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Users See Cloud As an Alternative Financing Strategy

Posted by Frank Gens on June 30th, 2009

calculator_smallEveryone knows that one of the top cloud services model benefits, according to users, is the ability to stream payments out over the offering’s useful life, rather than paying the entire cost up-front.  But I still found it intriguing when IDC colleague Jennifer Koppy recently presented additional data points that support the strong economic appeal of the cloud model:



This survey finding, from the IDC Leasing and Financing Survey Results (IDC#218599, June 2009) report, shows user interest in a number of acquisition options, as alternatives to leasing.  Two things stand out:

  • Users rated cloud computing as the top alternative to traditional IT leasing. Cloud computing garnered the highest average rating (2.7 out of a maximum 4), as well as the highest percentage of respondents (27%) indicating an interest level of 4 (”very interested”).  It’s notable that the third highest-rated alternative was “utility-type computing”, which is synonymous with cloud computing.
  • Cloud computing edged out outsourcing as a leasing/financing alternative. In tough times, as CIOs are squeezed, they’ve traditionally looked to outsourcing as a method for lowering costs, and spreading them out.  No doubt this finding will be particularly interesting – and challenging – to outsourcing services providers, most of whom are currently trying to determine just how serious they should be in adding cloud services options to their services profolios.

It’s clear that cloud computing is of growing interest, not just to the technologists, but to the money people – the CFOs, CEOs, Procurement VPs, as well as senior IT execs – who think about the capital and cost implications of IT.  And from these ratings, it looks like their initial impressions are positive.  The implications for the IT leasing and finance players, as well as traditional IT outsourcers is obvious:  they need to quickly determine how they will get their share of the growing cloud opportunity.

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One Response to “Users See Cloud As an Alternative Financing Strategy”

Hi, yes this is useful thinking from IDC.

Using theory of constraints the commercial model for cloud is probably the no1# issue at the moment apart from the tech.

Building out from the technology today we could enter and deliver services on multiple touch points of the client. The IDC view recognize this state of affairs with the need for a dedicated service as well as the public area. Clients need a robust transition path to explain how to address internal and external integration services (a modernization story if ever there was one for sales….). Current escalation roadmaps to cloud could include the phases mentioned in the graphic in the blog (note the deliberate partition of services as we increase the cloudiness of services). I particularly like the bundled commentary as this gives up a added-value premium pricing strategy:

- managed hosting ( EOL, ELC and other types of ownership financial and leasing models)
- Transition to Pay -per -use (Run & Maintain Service management and Dev/Test Burst Services)
- Transition to Utility services ( selected Infrastructure and software as services – separated from existing IT Estate)
- Transition to Bundled services ( Dedicated cloud services connected with existing IT estate – this could include mashup and data services. The focus here is on non-mission critical services but could start
to evolve mission critical services out of this)
- Transition to Cloud services ( use of public and or private cloud as main operational services.)
(we could sell entry points on any of the above)

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