KPMG’s Cloud Survey

Cloud_computing_icon_svgLate last year KPMG published the results of a survey on cloud computing. You can see the results here. The survey was given to 500 CEOs, CIOs, and CFOs of large companies with annual revenues of over $100 million.

You might ask why these results matter much to anybody who is smaller than that. I think it matters because in the IT world, what the big companies do moves downhill to the rest of us. As an example, if the large companies, with all of their buying power, move away from enterprise level routers, then the rest of us will be dragged in that same direction as the market for enterprise routers stops evolving and dries up. The large companies collectively have the majority of the buying power in this market.

When cloud computing got started a few years back the original sales pitch for the change was all about cost savings. Cloud vendors all touted that it was far cheaper to use computing resources in large data centers than to own your own computer resources that includes a dedicated staff to operate an IT network. And while cost savings is still part of the reason to change to the cloud, it’s no longer the only reason. The survey found the following reasons given by large companies for using the cloud:

  • Cost savings – 49%
  • Enabling mobile work forces – 42%
  • Improving customer service and partner interfaces – 37%
  • Understanding corporate data better – 35%
  • Accelerating product development – 32%
  • Developing new business lines – 30%
  • Sharing data globally – 28%
  • Faster time to market – 28%

In a similar survey from 2012 the responses were primarily about cost savings. For example, the emphasis on enabling a mobile workforce then was only given as a reason by 12% of respondents. What bought about such a big shift in the way that large companies think about the cloud in only a two year period?

The reason is that the cloud was originally a hardware transition. It let companies stop having to buy and maintain expensive computer systems and a large staff to operate them. Executives were tired of constantly being told that their systems were obsolete (and in our fast changing world they usually were). More importantly, executives were tired of being told that it was too hard to accomplish whatever they most wanted to do and they felt that their IT functions were often holding back their company. Many executives thought of their IT department as a black box which they didn’t understand very well.

In the last few years it has become clear that the cloud is not just a substitute for hardware and staff, but is also a catalyst for changing software. Large corporations have often been locked into huge software systems from companies like Oracle or Microsoft. While these packages did some things very well, there were some functions where they were just adequate, and other functions for which they were downright horrible. But the computer systems and IT staff tended to make everything work with a few integrated software packages rather than support a lot of different programs for various functions.

At the same time there has been a revolution in network hardware and a shift to the efficiencies of using large data centers, there is also a host of new software on the market that is extremely good at just a few functions. Companies have found that while they were breaking free of the restrictions of an in-house IT network and staff that they have also been able to break the bundles of the large software packages.

And this can be seen by looking at the claims that the respondents to the survey made about what they have already been able to achieve through the cloud:

  • Improve business performance – 73%
  • Improve the level of service automation – 72%
  • Reduce costs – 70%
  • Better integration of systems – 68%
  • Introduce new features and functions – 68%
  • Enhance interaction with customers and partners – 67%
  • Rapidly deploy new solutions – 67%
  • Replace legacy systems – 66%

Most of these results reflect changes in software as much as they represent just changing computer platforms. This is not to say that a shift to the cloud is seamless. For example, there is a lot of corporate anxiety about the security of their data. But overall, the large corporations are so far very happy with the shift and most plan on transitioning more to the cloud. Smaller companies are going to feel the tug to move to the cloud for the same reasons. It’s likely that you can save money and begin using newer and better software after such a change.

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