Cloud. Users. Public. Global Market. Investment. KPIs. Cloud Providers. Big Data. Efficiency. Cost savings. Innovation. Tax. Evolve.

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1 KPMG INTERNATIONAL Embracing the Cloud Global forces shaping the service provider market kpmg.com Tax dels are Cloud Migrate Compliance Providers ollaboration KPIs Innovation Risk mitigation Public Investment Measurement Web-based Evolution Change Management Evolve Integration Transformation Security Customer management Speed-to-market Cost savings Efficiency ConsistentsApplications Enterprise Competitive Advantage DeploymentFlexibility Hybrid KPI s CRM Agility Servers Big Data Evaluate Users GovernanceThird Party Implementation Open Standards Global Market Cloud Providers Private Analytics Risk

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3 Contents Foreword 1 Executive summary 2 Introduction 5 Core challenges mean core opportunities 6 Outcome: business transformed 7 Cases in point 9 Where are we going and what are we spending? 16 Adopting cloud services 25 Has total cost of ownership been evaluated properly? 27 Functionality is essential; 30 it is a question of good enough vs. perfect. Tax in the equation, a relevant variable 36 Who should lead cloud efforts? 37 Conclusion 40 Insights & implications 41 Interviewees 45 Additional reading 46

4 The impact, opportunity and risk of cloud. It s here. It s now. Find out what your peers are doing today.

5 Foreword We are pleased to present KPMG s 2011 Global Cloud Survey report. This is the first year that KPMG has conducted a global survey of over 900 executives in 15 countries. The survey examines three distinct perspectives that of senior business unit executives, senior corporate IT executives, and cloud service provider executives. The survey analysis identifies the interplay, including commonalities and dissonance, among these three sets of participants. The objective of this publication is to identify cloud adoption barriers and opportunities as well as provide insight into the forces shaping the cloud market. For many, cloud s promise is more than just a shift in IT strategy; it could lead to a fundamental transformation of a company s business model. For providers of cloud services and for companies that are considering moving delivery of their products to the cloud this analysis provides critical insight into how users are approaching their cloud buying and implementation decisions. Undoubtedly, the full story will unfold at different rates across companies around the world, as some move cautiously and others make a bold dash. Based on our experience and the interviews with cloud providers and users, the following recommendations will help cloud providers increase the success of their clients move towards cloud: Educate customers and prospects on the benefits of cloud beyond the economics. The advantages of the cloud model appear to be understood by enterprises, but only at a high level. Organizations need help getting started by translating the cloud into organization-specific competitive advantages. Assist clients in developing new KPI s to measure their investment. Be realistic on cost savings claims; back up examples with proof. Be proactive about the challenges clients will face from rapid and multiple cloud investments and deployments. Ensure, as a cloud provider, you have changed your business model in key areas such as revenue and billing, customer management, risk & compliance, and tax structures. Cloud is opening the door to transform business and drive innovation inside and outside organizations. As the cloud business and technology models continue to evolve, cloud service providers have the opportunity to assist their clients in the development of a comprehensive cloud strategy. We trust you will find this publication s insights and guidance of value. Sincerely, Gary Matuszak Global Chair, Technology, Media & Telecommunications Tom Lamoureux Global Advisory Leader, Technology Embracing the Cloud: Global forces shaping the service provider market 1

6 Executive summary 81% of businesses are either planning their initial adoption, are in early or advanced stages of experimentation or have full-on cloud implementations. Transform your business with the cloud. This drumbeat has punctuated most technology and business conversations over the past few years. Fueled by hype, many cloud advocates can discuss at a high level how they can transform business models, but few have the insights of what companies around the world are actually doing to benefit from the cloud or how to create and deploy a strategy that is truly transformative. Much has been discussed about the business and operational challenges surrounding cloud adoption including security, total cost of ownership, and the intersection with business strategy and operations. As companies in a variety of industries are beginning to address the impact of cloud integration with other applications and data, these companies also face the challenge of organizational redesign and change management, compliance, taxes, and security. KPMG International and Forbes Insight conducted a global survey in 2011 to assess global cloud adoption trends. The survey included more than 900 executives from 15 countries. Respondents represented end-users, executives in IT and business functions, and cloud vendors. From all angles, the responses showed increased readiness to accept and exploit the benefits of cloud. And while the cloud continues to have many definitions, our report highlights where it is going, underscoring that this seemingly simple and flexible solution can create complexity if not managed properly. The real transformative impact of the cloud Cloud is transformative in that it is creating new business opportunities as companies harness its power to efficiently facilitate new revenue, services and businesses. It is breaking down barriers in the supply chain, as well as creating more effective and timely interaction between clients and suppliers. It is delivering speed, agility and cost reduction to IT and other functional areas within the enterprise. The transformative impact of cloud can readily be seen across the enterprise in areas such as HR, CRM, and IT infrastructure. Many early adopters have implemented the cloud in areas that are self-contained, primarily in areas that are not rife with complexity and multiple applications, and that do not require integration with core enterprise applications or infrastructure. Others have pushed forward more broadly in new, start-up or evolving businesses, often with increased speed over their sister organizations burdened with legacy systems. And while there are notable ground-breakers pushing cloud to the edge, the majority has focused on controlled implementations to improve the odds of success. Key findings include: The cloud is commonplace, but its scope varies widely. Over half of the businesses and government enterprises surveyed have already conducted either a full (24%) or partial (35%) cloud implementation of some functions. The vast majority has tested these new technologies and processes, and they are using them on a small scale. Some typical areas of cloud implementation are for , sales management and other available Software as a Service (SaaS) offerings. The research notes that in 2011, 19% of the respondents indicated spending on cloud represents 10% or more of total IT expenditures with 65% citing 10% or less. Early investment centers on Software as a Service (SaaS). Again, the majority of early adopters are using basic, available tools in the cloud. Of the respondents, 46% of planned implementations are in a SaaS environment. However, significant numbers of end users are also exploring the use of Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) models. Cloud environments have the potential to transform business and operating models. Eighty-seven percent say, at the very least, the coming change will be significant. This view is consistent among companies of all sizes and whether the respondents work within IT functions or business units. It is not a surprise that cloud providers believe that business and corporate IT executives underestimate the degree of change that could result from cloud adoption. 2 Embracing the Cloud: Global forces shaping the service provider market

7 Approximately 45% of the respondents are either not evaluating the tax implications of cloud or don t know if these factors are being evaluated. The vanguard already resides in the cloud. Right now, 81% of businesses are either planning their initial adoption, are in early or advanced stages of experimentation or have full-on cloud implementations. While the scope may be controlled, and the approach measured, there is indeed activity. Remarkably, respondents at one in 10 businesses say they are already running their core IT services using cloud technology, although this number varies widely by geography. Substantial cost savings are on their way. Cloud user in the business and IT functions, as well as cloud providers believe cloud environments will deliver cost savings. The prevailing wisdom points to economies of scale, meaning the cost of each unit of computing value within a cloud environment will fall dramatically over time. As for business processes, executives believe innovation will lead to streamlining. But an intriguing finding is this: while providers promote up to 30% savings, most business executives would be happy with 10% 15% savings. Opportunities exist to overcome barriers to success. Executives are particularly intrigued by potential gains in areas such as speed to solution and widespread accessibility as well as flexibility, scalability, security and advanced technology. Buyers are concerned by risks of provider performance, downtime and data security. Recent headlines exposing compromised data and temporary shutdowns remain front and center for many potential adopters. However, provider input suggests that such fears are overstated and that in reality, the cloud will be a safer, more secure and more reliable IT environment than these customers have ever known. Private clouds will dominate the most critical functions. Many factors drive the decision over public or private cloud. Industries with the strongest adoption of private clouds are financial services, healthcare and diversified industrials (averaging 45% of respondents), with financial services and healthcare facing heavy regulatory and compliance issues that are exacerbated, though not impossible in the cloud. Organizations custom-configured applications and infrastructure also contribute to the need for private cloud solutions versus the standardized solutions among public clouds. Business unit executives and CIOs views diverge when it comes to cloud leadership. IT executives see migration to the cloud as their initiative; and, consequently, they believe that it should be led by the Chief Information Officer. In the minds of business executives, however, the natural leader of cloud-based initiatives should be the CEO. Not surprisingly, post-implementation expectations are similar. Ultimately, responsibilities will likely be shared with relative influence depending on the services in question: businesses will tend to control ownership of applications; IT executives will tend to manage infrastructures. Unless this trend is managed properly, organizations will face new silos and integration challenges. Enter the Chief Integration Officer as the traditional CIO s role expands to break down potential silos and integrate internal and external business needs, systems and partners. Ignoring tax issues raises concern. Approximately 45% of the respondents are either not evaluating the tax implications of cloud or don t know if these factors are being evaluated. Ignoring tax issues has never changed the responsibility of the payer, which makes taxation a critical issue for those wishing to evaluate all implications of the cloud environment. Embracing the Cloud: Global forces shaping the service provider market 3

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9 Introduction Whether public, private or hybrid, the factor that most commonly signifies a cloud solution is a user s ability to obtain asneeded services from the internet based on flexible volumes of resources. Web-based beginnings The most common and easily recognizable cloud examples are web-based services for , Customer Relationship Management (CRM) and web hosting. Many are simple consumer applications, while businesses are considering far more sophisticated systems. For businesses, cloud services are often developed in one of two ways: Private clouds, where the applications, data and necessary infrastructure are dedicated to a single party that retains direct management oversight; and Public clouds, where data and applications of non-related parties may reside on the same servers and are more likely to be primarily managed by a third party. Hybrid clouds, as the name suggests, are combinations of these two methods. Whether public, private or hybrid, the factor that most commonly signifies a cloud solution is a user s ability to obtain as-needed services from the internet based on flexible volumes of resources. The cloud marketplace has been evolving for years, as many traditional application services and infrastructure hosting providers migrate to a cloud model. This maturity is creating a viable market for enterprises looking at service delivery options. The flexibility and agility provided by the cloud is appealing, and it can be managed to deploy significant competitive advantage. Definitions KPMG used the following definition of the cloud computing for the purposes of this survey. IaaS: (e.g., infrastructure traditionally provided by servers, desktops and network equipment instead delivered over the internet and can be scaled up or down as needed) PaaS: (e.g., software development, storage and hosting are accessed as a service over the internet) SaaS: (e.g., on-demand applications provided through an internet browser, eliminating the need to install, run and maintain programs on internal systems) BPaaS: (e.g., business process outsourcing (BPO) is provisioned using a cloud computing model; bundled with SaaS/PaaS/IaaS and delivered over the internet Embracing the Cloud: Global forces shaping the service provider market 5

10 Core challenges mean core opportunities The challenge going forward will be to balance objectives, needs and wants against real capabilities and risks. As enterprises first approach the cloud, their tendency is to perceive the work as primarily IT-centric. But in reality, understanding the cloud requires a much broader view. In many situations, the cloud is being driven by an ecosystem of participants. So it becomes vital to think of the evolution of cloud environments in terms of three broad sets of people and principals: service providers, business users and IT users. Another challenge is that size matters. Smaller organizations, with less legacy IT infrastructure and fewer constituents, are able to more rapidly and aggressively invest in deploying cloud capabilities. Any cloud implementations require cooperation, agreement and compromise along with intensive focus and hard work. The challenge going forward will be to balance objectives, needs and wants against real capabilities and risks. As such, coordinating and harmonizing the advancement of the cloud represents a massive undertaking. But the rewards can be significant and transformative. To the cloud: three constituencies Industry Service Providers Geography Core Challenges Geography Business Users IT Users Company size 6 Embracing the Cloud: Global forces shaping the service provider market

11 Outcome: business transformed Cloud calls for executives to challenge their thinking, to look at old problems in a new light, and to create new opportunities. Transformation a distinct change in the way business solves problems and gears for growth is coming. The survey of end-users shows that a significant number of companies believe fast-evolving cloud capabilities will heavily impact business models. While cloud-driven cost reductions may hold the most promise (half of survey participants expect as much), the impact on the business model could be much more extensive. Indeed, nearly a third of respondents, 32%, believe the arrival of cloud environments will drive nothing short of a fundamental change in their business models. And nearly four in 10 users (39%) expect cloud will change interactions with customers and suppliers. Only 12 percent of respondents felt cloud would have no impact on their business models. Consequently, 88% feel some kind of business model change will occur. Cloud calls for executives to challenge their thinking, to look at old problems in a new light, and to create new opportunities. KPMG firms have observed several recent examples where organizations are converting historical business models into revenue opportunities through cloud. One example is a company selling goods and services that identifies additional need-based sales opportunities related to a key product. The company is developing a new business model to package and deliver this information to its clients via a new cloud-based model, thereby driving a new revenue stream. Similar examples are seen worldwide. Which of the following best describes the impact of cloud on your business model? It will fundamentally change our business model 32% It will change our interaction with customers and suppliers 39% It will provide management with greater transparency on transactions 32% It will reduce costs 50% It will accelerate time to market 35% No significant impact 12% Other 1% Multiple responses allowed. Source: KPMG International, 2011, Clarity in the Cloud Embracing the Cloud: Global forces shaping the service provider market 7

12 Organizations in emerging markets or those that have not invested heavily in legacy models can leapfrog the competition technically by adopting the latest available systems and capabilities via the cloud model. Cloud, more than any new technology since the internet, is seen as the harbinger of transformation. The findings are consistent regardless of company size (those with annual revenues above and below US$1 billion as well as between IT and non-it executives). Even companies with a large installed base of software or other elements of enterprise IT anticipate a highly significant degree of change as a result of cloud adoption. Regional differences Executives from Asia are significantly more likely to describe the changes stemming from cloud environments as driving a fundamental shift in their business models. For example, organizations in emerging markets or those that have not invested heavily in legacy infrastructure can leapfrog the competition technically by adopting the latest available systems and capabilities via the cloud model. Which of the following best describe the potential impact of cloud on your business model/operations? It will fundamentally change our business model 32% 28% 30% 43% It will change our interaction with customers and suppliers 30% 39% 40% 49% It will provide management with greater transparency on transactions 27% 32% 33% 37% It will reduce costs 45% 50% 49% 57% It will accelerate time to market 29% 35% 35% 44% No significant impact 6% 12% 13%15% Other 1% 2% <1% 1% Global average (medium) Americas EMA ASPAC Multiple responses allowed. Source: KPMG International, 2011, Clarity in the Cloud 8 Embracing the Cloud: Global forces shaping the service provider market

13 Cases in point More than the data alone, it is instructive to delve into the people and companies who are working with cloud today. In these cases, executives are seeing many benefits as they learn from their cloud implementations. More options in Italy Silvio Sperzani, CIO of ENEL, Italy s largest and Europe s second largest electric utility, says that cloud environments are moving rapidly, From buzzword to something real. For now, his group is just beginning its analysis of the potential benefits of a cloud environment. Still, Sperzani is already convinced that cloud migration, will lead to a more flexible IT service model and more options in business processes. Preparing new processes throughout Europe Massimo Milanta, CIO at UniCredit, one of Europe s most geographically wide reaching banks, with an international presence in approximately 50 markets, believes that cloud environments will have a profound impact on business processes. The cloud, he explains, will provide the means to speed up prototyping of new products or applications for customers. Meanwhile, Milanta sees cloud migration as a means to accelerate the adoption of new, more efficient and effective processes and technologies. Though we realize we have much to do before we can take full advantage of these developments, we are starting to prepare now. We are now fully engaged in the journey from IaaS to PaaS, which we would consider the real cloud, using it as a tool to be quick-to-market and the standardization of environments. Strategic advantage in global advertising At advertising and communications agency JWT India, Sunil Mehta, CIO, believes that the whole point of investing in a cloud environment is to achieve strategic advantage. We want to make certain that we are always in a position to take advantage of any next-generation applications, says Mehta. Achieving a state of continuous transition to the most efficient processes and technologies will be easier within the cloud, he adds. Cost reductions and strategic benefits for financial firms Anil Jaggia, CIO of HDFC Bank, one of India s largest financial services providers, says that cost reductions from the cloud will be significant. However the strategic benefits are far and away more vital than the cost savings. He adds, Agility being able to quickly and efficiently provision or deprovision; being on the forefront of innovation and being able to transition quickly: these are the objectives worth attaining. Embracing the Cloud: Global forces shaping the service provider market 9

14 Legacy systems tend to ossify, restricting established businesses and preventing them from pursuing that next new idea. Pat Howard, IBM Partner and VP Global Services Enormous innovation for IBM and its clients From a provider standpoint, IBM Partner and Vice President for Global Services Pat Howard believes that, if anything, business and IT executives are underestimating the likely strategic impact of cloud migration. Howard says these new technologies and processes are leading to a period of enormous innovation and competitive disruption. All that s coming opens up strategic possibilities that just were never there before, notes Howard. Legacy systems tend to ossify, restricting established businesses and preventing them from pursuing that next new idea. However, within a cloud environment, Howard believes companies will be able to achieve greater agility for example, by being better able to quickly organize to serve new customers, develop products or deliver services. Overall, says Howard, I don t believe everyone yet fully realizes how much this stimulates innovation; how many opportunities will be presented; how many new challenges will need to be addressed; and how much change is coming. In much the same vein, SAP Senior Vice President Dr. Bernd Welz notes, Cloud migration is shifting all aspects of the competitive landscape across all industries. How important are strategic factors in driving your organization s adoption of a cloud environment?* Extremely important 33% Important 44% Neither important nor unimportant 19% Unimportant 3% Extremely unimportant 2% Figures may not add up to 100% due to rounding. Source: KPMG International, 2011, Clarity in the Cloud *Strategic factors (e.g., business process transformation, linkage to business partners, speed to market, focus on core competencies) Demand driven supply chain retail A KPMG retail client is using cloud as a supplier network, reducing data latency between and among suppliers. In some cases, the client has reduced lead times on information exchange from 30 days to 1 day, and the suppliers are able to modify the exchange of material accordingly yielding significant benefit for all parties in the process. So as demand changes at the store, all parties can see and act upon the changes. Leveraging the cloud as a community platform can significantly reduce information latency resulting in more product getting to the right place at the right time with less inventory through the supply chain. 10 Embracing the Cloud: Global forces shaping the service provider market

15 Without legacy systems and processes, startup firms and emerging businesses in mature firms can be ready for cloud-based applications and platforms. Enabling innovation and investments technology KPMG recently worked with a large client to support its emerging, or start-up, businesses. Innovation is one of the fundamental pillars of this company s corporate strategy as it acquires and/or incubates companies that design, develop, and market next-generation products. Historically, each new business worked autonomously to design its own operations processes and to source and deploy enabling technologies. The company found it was spending too much time and money on technology development and deployments when it should have been focused on its go-to-market strategies. Its goal was to design, develop, and implement a common set of operational business processes and an enabling IT architecture that a new business could plug and play. The process and IT architecture needed to be flexible and scalable, supporting various e-commerce business models with a high degree of re-use of its core processes and functionality. In addition, standardized reporting was needed to enable the corporate entity to understand the performance of each new business its profitability, its growth potential, and its challenges or limitations. The incubator model offers particular advantages for broad cloud deployment. Without legacy systems and processes, the greenfield is immediately ready for deployment of cloud-based applications and platforms. Ready-made applications and architecture will be available for businesses as they enter the market. The scope is broad from the user access, to cross-enterprise applications (sales, marketing, customer services, order management, accounts receivable and payable, inventory management and purchasing), and to identity access. The need for supporting resources is reduced. At the same time, the larger business reporting, compliance and data needs will be met, and relevant information can be fed back into the core financial and operating systems. Embracing the Cloud: Global forces shaping the service provider market 11

16 IBM INTERVIEW Pat Howard Vice President and GBS Global Cloud Leader, IBM What do you see as the value behind cloud services? The real value is that cloud opens up strategic avenues that weren t there before. Across the enterprise, there will be a level of optimization, market responsiveness and agility that businesses just couldn t achieve in the past. Between SaaS, IaaS, PaaS: where do you see the most potential? I don t partition my thinking as such from the perspective of a business enterprise. The way I view it, cloud services are an enabler around efficient business outcomes. The scripture reads: the era of the cloud will unfold extreme innovation in years to come. Cloud can be a key enabler of new business models that will require changes in corporate governance and can lead to more efficient outcomes where businesses will receive greater value from IT. At this time there is investment in cloud infrastructure and services. In the future, business innovation will drive the investment and the technology acronyms will be a forgotten memory. The real value is that cloud opens strategic avenues, including levels of optimization, not available before. What is driving the cloud buying decision? Nothing happens without the economics. But what are the lowest price points on the planet? Cloud can lead to that discovery. Technically, asset utilization and shared service models are understood the value is there. And overall, I think the customer should expect savings. The real value is that cloud opens strategic avenues including levels of optimization not available before. Cloud buying decisions are beginning to take into consideration this new agility to respond to market opportunities. From an optimization perspective, strategically, greater cost efficiency should filter into operations, compressing cycle times to respond to hot new ideas. The economics are the baseline. 12 Embracing the Cloud: Global forces shaping the service provider market

17 Are there industry adoption differences? Industry dimension is huge! The consumer products industry is a great example. The model hasn t changed in 100 years until now. Consumer hyper-personalization is creating a remarkable tsunami of data. Tracking consumer preferences, merging products and customer databases and integrating social media and related information systems is making Big Data analytics in the cloud a great opportunity. The industry is thinking about data differently and cloud and analytics will enable the industry to capture new opportunities and be more proactive than in the past. In the financial services and insurance industries companies are gaining more efficiencies. The government industry is also adopting cloud services. Who is driving the cloud buying decision? The buying decision should be based on the specific capability. The CIO should own the decisions related to storage and cloud infrastructure. The decisions related to business functions and governance should be made jointly between the business functions and IT. The functions have been pushing due to the consumerization of IT and they are getting the additional benefits of cloud services. The CIO and IT teams have been more conservative. Business units are challenged with the speed it takes their current IT to do things. Does anyone believe all problems go away with cloud-delivered capability? No. Business capability considerations are critical. The verticalization of business processes within the cloud, such as end-to-end order management processes, has great potential for increased efficiency and agility. Any other thoughts? The cloud adoption story will unfold at different rates. For some it might be a breakaway, they ll grab the opportunity and dash for the goal line. For others, they will adapt services in increments. There has to be a starting point and this is hard work. I ve been through a couple of cycles and there are many elements to consider such as the creative process, the technical dimensions, and assessment of the impacts on customers, vendors and the sales force. There is a new way to think about IT and the changes in the way IT functions. The absence of a coherent strategy is a problem. Cloud adoption is real and it creates strategic opportunities that have not existed before. I don t believe everyone yet fully realizes the potential of cloud to stimulate innovation or, for that matter, how many new challenges will need to be addressed or how much change is coming. Watch out for the business model innovators with a comprehensive cloud strategy. Embracing the Cloud: Global forces shaping the service provider market 13

18 SAP INTERVIEW Dr. Bernd Welz Senior Vice President SAP OnDemand Where are you in terms of cloud development? Most of our customers have a hybrid solutions landscape. Our customers need choice. So we have to offer a range of processes, services and infrastructure. What trends are you seeing in implementation? OnDemand might be the most frequent path to the first meaningful implementation. But we believe the value of a solution is much greater if it s an integral part of the whole, and what customers soon learn is that further integration is vital. So we are designing all of our point solutions to make sure they will fit together well with broader installations. The difference in the overall risk profile of the cloud is like that between flying in an airplane and driving in a car. We feel safer in our cars when we all know, statistically, we are far safer in the airplane. Who is driving implementation? These point solutions tend to be purchased by the line of business themselves. But larger corporations have very tight IT processes, so at some point, it is vital that the IT group becomes more closely involved. Are you noticing any differences by industry? Not really. Cloud computing is in fact shifting all aspects of the competitive landscape in so many industries that I d have to say all industries are getting involved. 14 Embracing the Cloud: Global forces shaping the service provider market

19 How important are reduced costs to cloud adoption? Cost is one factor. But also, the time it takes to get a solution up-and-running is equally important. Especially for small-to-medium enterprises (SME), recruiting and managing IT takes time. So getting rid of those hassles is important. And one of the beauties of cloud services is that you can start small, then make changes as you go. So instead of large, complex and even risky process initiatives, you can continuously change the solution that you have over time. What do you see as the key inhibitors to cloud adoption? It s trust. Any data center at any company can go down from time to time. Now if that was a server of a mid-market company, it won t be in the newspapers you will never hear about it. So there s already risk in running your own servers. But by comparison, the risk of a cloud provider failing materially for any extended period is substantially lower. So the difference in the overall risk profile of the cloud is like that between flying in an airplane and driving in a car. We feel safer in our cars when we all know, statistically, we are far safer in the airplane. Embracing the Cloud: Global forces shaping the service provider market 15

20 Where are we going and what are we spending? Heavily regulated industries, such as financial services and healthcare, demonstrate a stronger likelihood of adopting a private cloud. As we ve seen, signs of growing comfort and familiarity with cloud environments are everywhere. Today, 40% of the businesses surveyed are currently evaluating the cloud (19%) or using/testing the technology (21%). KPMG firms have observed large organizations migrating , CRM, components of HR, point of sale, hosting, and other applications to a cloud environment. Several are using the cloud to enable new business models to develop in and around existing businesses, resulting in additional revenue streams. More often than not, early migrations are targeted for areas of limited complexity. Another 13% of enterprises are beyond the testing stage and are now transitioning core business processes. Even more striking, one in ten enterprises are already running core IT functions in the cloud. As highlighted in the Executive summary, 81% of businesses are either planning their initial forays (within the next year), are in early or advanced stages of experimentation, or have full cloud implementations in place. And companies with more than US $1 billion in revenues appear to be leading the way. What is the status of your organization s current use of a cloud environment? Evaluating Using/testing aspects Embraced/transitioning Running all core IT services on the cloud Plan to implement in next year Plan to implement in next 2 years Plan to implement in 2+ years Not considering Don t know 0 4% 4% 5% 3% 3% 3% 3% 4% 5% 6% 7% 8% 8% 8% 10% 10% 11% 11% 11% 11% 13% 13% 13% 12% 13% 12% 13% 14% 16% Global Americas EMA ASPAC 18% 19% 20% 21% 21% 24% 25% Figures may not add up to 100% due to rounding. Source: KPMG International, 2011, Clarity in the Cloud 16 Embracing the Cloud: Global forces shaping the service provider market