Cloud Computing Yields Perceived Benefits, But Might Not Save Much Money, Global Survey Finds

About 82 percent of 3,645  cloud computing users surveyed by TNS in eight countries say they saved money on their most recent cloud project. But savings have been relatively small, with
35 percent of U.S. organizations, for example, reporting payback of less than $20,000. Cloud computing ROI

The issue is not whether respondents believe they have seen improvements. The survey indicates that nearly all organizations boost improvements in IT performance following cloud adoption, with 93 percent of all organizations reporting at least one area of IT improvement.

Among the most common improvements, 52 percent of users report increased data center efficiency and utilization, while 47 percent witness lower operating costs post cloud adoption.

And these benefits arrive quickly as 48 percent of organizations see benefits within six months. Overall, more than 80 percent of respondents see gains within six months.

Some 23 percent of all U.S. organizations and 45 percent of U.S. organizations with fewer than 50 employees report no savings, says CSC, which funded the study.

Some 88 percent of Australian organizations see improvement in their IT departments since adoption of cloud, and 82 percent see benefits in six months. However, the cost savings of cloud are not as high as expected. Some 64 percent of organizations say they save under $20,000 or nothing at all after their last cloud adoption project. In particular, cloud computing is not helping Australian small businesses save money, as 95 percent save less than $20,000 or nothing at all. In fact, 48 percent of small businesses say they saved no money.

Eighty-two percent of UK organizations see benefits from the cloud in under six months; 38 percent see benefits immediately. Almost half (49 percent) cite increased data center efficiency and utilization as the number one benefit from adopting cloud.

However, 63 percent of small businesses say their total cost of delivering enterprise services stayed the same after implementing cloud services.

Some 90 percent of U.S. respondents said their organizations experienced IT improvement post cloud. However, cost savings were not as extensively realized. In fact, nearly a quarter of U.S. organizations don’t find any cloud savings.

For the purposes of this survey, cloud computing was defined as “a general term for anything that involves delivering hosted services over the Internet.” The survey further specified five essential characteristics, including that cloud computing was an on-demand self-service with broad network access; involved  resource pooling, rapid elasticity and measured service.

Interviews were conducted between October 2011 and November 2011. Organizations in the United States, the United Kingdom, France, Germany, Brazil, Australia, Japan and Singapore were part of the survey.

None of those results should be surprising. We are early in the process of cloud computing adoption. Some would argue significant changes take time to show clear productivity gains because it takes time for human beings to adapt, and for entire processes to be redesigned around the new technology.

Gartner Says Cloud Banking Can Drive 'Creative Destruction' in the Banking Industry

A rapid shift in attitude towards cloud banking is happening within the financial services industry, according to Gartner. 


A Gartner survey found that cloud is the top priority for global financial services CIOs and that 39 percent of those surveyed expect that more than half of all their transactions will be supported via cloud infrastructure and software as a service (SaaS) by 2015.


In Europe, the Middle East and Africa (EMEA), 44 percent of FS CIOs expect that more than half of all their institutions' transactions will be supported via cloud infrastructure by 2015 and 33 percent of them expect that the majority of transactions will be processed via SaaS by 2015. Gartner Says Cloud Banking Can Drive 'Creative Destruction' in the Banking Industry:


“Early cloud adoption, especially in the FS sectors, may have been limited to non-core areas and proofs of concept, but it is set to go mainstream, moving the heart of the business, transaction origination and processing, into the cloud,” said Peter Redshaw, managing vice president at Gartner. “Cloud banking should be innovative, dedicated to this industry and transformative.”



As with most cloud initiatives, cloud banking might be disruptive. It can provide the ability for attackers or defenders to try completely new services and processes, such as reverse auctions and third-party core banking systems, for example. 


Successful new cloud services can displace the existing and dominant process for design, distribution or transacting in a disruptive way, rather than just incrementally improving them, says Redshaw. 

As banks progressively replace people in the value chain with algorithmic operations (AOs) to run processes and make decisions, their intellectual property increasingly resides in these algorithms. The value of people is not in running operations but in improving the AOs, Redshaw argues. 


At a more prosaic level, cloud banking should lessen investment in bank data centers. Data center investments affected

IaaS Will Count for a Third of IT Resources in 2014

About 77 percent of enterprises respondents surveyed by PwC have a plan to adopt some form of cloud computing, and 64 percent said some type of cloud, including private and public, would be the best way to manage IT infrastructure in three years.


Precisely what that means for would-be providers is not quite so clear, though. 


PwC surveyed 489 business executives in an effort to understand the real state of data center management, and the results suggest both increases in traditional data center operations, "private" cloud operations and some increase in public cloud activities. But there will be a huge decline in use of traditional data center services managed by service providers. 


Traditional IT outsourcing service providers are about to see their business models and customer value propositions disrupted. 


But the essence of cloud computing is a move towards highly standardized racks of commodity servers and a software environment that together make for a highly efficient use of resources. Who needs to outsource to a third party when such capabilities are available?

"We have seen major technology shifts in the data center in the past," says David Stuckey, PwC's US leader of its data center infrastructure practice. "These shifts in reality have just added to the mix in the data center, increasing complexity and cost."

Cloud computing, when done right, has the potential to actually replace, and not just augment, legacy environments while adding value by reducing costs and increasing agility," says Stuckey. 

Private cloud is infrastructure operated solely for a single organization, whether managed internally or by a third-party and hosted internally or externally.^[43]

They have attracted criticism because users "still have to buy, build, and manage them" and thus do not benefit from lower up-front capital costs and less hands-on management,^[44] essentially "[lacking] the economic model that makes cloud computing such an intriguing concept".

IaaS Will Count for a Third of IT Resources in 2014

Managed Services Spending Set To Boom

Small to medium-size businesses (SMBs) in the United States will be spending $7 billion on managed services in 2011, according to Techaisle. Growth will be in double digits over the next several years as well. At the moment, most of those services are related to IT infrastructure, rather than applications, but one would assume that will shift, over time. Managed Services Spending Set To Boom

The survey of 2000 SMBs and 600 channel partners in America also suggests that, as a percent of support and maintenance (known as break-fix), US-based SMB managed services’ spend will increase from 27 percent in 2011 to 40 percent in 2015. More than one in five small businesses (companies with 1-99 employees) use some type of managed services with greatest use observed among businesses with 50-99 employees.

Another percent of small businesses plan to use managed services suggesting robust opportunities for MSPs (managed services providers). Of the U.S. medium businesses (100-999 employees), 65 percent are using one or more managed services.


It also would be reasonable to expect some shifts in the IT services ecosystem, with MSPs displacing traditional "master distributors" to a greater or lesser extent. Ecosystem to shift

Cloud email, video impact

A recent report by the Carbon Disclosure Project (CDP) and Verdantix estimates that cloud computing has the potential to reduce global carbon emissions by millions of metric tons.

Comparing Gmail to the traditional enterprise email solutions, switching to Gmail can be almost 80 times more energy efficient than running in-house email. This is because cloud-based services are typically housed in highly efficient data centers that operate at higher server utilization rates and use hardware and software that’s built specifically for the services they provide, conditions that small businesses are rarely able to create on their own.

A similar calculation for YouTube shows the servers needed to play one minute of YouTube consume about 0.0002 kWh of energy. To put that in perspective, it takes about eight seconds for the human body to burn off that same amount. You’d have to watch YouTube for three straight days for our servers to consume the amount of energy required to manufacture, package and ship a single DVD.

Cloud email energy impact

85% of Software Firms Say They Sell Cloud Software Now

Cloud-based software seems already to have become a significant product for a majority of 100 software executive respondents recently surveyed by Sand Hill Group.

Fully 85 percent of respondents said their company already has a cloud product or service offering in the market.

Some 43 percent of the executives forecasted that their revenues will be dominated (81 - 100 percent) by cloud-based services and products in five years.

Some 61 percent of respondents from companies with revenues less than $250 million are driving towards cloud-dominated (81- 100 percent cloud revenue) business in five years. The larger companies will grow cloud revenues more slowly. About 16 percent of the large company respondents indicated that their revenues will be in the range of 1-20 percent in five years, and 67 percent said it would be between 41-60 percent.



The survey data shows clearly that Platform-as-a-Service is still in its infancy. Enterprise customers already have a rich suite of on-premise development tools and question the value of the platform in the cloud. They also have concerns about vendor lock-in, architectural re-design efforts, and the readiness of PaaS platforms to handle enterprise production applications. Furthermore, CIOs are waiting to see which platform will emerge as the dominant one before committing. In the near term, PaaS will be a favorite for early adopter and progressive companies.

The most popular form of cloud service is "software as a service." SaaS is a dominant delivery model with more than 93 percent of executives indicating that SaaS generates the highest revenues for them, among cloud services. However, PaaS is a strong favorite to dominate in the next three years with 85 percent of executives indicating that PaaS will generate the highest revenues.

Once PaaS reaches mainstream adoption, however, it will be a sweet spot for many product and services vendors. Half of enterprise software comprises of custom software developed on software development platforms. PaaS is where almost half of the tools, custom development, and migration revenues will be generated.

The survey was conducted betwen January and February 2011. See this for more detail.

Amazon Cloud Storage Traffic Soars

Amazon Web Services said this week that its "Simple Storage Service" housed 262 billion objects at year-end of 2010, more than doubling in size from 102 billion objects at the close of 2009. The peak request rate for S3 is now in excess of 200,000 requests per second, according to Amazon’s Jeff Barr.

Amazon S3 Cloud Stores 262 Billion Objects Data Center Knowledge

Global Cloud Computing Revenue Forecast

The Yankee Group global forecast for cloud computing revenue includes some key definitions.

Yankee Group defines midsize to large enterprises as 249 or more employees. The forecast also includes SMBs, which the firm defines as organizations with 2 to 250 employees. The forecast excludes consumer cloud services but does allow that small businesses will often adopt consumer cloud services for business use. Yankee Group excludes sole proprietors from infrastructure as a service and platform as a service because analysts do not believe the typical small business has a need for those services.

The forecast likely understates demand in the small business segment to the extent that many small software firms will have high incentives to buy platform and infrastructure services "as a service."

To forecast revenue, the analysts start with the concept of average revenue per employee per month. Yankee Group calculates ARPE for SaaS, IaaS and PaaS as $4, $2 and $1, respectively.

For example, a typical enterprise will spend $4 per employee per month on SaaS. This is equivalent to $48 per year per employee, or what a small business or sole proprietor might pay for an online backup service such as Mozy or Carbonite and simple collaboration software like Evernote or Dropbox.

Yankee Group Research Report

Rackspace Bullish on Cloud Computing, Of Course

Cloud computing implies data centers and good connectivity. That's good for Rackspace, and for capacity suppliers alike.

Cloud Computing: Less Adoption Near Term; More Than You Think Long Term

It would be entirely within historical precedents for cloud-based enterprise software to achieve less near-term revenue success than analysts expect, but more success than anticipated long term. That, in fact, is a common experience for truly-important and successful innovations.

Why Enterprises Move Apps into the Cloud

"Business agility" is the reason 65 percent of 140 surveyed enterprise information technology professionals give for desiring virtualization and cloud projects.

But cost savings are the second most important reason for moving at least some applications into the cloud. Competitive advantage also is seen as a top driver for such moves.

read the study here

Telco Opportunities in Cloud Computing

Ray Ozzie on Cloud Computing's Implications

"Whether in the realm of communications, productivity, entertainment or business, tomorrow’s experiences and solutions are likely to differ significantly even from today’s most successful apps," says Microsoft Chief Software Architect Ray Ozzie.

"Tomorrow’s experiences will be inherently trans-media and trans-device," he says. "They’ll be centered on your own social and organizational networks."

"For both individuals and businesses, new consumption and interaction models will change the game," Ozzie says. "It’s inevitable."

To deliver what is required, specifically new levels of coherence across apps, services and devices, lots of innovation will happen to occur in the user experience, the interaction model, authentication model, user data and privacy model, policy and management model, programming and application model.

If you wonder why tier-one service providers think cloud computing is important, all this is why.

Dawn of a New Day Ray Ozzie:

Think Seriously About a Post-PC World, Ray Ozzie Says

"It’s important that all of us do precisely what our competitors and customers will ultimately do: close our eyes and form a realistic picture of what a post-PC world might actually look like, if it were to ever truly occur," says Microsoft Chief Software Architect Ray Ozzie, who has just announced his resignation.

"How would customers accomplish the kinds of things they do today? In what ways would it be better? In what ways would it be worse, or just different?," Ozzie says everyone must ask.

Whatever happens, the future is likely to include approaches that attack the complexity that now characterizes the PC-based computing model.

And make no mistake, Ozzi believes "we’re moving toward a world of cloud-based continuous services and appliance-like connected devices."

Continuous services are websites and cloud-based agents that are constantly assimilating and analyzing data from both a user's real and online worlds.

Tomorrow’s devices will be relatively simple and fundamentally appliance-like by design. They will be instantly usable, interchangeable, and trivially replaceable without loss. A world of content – both personal and published – is streamed, cached or synchronized with a world of cloud-based continuous services.

"Many years ago when the PC first emerged as an alternative to the mini and mainframe, the key facets of simplicity and broad approachability were key to its amazing success," Ozzie says. "If there’s to be a next wave of industry reconfiguration – toward a world of internet-connected continuous services and appliance-like connected devices – it would likely arise again from those very same facets."

Dawn of a New Day Ray Ozzie:

Tablets, Cloud Computing are at Hype Cycle Peak

Media tablets, private cloud computing, and 3D flat-panel TVs and displays are some of the technologies that have moved into the Peak of Inflated Expectations, according to the 2010 Emerging Technologies Hype Cycle by Gartner.

Click on the image for a larger view. 

That virtually guarantees there will be a period of relative disillusionment coming for tablet devices and cloud computing. That is not to say they will not be important, only that the wave of hype now is cresting.

Gartner's 2010 Hype Cycle Special Report Evaluates Maturity of 1,800 Technologies

Cloud Computing: the Revenue Model, Not the Technology

Cloud computing has immediate revenue implications for hosted service providers now. Down the road, it is going to create new revenue models for all sorts of companies that used to sell in a "location-limited" manner. Whether you want to consider this "over the top everything" or just the extension of browser-based and Internet-based application delivery is sort of a matter of taste and your own preferences. But is will be a big deal. Here's one practical look at the matter.

Reduced cost (65 percent), scalability (62 percent), and rapid implementation (50 percent) are seen as primary benefits to cloud computing, according to a survey of more than 300 information technology professionals surveyed by PhoneFactor.

Some 87 percent of respondents indicated that they were planning to at least evaluate the use of cloud services.

Click on the image for a larger view.

You can download the full survey results here: http://www.phonefactor.com/two-factor-resources/whitepapers/download-cloud-security-survey.

Smoothstone on Cloud Computing Business

Verizon Introduces "Computing as Service" for Smaller Businesses

Boosting bandwidth, adding more servers and turning up additional storage capacity to meet changing business needs quickly are among the many things small and medium-sized businesses now can do affordably with Verizon's new cloud computing offering, "Computing as a Service, SMB," that can be billed on a credit card.

Verizon's new offering is tailored to companies that have limited IT resources and do not want to own or manage their IT infrastructure. "CaaS SMB" is suited to smaller businesses such as retailers, manufacturers and professional services firms as well as independent departments within larger organizations, Verizon says. It also appeals to online businesses and application developers who want to code, test and stage in a reliable and scalable cloud environment.  All that's needed to get started is a credit card.

With Verizon CaaS SMB, customers can customize the server, storage and network resources required to manage a Web presence or enable company applications.  Unlike many other available cloud offerings, Verizon CaaS SMB offers built-in security including virtual private networks while allowing companies to add more security features.  CaaS SMB also lets companies retain previous computing configurations of their data and servers so data can be easily accessed in the future.

Cloud Computing Market is Bifurcated

Newer enterprises founded within the last 10 years are twice as likely to use cloud computing as are older firms, says the Yankee Group.

On the other hand, though cloud usage is significantly rarer among older enterprises, which hold a conservative view of the technology, those firms are most likely to choose more established names for their cloud needs, especially service providers and vendors such as AT&T, IBM and Microsoft, than newer cloud upstarts.

As often is the case in the communications and technology businesses, there is a natural bifurcation of supply and demand. Enterprises may prefer to work with other substantial companies, while small businesses will be more comfortable using smaller suppliers.

The smaller and newer firms seem to be optimistic that the cloud will evolve into a primary IT platform over the next several years and are willing to buy services from newer cloud companies coming from outside the traditional IT market, such as Amazon, Google or Terremark.

Yankee Group :: Research Report: