Why firms invest in cloud computing
that using a cloud model allows them to pay for that excess capacity only when it is required, resulting in reduced overall costs.
• Automation. The self-service and increased automation associated with the cloud is found to drive process efficiencies with many of the firms we spoke with since it eliminates the need to go through a server provisioning team.
Barriers to adopting a cloud model
While a series of cloud computing benefits were outlined through the course of the interviews, firms also revealed reasons why they are hesitant to adopt a cloud model. Among the findings:
• Perceived security concerns. This was the area most frequently referenced with respect to restricting cloud computing investment. Many firms remain reluctant to move any of their services to a public cloud environment since they prefer to keep their data behind their own firewalls. This situation is only likely to change if cloud service providers accept liability for the data, removing the litigation risk which currently sits with the customer regarding data loss or leakage.
• Service reliability. This has been brought into sharp focus with the April 2011 multi-day outage of Amazon Web Services. This outage resulted in the slow-down and in some cases, shut-down, of prominent internet sites such as Quora and Reddit. Many firms cannot countenance a similar outage across their IT estate.
• Vendor lock-in. Firms are concerned about moving to a public cloud deployment model since they fear becoming dependent on the provider’s service and exposed
to any future price increases in the subscription.
• Lack of clarity in the business case. While firms can understand the subscription-based costs associated with a public cloud service, understanding how this compares to the costs of the existing operations proves challenging since it is necessary to identify and calculate the costs of the hardware and people that support the existing operations.
Industry variations in cloud adoption
The interviews also revealed variations by industry in terms of cloud computing adoption. The principle trends were:
Financial services firms feel restricted by data security legislation. All the financial services firms interviewed were unwilling to use a public cloud provider to support any operations which involved client data. These firms in particular are governed by extremely strict legislation (e.g. Gramm-Leach-Bliley Act) concerning the security of the data and they considered a public cloud provider unable to provide the necessary guarantees.
Technology and pharmaceutical firms prefer direct control of their intellectual property (IP). In these sectors in particular, competitive advantage is established mainly through the development of IP through their research and development operations. Firms in these industry areas remain hesitant to allow this data to sit outside their firewalls in a public cloud.
Telecommunication firms demonstrate support for their own cloud solutions. Cloud computing services have emerged as a fundamental offering for telecoms providers. As a result, telecommunication firms are early
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“Cloud computing offers faster time to value and the ability to quickly scale,”
IBM, Rich Lechner
“If clients have workloads that only need to run once a week or month, they can leverage a cloud service and the cost savings can be immense.”
AT&T, Jeff Shafer
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