TOWARD A CLOUD COMPUTING STRATEGY

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1 TOWARD A CLOUD COMPUTING STRATEGY AN IT WORLD CANADA REPORT Best practices for cloud computing from Canadian IT decision makers SPONSORED BY TOWARD A CLOUD COMPUTING STRATEGY 1

2 There s a strategic problem with enterprise cloud computing initiatives: More often than not, there s no documented strategy. Our online survey of Canadian IT decision-makers revealed that nearly three quarters 72 per cent had no documented cloud computing strategy. And while that sample included a large proportion of companies still in the evaluation stage of the cloud computing journey, fully 61 per cent of those who could detail their cloud computing regimen said they had no documented cloud strategy. CHART 1: Do you have a documented cloud computing strategy? (Among companies already using cloud computing) No 61% Yes 39% Even the benefits that companies say they re deriving from cloud computing mainly lower cost and scalability speak to a tactical and cost-averse approach to cloud computing, rather than a strategic one. But the fact that companies are deriving benefits, strategic approach or not, suggests that there are some best practices to be gleaned from companies experience with cloud computing. Those best practices can serve as a starting point for developing a cloud computing strategy. TOWARD A CLOUD COMPUTING STRATEGY 2

3 TYPES OF CLOUD COMPUTING Canadian enterprises are taking a cautious approach to cloud computing; the plurality of respondents surveyed 39 per cent are still evaluating cloud computing. Of those companies that were already using some type of cloud computing, a private, in-house cloud was the favoured option at 30 per cent. Hybrid computing models were second most popular (26 per cent), while hosted private and hosted public models each were favoured by 24 per cent. CHART 2: What type of cloud computing does your company currently use? (Among companies already using cloud computing) Hybrid 26% Private, internal 30% Hosted private 24% Hosted Public 24% Interestingly, though, it was the companies operating a hybrid cloud solution that were most likely, by a significant margin, to have a documented strategy for cloud computing. While, overall, companies that practiced cloud computing had a formal strategy only 39 per cent of the time, 61 per cent of hybrid solutions were developed from a strategy document. This suggests: The complexity of a hybrid environment is such that it is difficult to operate in an ad hoc or tactical fashion; and Companies that take a strategic approach to cloud computing find that a hybrid model suits their strategies more often than other models. TOWARD A CLOUD COMPUTING STRATEGY 3

4 Hosted private environments were least likely to have a formal strategy (18 per cent), while a third each of public hosted and private in-house operations had a strategy document. PERCEIVED BENEFITS As mentioned above, the perceived benefits of cloud computing cited most often by survey respondents reflect the tactical nature of most cloud computing initiatives in Canada. Scalability (75 per cent) for example, to increase computing resources for seasonal peaks and lower cost (73 per cent) were most often cited as benefits. Contract flexibility, a more strategic benefit, was cited by only 32 per cent of respondents. Reliability was cited by 55 per cent as a benefit, while faster time to market was cited by 36 per cent. The perceived benefits of cloud computing cited most often by survey respondents reflect the tactical nature of most cloud computing initiatives in Canada. GRAPH 3: What are the most important benefits of cloud computing to your organization? Scalability 75% Lower cost 73% Reliability 55% Time-to-market 36% Contract flexibility 32% The lack of a strategic approach to cloud computing was also reflected in the amount of IT budget allocated to cloud computing. Thirty-one per cent of respondents did not know what proportion of their budget was spent on cloud computing. The bulk TOWARD A CLOUD COMPUTING STRATEGY 4

5 of companies (39 per cent) were spending less than 25 per cent of their budget on cloud; 16 per cent were spending none at all. Only 3 per cent were spending more than half their IT budget on cloud initiatives, while 11 per cent spent 25 to 50 per cent of their budget on cloud. GRAPH 4: Which of the following workloads are you currently considering and/or putting on the cloud? Web site 51% 48% CRM 36% Intranet 31% Finance 22% ERP 19% Analytics 19% SCM 12% APPLICATIONS IN THE CLOUD The top four applications have many things in common. Web sites (51 per cent), (48 per cent) and intranets (31 per cent) are very mature in terms of online operation; they are primarily communication-oriented; and they are customer-facing. Customer relationship management (36 per cent) isn t as venerable as the others, but among business process applications, it is the most mature of service-based offerings, and is also customer-oriented. TOWARD A CLOUD COMPUTING STRATEGY 5

6 There s much less penetration among more internal business process applications, with respondents being less willing to expose their supply chain (12 per cent), enterprise resource planning (19 per cent) and financial applications (22 per cent) to the cloud. One surprise, perhaps, is the extremely low number for analytics, as big data analysis frameworks like Hadoop are cloud-based. That may correspond to the slow uptake of big data analytics in general; in an online poll in January 2012, IT World Canada found that about half of respondents weren t buying into big data hype, with only 25 per cent embracing big data enthusiastically. Asked how they used, or planned to use, cloud computing, storage (42 per cent) and backup and recovery (41 per cent) were the most common answers. Again, these have a mature history of being off-premise to the business. In fact, particularly in the case of backup/disaster recovery, there are marked advantages to being remote; an onsite system failure would not affect the backup, so recovery would be much faster. There are also collaborative advantages to storing data and documents in a system that is available from remote locations. Applications and uses of cloud computing tend to have a more mature history in an online or off-site environment, and tend to be customeroriented. GRAPH 5: How does your company use/plan to use cloud computing? Storage 42% Backup and disaster recovery 41% Non-mission-critical workloads 37% Mission-critical workloads 33% Testing and development 32% Batch processing 12% TOWARD A CLOUD COMPUTING STRATEGY 6

7 Taken together, applications and uses of cloud computing tend to have a more mature history in an online or off-site environment, and tend to be customer-oriented. Interestingly, a third said they would put mission-critical workloads in the cloud, despite the marked reluctance to run business process applications in a cloud-based environment. ROADBLOCKS TO CLOUD COMPUTING Security concerns have been the primary roadblock to cloud computing since Day 1, and that position hasn t changed 67 per cent of those reporting reasons for not using cloud computing cited security concerns. Despite the fact that a cloud computing environment is not inherently less secure than an on-premise environment, the impression of poorer security remains. GRAPH 6: Roadblocks to cloud computing (Among companies who gave reasons for not using cloud computing) Security 67% Compliance issues 37% Limited technical resources 36% Anticipated difficulty integrating 33% No process for managing on-demand computing 25% Application compatibility concerns 24% Migrations are onerous 21% TOWARD A CLOUD COMPUTING STRATEGY 7

8 Security is entwined in so many other issues that it s bound to be a high-ranking concern. For example, of the 37 per cent who reported compliance as a roadblock to cloud computing, 91% also cited security. Limited technical resources (36 per cent) and anticipated difficulty integrating with a cloud environment (33 per cent) were also highranking concerns, suggesting an opportunity for companies to engage contractors for the purpose of migrating to the cloud and integrating it with on-premise systems and applications. And it appears that companies understand this. When asked in what capacity the company planned to use outsourcing providers in their planned cloud computing infrastructure, the two most common answers were mapping application workloads (36 per cent) and developing a migration roadmap (31 per cent). These map directly to common roadblocks to cloud computing outlined above. For example, if a company s concern is over integrating with a cloud environment, it could engage a consultant to help develop its migration roadmap. Those who answered other supplied reasons of their own for not adopting cloud computing, most commonly, doubts over the cost and ROI, Internet bandwidth concerns and the cost of migrating. CLOUD CONFIDENCE Of all those surveyed, 57 per cent said they were confident or very confident their IT departments had the internal expertise and resources it needs to implement and manage its cloud computing solutions. But the confidence numbers get really interesting when we filter them by whether they have a documented cloud strategy. Among respondents who did not have such a strategy, 41 per cent were only somewhat confident of their preparation; another 13 per cent said they had no confidence at all. Those numbers in the general sample were 34 per cent and 6 per cent, respectively. TOWARD A CLOUD COMPUTING STRATEGY 8

9 Meanwhile, among the respondents who did have a strategy, only 6 per cent answered not at all confident. And this was also where the vast majority of the very confident fell 35 per cent of the survey respondents who had a transition strategy were very confident their IT departments had the internal expertise and resources it needs to implement and manage its cloud computing solutions. In the general sample, that number was 19 per cent; among those without a strategy, just 12 per cent. CONCLUSIONS: BEST PRACTICES FOR DEVELOPING A CLOUD STRATEGY As we ve seen in this report, despite the paucity of strategic cloud computing strategy documentation, there are companies enjoying success with cloud computing. Their practices can help inform the development of a formal strategy for cloud computing initiatives. 1. A thorough evaluation process is key. This is reflected in both the large proportion of companies that are still evaluating cloud computing, and the evolution of confidence in skills and resources through the evaluation process. 2. Addressing security concerns is vital to the evaluation process. Despite the fact that a cloud computing environment is inherently no more nor less secure than on on-premise environment, security remains the No. 1 deterrent to cloud computing. Establishing a comfort level with the security of supplier and inhouse cloud environments is a prerequisite to moving forward with a cloud strategy. 3. Start with mature, customer-oriented applications. Applications with a longer online history, like , Web sites, customer relationship management and storage are lower-risk; customer-facing applications expose less of the infrastructure applications to the cloud. TOWARD A CLOUD COMPUTING STRATEGY 9

10 4. Complement internal expertise with external contractors. Map the use of consultants and outsourced operations to the roadblocks to cloud adoption. 5. Strategically sophisticated companies often find that a hybrid cloud best suits their needs. One cloud model does not fit all, but the data collected clearly shows a preference for a hybrid model by companies with a documented strategy. This may also be reflective of the complexity of a hybrid model. 6. A comprehensive transition strategy breeds confidence. A strategy that aligns resources and skills to a cloud environment makes a company more secure moving forward into the cloud era. Survey Methodology: There were a grand total of 212 responses from Englishspeaking IT professionals. Not all responses were considered for all questions; for example, those who answered Don t know to the question What type of cloud computing does your organization currently use? would be excluded from the question Does your organization currently have a documented cloud computing adoption strategy?, yet would still be relevant to aspirational or perception questions. TOWARD A CLOUD COMPUTING STRATEGY 10

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