Monday, March 9, 2009

Survey says: Cloud computing proving to be a two-edged sword in a down economy

Cloud computing seems to be trapped between the rock of great expectations and the hard place of low confidence. While most enterprise and IT decision makers view cloud as a way to lower capital and operational costs, the way to more aggressive cloud adoption is blocked by concerns about security and control.

This is the finding of a recent survey commissioned by IT consultancy Avanade, Inc., Seattle, Wash., and conducted by Kelton Research, Culver City, CA.

The good news is that 54 percent of people surveyed used technology to cut costs, a boon for IT providers in these turbulent economic times. According to the survey, for every two companies that cut back on technology to save money, five will adopt new technology as a way of reducing expenses.

Also encouraging is the fact that most people, 9 out of 10 C-level executives, know what cloud computing is and what it can do. More than 60 percent know that it can reduce costs, make the company more flexible, help the company concentrate on its core business as well as react more quickly to market conditions.

The bad news is that 61 percent of those surveyed aren't using cloud technologies at this time, and of those who now rely solely on internal systems, 84 percent say they have no plans to switch to cloud in the next 12 months.

Something like Garrison Keillor's mythical hometown of Lake Wobegon, where "all the children are above average," nearly two thirds of US companies surveyed consider themselves "early adopters," which raises the question of how you can be an early adopter when almost everyone else is doing it. Whether early adopter or not, the fact remains that most people are shying away from cloud, though it's a hot topic at the Chitchat Cafe.

The main concern? Fears of security threats and loss of control over systems. Ironically, these were the same concerns we heard when email, the Internet, web services, and instant messaging appeared on the scene. None of those concerns were without merit, but enterprises seem to have adjusted and benefited.

The companies surveyed who had overcome their resistance reported business benefits and are accelerating their use of cloud technologies. Of those companies who have adopted cloud, use it for business applications:
  • Customer relationship management (CRM) -- 50 percent
  • Data storage -- 46 percent
  • Human resources -- 44 percent
Only five percent of companies rely solely on cloud computing. However, of those who do use it at all, more than one third have increased their use of cloud since the economic downturn began in July of 2008.

I expect that trend to continue and accelerate, especially for new companies born in the recession where survival is the mother of invention (and the father of low or nil capital up front costs).