By Robert Mahowald, IDC Program Vice President, SaaS and Cloud Services
According to IDC’s CloudView Survey, 57% of organizations are already using or planning to implement some form of cloud services. Many organizations we surveyed (44%) are using or planning to implement private clouds. But respondents pointed to hybrid cloud — a strategy for operating in a mix of public and private cloud environments — as their dominant operational model, at 64% of all organizations surveyed.
Moreover, organizations intend to invest more money in hybrid clouds. By 2016, we expect to see an 11% shift in budget allocation toward hybrid cloud architectures. It’s important to note that future budget allocations for provider-based cloud plans grow primarily at the expense of spending for traditional in-house IT. This means that organizations are focusing on sorting out what types of workloads are best suited for private clouds versus public clouds. Sustained workloads requiring control and compliance tend to be allocated to private clouds, while elastic workloads go to public cloud providers for quicker ramp-up and scalable services.
Hybrid cloud growth also means that organizations are expecting greater returns from their cloud investments on strategic business outcomes. For example, more than half of all organizations expect to increase revenues from their use of cloud services. However, only 25% of organizations in our survey had repeatable, managed, or optimized cloud strategies, and 32% had no cloud strategy at all. Nearly 90% had a 3-5 year goal to achieve “Optimized” maturity, the highest level of sourcing and management in IDC’s Cloud Maturity Model, but only 1% of firms currently have that fully-optimized cloud strategy – pointing to the need for guidance, enhanced skills, software, and equipment to move to the next level of maturity. Clearly there is significant room for improvement, which perhaps is why 83% of organizations think it’s important to work with their major incumbent provider to carry current operations into the cloud.
IDC research indicates that these expectations of cloud adoption are grounded in tangible benefits. Organizations we’ve studied are realizing $1.6 million in revenues and $1.2 million in reduced costs per cloud application deployed. Most respondents expect to migrate data between public and private clouds, and they have high security and policy requirements. These IT executives also expect to act as IT service brokers and want solutions that support their requirements.
Indeed, IDC foresees the emergence of “Provider-Based Cloud,” in which trusted IT infrastructure vendors become the cloud providers of choice. IDC sees a growing potential for IT incumbents to deliver feature-rich cloud services fully managed by the enterprise, with features such as mobile asset management, directory integration, and customer-managed encryption keys.
What IDC sees as the “second wave” of cloud adoption is on the rise. The first wave was tied to metrics such as improved service-level agreements (SLAs) and lower costs, but now organizations consider those goals to be table stakes for cloud. In this next wave, businesses increasingly have expectations for cloud that are tied to better business outcomes, such as top-line revenue growth and the ability to invest in innovation by more strategically allocating the IT budget. For example, 54% of IDC’s CloudView Survey respondents expect cloud — public, private, and increasingly hybrid — to enable them to be more strategic about how they allocate their IT budget, and 53% believe cloud will help them improve their revenue.
For more information and guidance on cloud adoption, I invite you to read the IDC InfoBrief “Don’t Get Left Behind: The Business Benefits of Cloud Adoption,” sponsored by Cisco. Cisco has also made many of these market research findings actionable by developing the Cisco Business Cloud Advisor (BCA) framework enabled by IDC. Begin to explore the possibilities by completing a brief survey.
Robert Mahowald is a Program Vice President at IDC and leads the SaaS & Cloud Services practice, and the PaaS & Cloud Application Platforms program, as well as co-leads IDC’s Cloud Services: Global Overview program. In his roles, Robert advises clients on key trends and opportunities in the changing world of software creation and delivery in the age of cloud computing. An experienced speaker, Mr. Mahowald is well-known as a subject matter expert in the areas of SaaS, IT Cloud services and software application delivery, and he has been a featured lecturer at various executive events, industry seminars and conferences such as InternetWorld, and on such television programs as CNBC and CNET TV. Mr. Mahowald’s research and commentary has appeared in trade journals and publications including The Wall Street Journal, USA Today, The New York Times, and Investor’s Business Daily.