT) and Big Data in the transportation sector. The consumer products and retail sector has low cloud maturity and seems to struggle with the digital transformation needed to meet the changing market dynamics toward online retailing.

Digital transformation is driving cloud adoptionThe most important business driver for cloud adoption is digital transformation. However, most of the cloud services still seem to be used for internal IT initiatives and pilots of new digital services, as indicated by the limited interest in moving to the cloud to drive revenue growth.

Legacy applications are holding the adoption backComplexity in migrating legacy applications are a significant barrier for large-scale adoption of cloud services. Hence there seems to be a lack of cloud proficiency in the Norwegian market to overcome these challenges.

Plans for increasing the use of cloud-based applications exist, but will be delayed till the adoption of cloud-based infrastructure takes offThe largest Norwegian organizations are planning to significantly increase the usage of cloud-based applications in the coming years. However, the adoption of cloud-based infrastructure services is expected to lag behind. This can be attributed to the complexity of migrating legacy applications to the cloud.

Developing cloud strategies and executing on cloud road maps have priority over tackling the migration issuesThere is a high focus on building new cloud-native digital applications to support digital transformation, developing cloud strategies and executing on cloud road maps in the coming year; whereas, there is only a minor focus on overcoming the issues related to legacy migration. It will, therefore, take time until the cloud adoption really takes off.


Contents01

02

03

04

05

Cloud maturity

Drivers and challenges

Current usage

Future plans

About the survey

01Cloud maturity


Cloud maturity is still relatively low

Average cloud maturity based on geographical footprintAverage cloud maturity level of respondents on a scale from 1 to 5, where 5 is the highest

Average cloud maturity based on sectorAverage cloud maturity level of respondents on a scale from 1 to 5, where 5 is the highest

Average cloud maturity of the respondents is between 2 and 3, which is supported by previous EY experiences from cloud projects in Norway.

Organizations with EU/Global footprint have lower average cloud maturity than the organizations with a Norwegian or Nordic footprint.

The Technology, media & telecommunications and Transportation sectors have the highest cloud maturity. This can be attributed to the impact of technology disruption of their core business in the Technology, media & telecommunications sector.

The relative low cloud maturity in the Consumer Products and Retail sector indicates that the digital transformation to meet the changing market dynamics toward online retailing is challenging.

Norway

5

3

4

2

1Nordics EU/Global

Construction Consumer products & retail

Technology, media & tele- communication (TMT)

TransportationIndustrial Products

Government & public sector

Oil & GasFinancial services

5

3

4

2

1


02Drivers andchallenges


Digital transformation is driving cloud adoption, but the complexity in migrating legacy applications is holding organizations back

Key business drivers for moving to the cloudPercentage of respondents reporting the driver

Benefits of using cloud servicesPercentage of respondents reporting the benefit

There are many business drivers for moving to the cloud, the most important ones being digital transformation and cost reduction. This indicates that shorter time to market is a significant driver for adopting cloud services in the Norwegian market. There is, however, less interest in moving to the cloud to drive revenue growth. This indicates that most of the cloud services are used for internal IT and pilots of new digital services.

Greater scalability is reported as the most significant benefit of using cloud services. Cost savings and improved IT operational efficiency are reported as less important than scalability and time to market. This indicates that flexibility and agility are viewed as more important benefits than cost reduction and efficiency improvement. Larger geographic reach is the least-reported benefit of using cloud services, indicating that cloud services are not much used to expand the geographical footprint for Norwegian organizations.

Drive digital transformation 70%

68%

59%

59%

57%

49%

19%

Reduce time-to-market with new digital solutions

Drive business innovation

Reduce costs

Improve business scalability

Develop new products and services

Drive revenue growth

Greater scalability

Reduced IT operational risk

Shorter IT infrastructure deployment time

Improved IT security

Larger geographic reach

73%

54%

54%

51%

46%

43%

38%

35%

35%

32%

30%

22%

5%

Improved IT operational efficiency

Move from CapEx to OpEx

Increased developer productivity

Shorter time-to-market with new digital solutions

Business continuity

Cost savings

Higher availability

Higher performance


Challenges related to using cloud servicesPercentage of respondents reporting the challenge

The complexity in migrating legacy applications is reported as the most significant challenge related to using cloud services. This is supported by EY’s experience from previous cloud projects at large Norwegian organizations. Security concerns and compliance and/or regulations are still perceived as major challenges for moving to the cloud, and the responses indicate a lack of cloud expertise in the Norwegian market.

Complexity in migrating legacy applications 70%

Lack of cloud expertise 43%

Security concerns 51%

Complexity of managing cloud costs 35%

Vendor lock-in 57%

Complexity of managing multiple cloud services 38%

Compliance and/or regulations 46%

Current identity management solutions and processes 30%

Move from CapEx to OpEx 11%


03Current usage


Current usage of cloud-based services is still low, with Microsoft as the dominant service provider

Share of cloud-based IT applicationsPercentage of responses within each range

Share of cloud-based IT applicationsPercentage of responses within each range split on the respondent’s geographical footprint

All respondents have cloud-based IT applications. However, the responses show that the Norwegian cloud maturity is relatively low. The survey results show that 60% of the respondents use cloud services for only 1%–19% of their IT applications.

Respondents with EU/Global footprint are reported to have a lower share of IT applications in the cloud compared to those with a Nordic or Norwegian footprint. This indicates a slower migration pace toward cloud for larger organizations. EY’s experience shows that this is related to the vast number of legacy applications in large organizations and the complexity related to migrating these to the cloud.

1–19% 20–39% 40–59%

1–19% 20–39% 40–59%

Norway

Nordics

EU/Global

60%29%

11%

0% 100%

60%

50%

69%

27%

40%

23%

13%

10%

8%


Use of SaaS-based IT applicationsPercentage of respondents using the application

Microsoft Office 365 is the most used cloud-based IT application in the Norwegian market. The responses also show that Microsoft has a strong overall position, with Office 365, Power BI and Dynamics 365 among the top six cloud-based IT applications used. In addition, IT development and operations process tools such as JIRA, GitHub and Confluence are widely used. Slack is high on the list of usage, indicating that SaaS adoption can happen very quickly even at large Norwegian organizations.

Microsoft Office 365 76%

Microsoft Power BI 32%

ServiceNow 22%

Dropbox 19%

Google G Suite 11%

Box 5%

GitHub 35%

Confluence 32%

Slack 19%

SAP Sucessfactors 11%

New Relic 5%

Oracle Sales Cloud 3%

JiRA 38%

Microsoft Dynamics 365 32%

Adobe Creative Cloud 22%

DocuSign 14%

Salesforce.com 5%

Zendesk 3%


Share of cloud-based IT infrastructurePercentage of responses within each range

Migration complexity is a major barrier for moving to the cloud, and almost all of the respondents have below 40% of their IT infrastructure in the cloud.

On average, the responses show less use of cloud-based IT infrastructure compared to cloud-based IT applications, indicating that the migration to cloud services is happening more rapidly in the applications layer.

Share of cloud-based IT infrastructurePercentage of responses within each range split on the respondent’s geographical footprint

All respondents with Norwegian only geographical footprint use cloud-based IT infrastructure, whereas over 20% of the respondents with an EU/Global footprint do not. This confirms the finding that the use of cloud-based services is most prevalent for smaller organizations, and that the migration complexity is a major barrier for the adoption of cloud-based services.

18%

10%

66%

3%

3%

Do not use cloud 1–19% 20–39% 40–59% 60–79%

Do not use cloud 1–19% 20–39% 40–59% 60–79%

80%

10%

23% 46% 23% 8%

70% 20%

0%

Norway

Nordics

EU/Global

100%

13% 7%


IaaS or PaaS providers usedPercentage of respondents using the provider

Microsoft Azure is, by far, the most popular IaaS or PaaS provider among the respondents. The responses indicate that Amazon Web Services (AWS) has a significantly smaller market share in the Norwegian market compared to its market-leading position worldwide.

Google is emerging as the third most popular provider and has a significantly higher market share in Norway compared to their global position.

The responses indicate that the other providers have a limited market share, and that the market is dominated by the three large global providers mentioned above.

Number of IaaS or PaaS providers usedPercentage of respondents within each category

A majority of the respondents use more than one IaaS or PaaS provider, and 20% use more than three providers, indicating that a multi-cloud strategy is popular in the Norwegian market.

Use no laaS/Paas provider Use one laas/PaaS provider Use two laaS/PaaS providersUse three laas/PaaS providers Use four or more laas/Paas providers

33%

17%

3%

30%

17%

76%Microsoft Azure

Amazon Web Services (AWS)

Google Cloud Platform

IBM Bluemix/Cloud

SAP Cloud Platform

Heroku

41%

22%

8%

5%

3%


Cloud workloads usedPercentage of respondents using the workload

Apps and data analytics are the most used cloud workloads. Databases are emerging as a popular cloud workload — something that can be attributed to the high cost and complexity of hosting databases on premise.

There is limited use of cloud container services in the Norwegian market, again confirming that the complexity of migrating legacy applications is a major barrier for cloud adoption.

The responses also indicate that the use of cloud-based IoT services is still in its infancy in the Norwegian market.

28%

39%

44%

22%

22%

19%

17%

17%

14%

11%

11%

8%

8%

Databases

Data analytics

Apps

Storage

Integration services

Desktop

Machine Learning

Front end solutions

Disaster recovery (backup)

High performance computing

Container services

Push notifications

Internet of Things (IoT)


Unsanctioned cloud servicesPercentage of responses within each range

Organizations with only 1–9 approved cloud services have many unsanctioned cloud services as seen in the graph to the left. This relation between unsanctioned and approved cloud services is similar for organizations with 10–19 approved cloud services. This indicates that IT departments trail behind the business side’s adoption of cloud services and are still trying to catch up with the demand for cloud services among their user community.

Do not have unsanctioned cloud services 1–9 10–29 30–50

48%

39%

4%9%


04Future plans


Top cloud initiatives planned for 2018Percentage of respondents reporting the initiative

The responses show a high focus on building new cloud-native digital applications. This is supported by the finding that the most important business driver for moving to the cloud is digital transformation, and that shorter time to market with new digital solutions is reported as one of the major benefits of using cloud-based services.

Over 40% of the respondents are planning to develop a cloud strategy in 2018, implying an emerging cloud maturity in the Norwegian market.

Addressing the security concerns does not seem to be a high priority, with only approximately 30% reporting planned initiatives to address these, whereas over 50% are reporting this as a major challenge related to using cloud services.

3%17%

19%25%25%

31%36%36%

44%47%

NoneRun a tender process toward managed cloud laaS/PaaS services providers

Run a tender process towards laaS/PaaS technology providersMigrate legacy systems to the cloud

Implement cloud management/monitoringImplement improved security in our digital development life cycle

Execute on our cloud road mapImplement increased automation in our digital development life cycle

Develop a cloud strategyBuild new cloud-native digital applications

Top four cloud initiatives planned for 2018 based on geographical footprintPercentage of respondents reporting the initiatives split on the respondent’s geographical footprint

Organizations with a Norwegian or Nordic footprint have overall more initiatives planned for 2018, compared to those with an EU/Global footprint. They also have more focus on executing on their cloud road map. For organizations with an EU/Global footprint, initiatives related to building new cloud-native digital applications are more popular.

Norway Nordics EU/Global

19%15%

33%

27%23%

29%

23%31%

14%

31%31%

24%

Build new cloud-native digital applications

Develop a cloud strategy

Implement increased automation in our digital development life

cycle

Execute on our cloud road map

Developing cloud strategies and executing on cloud road maps are major priorities going forward


Share of IT applications estimated to be cloud-based in the following yearsPercentage of responses within each range

Share of IT infrastructure estimated to be cloud-based in the following yearsPercentage of responses within each range

Share of IT applications that are cloud-based is expected to increase significantly in the coming five years. Within three years, all respondents estimate having some of their IT applications in the cloud, and 6% of the respondents estimate that 100% of their IT applications will be cloud-based within five years.

More than 80% of the respondents estimate having below 20% of their IT infrastructure in the cloud within 2018. Within five years, only 20% of the respondents estimate having above 80% of their IT infrastructure in the cloud. In addition, none of the respondents estimate that this percentage will reach 100% within the same time frame. This indicates that it will take time until the adoption of cloud-based infrastructure takes off.

0% 1–19% 20–39% 40–59% 60–79% 80–99% 100%

53%

11%

17% 44% 19%

53% 25%

0%

1 Year

3 Years

5 Years

100%

33% 8%6%

11%

11% 6%3%

75%

19%

31% 31% 17%

50% 19%

0%

1 Year

3 Years

5 Years

100%

8%8%

11%

18%3%

0% 1–19% 20–39% 40–59% 60–79% 80–99% 100%

9% 3%

8%

Plans for increasing the use of cloud-based applications exist, but will be delayed till the adoption of cloud-based infrastructure takes off


05About the survey


About the survey

Geographical footprintPercentage of respondents

SectorPercentage of respondents

Organization sizePercentage of respondents

The results are based on an online survey distributed to chief information officers (CIOs) of the 126 largest private and public sector organizations in Norway. The responses were collected in November 2017.

Industrial products Oil and gas

Technology, media & telecommunications Transportation

Financial services Government and public sector

Construction Consumer products and retail

>10,000 employees

1,000–10,000 employees

<1,000 employees

21%

63%

16%

35%

26%

39%

EU/GlobalNorway Nordics

10%

16%

9%9%

9%

21%

14%12%


Key contacts

Christian MjaanesPartnerTechnology [email protected]: +47 951 50 088

Sophus SlaattaDirector, Cloud ComputingTechnology [email protected]: +47 408 56 699

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ey norwegian cloud maturity survey 2018 · ey norwegian cloud maturity survey 2018 5 cloud maturity...

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