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Cloud investment in 2012 to skyrocket, says KPMG Report
81% of user respondents said they were either evaluating Cloud, planned a Cloud implementation, or had already adopted a Cloud strategy and timeline for their organization.
The vast majority of senior executives surveyed expect Cloud investment in 2012 to skyrocket, with some companies planning to spend more than a fifth of their IT budget on Cloud next year.
76% said the use of Cloud would have strategic benefits, and has the potential to transform their business to gain a competitive advantage.
providers promote up to 30% savings, most business executives would be happy with 10%–15% savings.
The vast majority of senior executives globally say their organizations have already moved at least some business activities to the Cloud and expect 2012 investment to skyrocket, with some companies planning to spend more than a fifth of their IT budget on Cloud next year, according to a report by KPMG International.
“Clearly, these findings proclaim, ‘the Cloud is now,’” said Aurelia Costache, Head of Management Consulting at KPMG Romania. “Clearly Cloud is transcending IT and widely impacting business operations, as a full third of survey respondents said it would fundamentally change their business, which is significant considering many organizations are still developing their Cloud strategies.”
In a KPMG global survey of organizations that will use the Cloud, as well as companies that will provide Cloud services, economic factors were cited by 76 percent of both groups as an important driver for Cloud adoption. However, a number of other considerations were equally or more important: 80 percent said the switch to Cloud was driven by efforts to improve processes, offering more agility across the enterprise; 79 percent of users and 76 percent of providers said they saw it as having technical benefits, in some cases improvements that they otherwise could not gain from their own data centers; and, 76 percent said the use of Cloud would have strategic benefits, possibly including transforming their business models to gain a competitive advantage.
Most user respondents to the KPMG survey (81 percent) said they were either evaluating Cloud, planned a Cloud implementation, or had already adopted a Cloud strategy and timeline for their organization, with almost one-quarter of them saying their organization already runs all core IT services on the Cloud (10 percent) or is in transition to do so (13 percent). Fewer than one in 10 executives say their company has no immediate plans to enter the Cloud environment.
“Cloud adoption is quickly shifting from a competitive advantage to an operational necessity, enabling innovation that can create new business models and opportunities,” said Costache. “As this rapid adoption curve continues to gain momentum amid a struggling global economy, it is important for corporate leadership, directors and boards to be informed and engaged in strategic discussions about Cloud’s impact on their long-term growth opportunities and competitiveness.”
IT executives see migration to the Cloud as their initiative, while operations executives believe the CEO should lead the change. “Enter the Chief Integration Officer, as the traditional CIO’s role expands to break down potential silos and integrate internal and external business needs, systems and partners,” said Costache.
Tax Considerations
The survey also found that approximately 45 percent of the respondents had not evaluated the tax implications of cloud or don’t know if these factors are being evaluated. “Ignoring tax issues has never changed the responsibility of the payer, which makes taxation a critical issue for those wishing to evaluate all implications of the cloud environment,” said Costache.
Cost Savings Key
Respondents agree, however, that Cloud must offer a number of benefits before it can gain full momentum in their organization. For example, 75 percent of total respondents globally said they need to show cost savings to justify a move into the Cloud. More executives from Asia-Pacific countries (86 percent) required cost savings, than their counterparts in Europe, the Middle East and Africa (72 percent) or the Americas (71 percent).
Almost half of respondents (45 percent) said that, to make Cloud worth the investment, IT savings would need to be from 1 percent to 10 percent from current spending, 34 percent said such savings would have to be from 11 percent to 25 percent, and some 10 percent said IT savings would need to be in excess of 25 percent. But an intriguing finding is this: while providers promote up to 30% savings, most business executives would be happy with 10%–15% savings.
This global survey of 900 business and IT executives was performed in 2011 and explores some of the business and operational challenges surrounding the adoption of Cloud and aims to provide insight into the forces shaping the cloud market. The survey examines three distinct perspectives: that of senior business unit executives, senior IT executive and Cloud service provider executives.
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 152 countries and have 145,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
KPMG in Romania and Moldova operates from six offices located in Bucharest, Cluj-Napoca, Constanta, Iasi, Timisoara and Chişinău. We currently employ more than 600 partners and staff; Romanians and Moldovans as well as expatriates.