This year’s IDC IT cloud services survey reveals many of the same perceptions about cloud benefits and challenges as seen in last year’s survey. But there are a few interesting shifts this year, driven largely by: 1) budget pressure from the challenging economy, and 2) a growing sophistication in users’ understanding of cloud services.
This year’s survey was fielded, like last year’s, from the IDC Enterprise Panel of IT executives and their line-of-business (LOB) colleagues. The respondent population is very similar to that of last year’s survey, validating comparisons with last year’s results.
Economics and Adoption Speed Still Top Benefits; Standardization Moves Up
This year’s survey shows, once again, that economic benefits are key drivers of IT cloud services adoption. Three of the top five benefits were about perceived cost advantages of the cloud model: pay for use (#1), payments streamed with use (#3) and shift of IT headcount and costs to the service provider (#5).
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While pay-for-use slightly edged out last year’s #1 – easy/fast to deploy – these two are essentially in a tie for #1. It’s pretty safe to ascribe the slight edge for pay-for-use to the enormous pressure that the Great Recession has put on IT budgets, and the consequent increased focus on cloud economics in the minds of customers. But it’s still clear that speed/simplicity of adoption remains a key driver of demand for cloud services.
One benefit that moved up the list from last year’s survey – from #6 to #4 – was the cloud model’s ability to “encourage standard systems”. This upward movement reflects a growing sophistication in users’ understanding of the cloud services model, and how it can apply to their environment. One of the largest sources of IT complexity and cost is the huge sprawl of distinct, yet functionally redundant, systems and applications in most organizations. It’s an open secret that the lack of standardization – of things that could, and should, be standardized – is perhaps the number one brake on IT’s ability to respond quickly and efficiently to businesses’ changing needs. Cloud services – by definition – are built on the premise of standard, shared systems. This survey finding suggests that IT executives increasingly see, and will promote, standardization as an additional – and important – justification for migrating to both public and private cloud offerings.
Security, Availability and Performance Still Lead Challenges; Cost and Lock-In Worries Rise
This year’s top three IT cloud services challenges – security, availability and performance – also topped last year’s challenges list. Security is #1 again, and thus remains the top opportunity for IT suppliers to tackle as they position themselves as market leaders in the cloud era.
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Availability and performance were tied at #2 last year, and are in the same dead heat again this year. I wrap these two together under a label of “dependability”. This survey result is a clear call for suppliers to offer service level agreements, and – more important – service level assurance. Consequently – as we noted in IDC Predictions 2010 – look for lots of traditional IT suppliers to charge more forcefully into the cloud services business in 2010, with a focus on “enterprise-grade” IT cloud services.
The next two challenges represent very interesting shifts from last year’s survey. At #4, users’ concerns that the cloud model will actually cost them more, rose from #6 in last year’s survey. Cost worries may seem counterintuitive, given that economics show up very strongly on the “benefits” side of the ledger, but the reason is simple. Smart IT executives to ask: “what if my end-users, enabled by the cloud model’s self-service provisioning capabilities, use more than I (or they) have budgeted for?” This concern opens up an excellent opportunity for suppliers to introduce services/solutions that help customers better anticipate, monitor and manage the real demands (and costs) of cloud services offerings.
Appearing at #5 on the challenges list is “lack of interoperability standards”. We didn’t offer this as a choice in last year’s survey, but it’s an issue we’ve certainly been hearing a lot more about this year. Customers are wondering whether choosing cloud services will lead to the same kind of lock-in they’ve endured for decades, or whether standards will give them greater freedom of action in the cloud era. Interestingly, this concern about cloud standards is echoed in challenges #6 (bringing back in-house may be difficult) and #7 (hard to integrate with in-house IT). Even though standards cut against the grain of many leading suppliers’ traditional strategies (at least when it comes to standards that impact their core offerings), this survey suggests that suppliers who take a more aggressive and customer-friendly stance toward cloud standards may be able to grab larger market share at this important “crossing the chasm” stage of the cloud market.
Solving Challenges Will Define Cloud Market Leadership
Besides the specific points we’ve already discussed, there are two other important takeaways from this survey.
First, take a look again at the Benefits and Challenges charts above, and notice the percentage of respondents citing each benefit and challenge. You’ll see that there are a higher percentage of respondents identifying challenges than benefits. The midpoint of the benefits sits around 65%, while for the challenges it’s 81%. This doesn’t diminish the strong benefits users see in the cloud model; but it does suggest that the hurdles loom just a bit larger in users’ minds, slowing their adoption of IT cloud services.
And that takes us to the second, and concluding, takeaway: given the very positive benefits users see in the cloud model, it’s obvious that IT suppliers who most directly and effectively mitigate the cloud adoption challenges will be strongly positioned to take market share as the all-important “early majority” customers expand to the cloud. If I were an aspiring cloud services supplier, I’d be putting the “challenges” chart on my wall, and developing and rolling out offerings that start at the top (security), and move right down the list.