Cloud crucial to competitiveness

We started this research program with a quote from Nicholas Carr’s groundbreaking book about the cloud, The Big Switch: Rewiring the World, from Edison to Google:

“Ultimately, corporate decisions are economic decisions—and the advantages of utility computing are going to push companies in that direction.”

Nearly seven years later, Carr’s prediction is looking solid.

Businesses exist to make money, and the financial performance of early cloud leaders suggests that the cloud helps them do so. Other companies need to catch up in order to remain competitive.

Cloud news roundup

Cloud security again dominates the cloud news cycle this week. We’ve reported in the past about government cloud adoption, but a new survey has some sobering numbers about those migrations. The survey found that only 20% of government IT executives are confident in their vendor’s security. But there is a bright spot—90% are taking steps to manage trust with their vendors. Given our survey results, other IT executives would do well to follow the government’s lead in this regard.

A flash poll from InformationWeek found that 40% of readers are less confident in storing photos and data in any cloud service. Yet only 12% of respondents said that they changed their personal practices or recommended some security tightening at work.

Finally, an insightful column on InfoWorld explores the hysteria surrounding the iCloud hack. Rather than blame “the cloud,” those worried about security should focus on their own and vendor’s practices.

Path to Value project update

Our survey of 350 business and technology executives nationwide has led to some interesting, topical insights about what firms are moving into the cloud, what they look for in a cloud vendor, and their expected benefits in the cloud.

Next week, we will be bringing you a new think piece and infographic about our “trailblazers,” firms that are far ahead in their cloud migrations. Stay tuned for that. In the meantime you can check out our briefing paper or any of the think pieces we’ve released so far. And, as always, we’ll be bringing you news, research, and insights here in the meantime.

Cloud news roundup

India’s Prime Minister Narenda Modi has unveiled an ambitious plan to bring the cloud to every Indian citizen. The website——will store citizens’ vital records (e.g. birth, death, or marriage certificates) in a huge, easily-accessible digital locker.

China also has its eye on the cloud, initiating a cloud-computing program in its 13th Five Year Plan. The prospect has both Chinese and foreign companies salivating, with the cloud market in China estimated to grow to almost $5 billion by 2015. Companies there are jockeying for position to be the country’s supplier of security products.

Finally, NASA has set its sights a little lower than the moon—the agency is currently undergoing a massive cloud migration, freeing 110 of its applications from the surly bonds of physical storage space. It’s got far to go, though. Many of its applications were and are running on outdated systems and involved huge amounts of sensitive information.

Cloud news roundup

A study of M&A in the second quarter of 2014 found that cloud and smart mobility drove 42% of technology deals. Of the deals greater than $1 billion, fully three quarters targeted internet, cloud/SaaS companies, or Internet of Things firms.

As we’ve seen from our study, security concerns are top of mind for firms migrating to the cloud. To that end, worldwide spending on information security will top $71 billion this year, with data loss prevention experiencing the fastest growth over 2013’s spending.

Another recent study shows how cloud is set to transform small businesses. By 2020, the report says, 80% of small businesses in the US will have migrated to the cloud. That’s explosive growth—today, 37% of small businesses have migrated to the cloud.

C-levels disagree about cloud decision making

One of the key takeaways from our survey of 350 business and technology executives was that although businesses have a sophisticated understanding of the benefits of the cloud, plans for migration are in short supply. This dearth of strategy may have to do with how decisions about the cloud are made.

How are decisions about cloud and managed services strategy made at your company? Click to enlargeWindstreamQ20a

As you can see in the chart above, C-level executives have very different opinions on how these decisions are made. For instance, while 29% of CFOs say cloud decisions are made by an individual at headquarters, only 10% of CIOs say that. Furthermore, only 6% of the other C-level titles we surveyed agree with that statement.

30% of our total respondents said decisions are made by a centralized group or committee at headquarters. 40% of the other C-levels we surveyed agree, but only 20% of CFOs say that’s true.

The differing responses to this question are troubling—in order to have a successful cloud migration, companies should agree upon and have a clear decision-making process when it comes to cloud and managed services.

Industry opinions: Cloud service providers

So far we’ve taken a look at the benefits that particular industry sectors are seeing from their cloud migrations, and what qualities they look for in a cloud services provider. Today we’ll focus on  what executives are saying about the providers themselves.

Please indicate your agreement with the following statements about cloud and managed services providers. (Top 2-box scores) Click to enlargeWindstreamQ25all

As you can see, a majority of respondents say cloud providers add measurable value to their business results. Among industries surveyed, financial services are seeing the most value—70% of respondents said their provider adds value—while only half of respondents from retail say that.

Professional services firms are the most likely among our industry respondents to expect a pre-sales technical consultation (54%), while government/education companies are the least likely (37%). Meanwhile, healthcare companies are significantly less likely to see cloud hosting as a commodity service (28%), while government/education is the industry most likely to see cloud as a commodity (46%).

Government/education organizations are also the least likely to say their provider adds measurable value to their operating processes, at 25%—but are the most likely to say their service provider works to tailor solutions to their needs, at 27%.

Choosing a cloud provider: Industry preferences

One of the most important aspects of any cloud migration is selecting a cloud services provider. As you can see in the chart below, our survey respondents are most concerned about price when it comes to their providers.

How important are the following qualities in a cloud service provider? Click to enlargeWindstreamQ25Total

But respondents in some industries surveyed—especially professional and financial services firms—have slightly different priorities. The top pick for financial services is service-level agreements (69%), while professional services firms ranked pre-sales engineering as top pick.

Perhaps unsurprisingly, given the nature of their business, healthcare respondents are significantly more likely to rank compliance as a top quality (67%); meanwhile, professional services firms are significantly more likely to rank transparency into operations and performance (62%), whereas transparency is less important to financial services (43%).

The takeaway for providers? It makes sense to tailor offerings and solutions to different industries.

Infographic: Cloud’s strategic importance

Today we bring you a snapshot of some key findings from our survey analysis. A companion to our think piece, this infographic highlights the ways companies are increasingly using cloud as a strategic asset. Large majorities of our respondents expect a variety of business functions—like engineering and development, operations, and management and board—to be partially or fully in the cloud over the next two years. Yet planing for these migrations are in short supply. Click below for some encouraging numbers on cloud migration plans, and some worrying numbers about their execution

WindstreamStrategyInfographicClick to enlarge