Cloud computing shifting into second adoption wave

Cloud computing is moving into a second wave of adoption, with companies no longer focusing just on efficiency and reduced costs, but rather looking to cloud as a platform to fuel innovation, growth and disruption., according to a study released by Cisco.

The study finds that 53 percent of companies expect cloud to drive increased revenue over the next two years. Unfortunately, this will be challenging for many companies as only 1 percent of organizations have optimized cloud strategies in place while 32 percent have no cloud strategy at all.

The Cisco-sponsored InfoBrief  “Don’t Get Left Behind: The Business Benefits of Achieving Greater Cloud Adoption” was developed by International Data Corporation (IDC) and is based on primary market research conducted with executives responsible for IT decisions in 3,400 organizations across 17 countries that are successfully implementing private, public and hybrid clouds in their IT environments.

In the study IDC identifies five levels of cloud maturity: ad hoc, opportunistic, repeatable, managed and optimized. The study found that organizations elevating cloud maturity from the ad hoc, the lowest level to optimized, the highest, results dramatic business benefits, including:

  • revenue growth of 10.4 percent
  • reduction of IT costs by 77 percent
  • shrinking time to provision IT services and applications by 99 percent
  • boosting IT department’s ability to meet SLAs by 72 percent
  • doubling IT department’s ability to invest in new projects to drive innovation.

Economic Benefits for Advanced Cloud Organizations

The study also quantified the economic benefits the most mature cloud organizations are realizing. Organizations studied are gaining an average of US$1.6 million in additional revenue per application deployed on private or public cloud. They are also achieving US$1.2 million in cost reduction per cloud-based application.

The revenue increases were largely the result of sales of new products and services, gaining new customers, or selling into new markets. Organizations were able to attribute revenue gains to increased innovation resulting from the shifting of IT resources from traditional maintenance activities to new, more strategic, more innovative initiatives.

Operational cost reductions associated with cloud stem from the advantages to the business of running on a more scalable, reliable, and higher-performing environment. These include improved agility, increased employee productivity, risk mitigation, infrastructure cost savings and open source benefits.

Private Cloud’s Correlation with Better Expected Business Outcomes

Private cloud allows better resource use, greater scale, and faster time to respond to requests, but with the added control and security of dedicated resources for a single company.

Adopting hybrid cloud can be more complex than adopting other forms of cloud. It requires workload portability, security, and policy enablement. These requirements were evident in the study, which showed that up to 70 percent of respondents expect to migrate data between public and private clouds (or among multiple cloud providers) and have high security and policy requirements.

Mature Cloud Adoption by Country

Mature cloud adoption varies by country, and the study notes the percentage of organizations with mature cloud adoption in each country.

Among the countries, China has 55 percent of organizations with repeatable, managed or optimized cloud strategies but organizations interviewed in China were, on average, larger than companies surveyed in other countries.

The percentages of organizations with mature cloud adoption in other countries or regions are as follows:

  • 34 percent USA
  • 29 percent Latin America Region
  • 27 percent UK
  • 22 percent France
  • 21 percent Germany
  • 19 percent Australia
  • 19 percent Canada
  • 18 percent Korea
  • 17 percent The Netherlands
  • 9 percent Japan

Cloud Adoption by Industry

By industry, manufacturing has the largest percentage of companies in one of the top three adoption categories at 33 percent, followed by IT (30 percent), finance (29 percent), and healthcare (28 percent).

The lowest adoption levels by industry were found to be government/education and professional services (at 22 percent each) and retail/wholesale (at 20 percent). By industry, professional services, technology, and transportation, communications, and utilities expected the greatest impact on key performance indicators (KPIs) across the board.

Cisco Business Cloud Advisor Adoption Report, Tool and Workshop

Cisco is helping customers translate the findings of this study into customized reports for customers. These Cisco Business Cloud Advisor engagements come in two formats, a simple, survey-based tool and a more in-depth workshop.

The Adoption Report allows customers to go through a structured survey to determine their own cloud adoption maturity and associated business benefits relative to their industry peers—by industry, company size and geography. Customers can access the tool and additional information at www.cisco.com/go/bca.

The Adoption Tool and Workshop allows Cisco and qualified channel partner sales teams to bring a much deeper level of analysis to organizations. The half-day workshop will help organizations better measure the potential impact of cloud adoption on their IT organizations across a broad range of key performance indicators.

The recommendations include vendor agnostic guidance regarding how organizations can evolve their cloud journey across a number of domains, including the Intercloud. The Adoption Tool and Workshop are currently being rolled out on a worldwide basis.