Our survey identified a small group of respondents—16% of the total—who are furthest along the path to value in the cloud.
These leaders, or Trailblazers, are more likely than their peers to establish a clearly defined strategy for migrating applications and data to the cloud. And this maturity reaps measurable rewards. As you can see in the charts below, Trailblazers tend to be larger companies expecting big revenue gains in the next two years:Trailblazers also report significantly higher profitability and profit margins.Trailblazers view the cloud as a way to open new markets and new lines of business that spur growth. Over half (52%) of them say that clouds are critical for innovation, compared with 33% of non-leaders.
We’ll have more on Trailblazers—including what they’re doing and what they value in the cloud—in coming posts.
About a third of our 350 respondents say that core business functions (e.g. payroll, billing, and workforce planning) have a substantial presence in the cloud today. And as you can see in the chart below, these companies expect robust growth in these areas over the next two years. (Click to enlarge)Respondents from government/education expect to be significantly ahead when it comes to workforce planning—two thirds of those firms expect that function to be in the cloud by then. While we’ve seen that more profitable firms generally tend to have more sophisticated cloud understanding and capabilities, the gap is not as wide when it comes to these core business functions.
Meanwhile, smaller companies—those with revenues less than $99 million– expect to be significantly behind other firms in terms of migration of key business functions to the cloud.
This week we’ll be showing you what assets companies are migrating to the cloud. As shown in the chart below, almost two-thirds of companies expect their disaster recovery systems to be cloud based in two years.
Click to enlarge
Government/education companies are significantly more likely to have disaster recovery in the cloud, both today and in two years.
Cloud-based supply chain systems are set to experience 41% growth. Smaller companies with revenues less than $500 million will lag in that area, with little more than 40% of companies expecting to have cloud-based supply chains by 2016.
As our survey results have shown, larger and more profitable companies are significantly more likely to have cloud-based assets today and expect to retain a comfortable lead.
Our survey findings have shown us what business functions are moving to the cloud, how companies are measuring cloud success, and how companies choose cloud vendors. But what specific assets are moving to the cloud?
The short answer is a lot, and that will only increase over the next two years. Development, storage, and management have experienced the strongest cloud migration so far, as you can see in the chart below. (Click to enlarge)
Smaller companies will be much less likely to use cloud for data warehousing and application development in two years, but will be more likely to have proprietary applications in the cloud by then.
Next week, we will explore more applications that are moving to the cloud, including disaster recovery, supply chain, sales and service, and core business functions.
Choosing a cloud vendor is one of the first steps in the migration to the cloud. We’ve looked at what companies expect from their cloud services providers, but what sets one apart from the rest of the pack? While price is an obvious point of differentiation, we found that companies with more mature cloud migration strategies have different priorities than their peers.
Which of these qualities differentiate a provider from others in your decisions regarding service providers? Rank the top three.
Price is much more of a concern for smaller companies—41% list it as their top priority versus 5% of the largest companies. Instead, large companies are much more likely to choose a provider based on brand reputation and portal capabilities.
We also identified a group that is further along the path to value than other survey respondents. Trailblazers, as we call these companies, are more likely to value pre-sales engineering that aligns a solution with business needs, as well as portal capabilities and additional services like network application and support. We will be exploring what sets Trailblazers apart in future posts.
We asked our 350 survey respondents what they expect and value from their cloud service providers (you can click on the chart below to enlarge it).
Please indicate your agreement with the following statements about cloud and managed services providers. (“Agree” and “Strongly Agree” responses)
As you can see, larger firms expect more from providers, like pre-sales technical consultations and tailored offerings.
Other key variances show a correlation between profitability and the vendor relationship:
- Companies with profit margins over 10% are also more likely to say their service providers add measurable value (72%, compared with 44% of firms with negative or flat profit margins).
- Companies with smaller profit margins are also significantly less likely to say their service provider adds measurable value to operating processes, works to tailor solutions to their needs, and to say those tailored offerings are a core value proposition for providers.
This week, we will be bringing you some top-level results of our Path to Value survey. Oxford Economics surveyed 350 business and technology executives in April 2014 to determine how companies are moving to the cloud. Respondents came from all 50 US states, with a fairly even distribution across regions, as you can see in the map below.
Stay tuned all week for more results from our groundbreaking survey.