While saving money is a commonly reason cited for moving IT to the cloud, it is really not the overriding driver at all for most companies, according to new research.
What’s more important than cost savings for companies — at least in the U.S. and Asia-Pacific regions — is the ability to standardize their software and business processes across the company, according to a new survey of 600 large companies by Tata Consultancy Services, the $ 8 billion IT service provider. In Europe and Latin America, the primary rationale was the ability to ramp systems up and down faster.
According to the survey:
The factors driving companies to launch entirely new applications in the cloud are quite different – to institute new business processes and launch new technology-dependent products and services.
The results confirm at least one bit of conventional wisdom — that European companies lag their U.S. counterparts in cloud adoption. Among U.S. respondents, 19 percent of their total applications run in the cloud compared to 12 percent in Europe. But both regions lag Asia and Latin America in adoption — at least in percentage of applications now running in the cloud: 28 percent for Asia and 39 percent for Europe.
However, companies in all regions expect their cloud usage to grow dramatically by 2014. For example, U.S. companies expect that 34 percent of their total applications will be cloud-based in two years. European repondents said they expect cloud applications to hit 25 percent in that period. But Asia and Latin America will keep up the pace, with Asia-Pacific companies expect to hit the 52 percent mark and Latin America 54 percent in 2014.
One of the reasons companies typically cite for moving to the cloud is that they’re able to move such IT budgets to an operational expense (OPEX) that can be spread out over the course of deployment as opposed to a larger, up-front capital expense. OPEX is far easier to get approved but, in terms of actual cost, there can be a point after which the cloud cost can exceed the operational expense. After five years paying a cloud provider for storing data — and also paying the networking charges for accessing that data — in some cases it may actually make sense to go with an on-premise solution. Companies need to do this math up front to determine which model works for them.
But, as Tata’s results show, cloud computing is big now, even if it’s not a panacea for bloated budgets. Actual adoption likely will ramp up significantly as companies get comfortable with the model and better understand how and when to use it, and what it might cost.
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