Usage of Cloud Computing: where do we stand and where are we going in Switzerland?
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1 Usage of Cloud Computing: where do we stand and where are we going in Switzerland? A survey conducted by Stefanie Huthmacher under the supervision of Prof. Dr. Stella Grivas Gatziu Olten, 31 July 2010
2 Summary Cloud Computing is one of the hot topics in IT today. It implies greater flexibility and reduces total cost ownership. The survey has been conducted in Spring 2010 with the goal to outline and assess the usage of cloud computing in Switzerland. The survey has shown that cloud computing will play an important role within the future. Already 42 out of 53 answering companies consider cloud computing in their long term plans. Both cloud provider and cloud user have a quite identical view of the interest of cloud computing. Just a real small part of the respondents stated that they have no interest so far. An interesting result is that almost 45 % of the cloud provider companies are new companies just launched for the reason to offer cloud computing to customer. Even if SaaS was a kind of precursor for cloud computing, the survey has shown that PaaS and IaaS cached up and achieved a high usage. The management of the cloud is so far mainly be done by software. But it must be clearly understood that this happens due to fact that cloud users does not have a huge cloud model in place. Some cloud users stated as soon as the cloud environment gets more complicated they have to work together with an external partner for example a consulting company. Many cloud users stated that cloud computing is able to solve the problem of underutilized servers and infrastructure. Moreover more than half believes that with cloud computing it is possible to have a shorter implementation process. In terms of problems that are generated by cloud computing the respondents answered that they are missing best practices and that not enough information is available. The study also has shown that cloud computing provokes many organizational changes including IT/business alignment and a changing role of the CIO. Unfortunately cloud computing does also have a lot of big challenges besides the major challenge of security is the aspect of how to get started with cloud computing and how does the implementation look like. The survey also helped to understand how enterprises decide for cloud computing. In most cases it was either way pushed by IT and management together or just by the IT person in charge. Another closing fact about the survey was that most of the enterprises are getting information about cloud computing from internet sources or from fairs. This study has made valuable contributions to the research for the usage of cloud computing in Switzerland. The results of the study helped to get a clear picture in order to understand the view of cloud provider and cloud user. A significant fact was in almost all cases cloud users and cloud providers have the same point of view. 1
3 1. Survey Structure University of Applied Sciences The survey was distributed to bring together information about the current state of cloud computing in Switzerland companies and was sent out to more than 500 companies. The three main objectives of the survey were: Collection of information from companies in Switzerland to get a current state of cloud computing in terms of offering and demand in Switzerland as well as data about the application areas of cloud computing solutions in the Switzerland marked. Gaining information about success stories of cloud computing, open issues and problems that companies currently have as well as anticipate for the future. Conserving ideas and facts about the company thinking in regards of where the journey of cloud computing will lead to. Structure of the Survey The questionnaire of the survey is divided into six parts. It begins with an introduction and explanation of the survey, goals and additional facts. Then general questions about the company and the answering person for example the role within the company follow. After this first general part the questionnaire is leading in two directions. Since there is a considerable difference between a cloud user and a cloud provider those two groups are separated and different questions were chosen. The questionnaire for both cloud user and cloud provider are similar structured but they questions are asked on different perspectives. Both were routed together afterwards again and had to answer the general questions part two about the revenue and the development of the revenue.
4 Response Rate To achieve more response several distribution channels were used. Personalized cover letter was put on the requests and it was clearly noted that the conducted data will be treated in completely confidential way. As it can be seen in the following table a total of 593 started the survey or at least clicked on the survey link to get to the starting page. Of these 593 persons, 54 companies which is completion rate of 9.11 % finished the questionnaire. The page with the most abruption was the starting page.. Total 593 Completed 54 Completion rate 9.11 % Averages survey editing time 8 minutes and 51 seconds
5 1. Sample Description University of Applied Sciences Size of the companies The survey shows that 85 % of the companies answering the questionnaire are independent enterprises. The other 15 % are subsidiary enterprise but exactly half of them are able to make their completely own decisions. A bit more than a third (35.71%) of subsidiary company s decision is affected by the corporate enterprise. Just % of the respondent companies do not have an impact on the decisions that are made regarding the use of information technology. Concerning the employee number of the companies, the majority with % of the respondent s enterprises are smaller companies with less than 49 employees considered as SMEs (Small and Midsize Enterprises). Number of Employees The survey was send randomly to all sizes of companies. The most likely explanation is that smaller companies are more interested in marked surveys because they are not able to afford their own surveys as well as they are taking more time to answer a questionnaire due to their attitude to be more personal. Exactly a quarter of the respondent companies has between 50 and 249 employees and categorized as midsized businesses. Large enterprises with more than 2500 employees are represented with 9.09 % and also with approximately 9 % companies between 250 and 2500 employees are counting among to the larger companies. In terms of the revenue and the size of the company the survey shows an identical picture.
6 Revenue Almost 50 % have revenue smaller than five million CHF. The second largest group are companies with a revenue of 5 50 million CHF which are also still small or midsize companies. On the other hand nearly 10 % of the companies have revenue higher than one billion CHF. Even two of the enterprises are belonging to real big companies with revenue of more than 120 billion CHF. Six companies did not give further details about their revenue. To obtain more information regarding the growth of the companies, they were asked about the development of the revenue within the last three years (2007 and 2009). This information does not automatically lead to a statement about the success but there is at least an impression. Mostly if companies are not profitable they do not have the necessary capacity to invest and increase their revenues. Almost all of the respondents increased their revenue with more than six percent yearly. 13 % answered that they had a yearly increase between two and six percent. Approximately 15 % percent were having solid revenue and just 1.85 % had a decreasing sales volume. 24 % of the respondents did not give information to their revenue development. However this result shows that most of the answering companies had a growth within the last three years in their business. Business Area To gather more information about the companies and how they are making their business some questions in terms of their goods and services have been asked. The findings revealed that the majority with % of the enterprises are developing products / services by their own and therefore have a high degree of their company's vertical integration % have a middle degree of the company s vertical integration and give away some parts of their production to a third party. Only four percent of the respondent companies hand out most of their production process to external partners. The characterization of the products and services of the respondents
7 are also an important fact to know about. Almost half of the companies signified that their products are customer oriented. The other 35 % does also have customer-oriented products but products that are not clearly to specify in advance and also not a recurring product instead they are changeable. Just % of the companies do offer standardized and clearly distinctable products. The company also answered a question how they see the situation in their target marked. More than half of the companies completely agree that the information technology has a huge impact on the processes of their products and services as well as to increase their functionality. The companies also agree that requirements of the customer to products and services are changing fast. Less than 50 % agreed that provider and customer intensively incorporate in a collective value added process. 25 % disagreed with this statement. A total of % entirely comply that the competition environment is considerably high. Just 11 % think different about this. The following figure gives more information about the answers of the enterprises. Business Area
8 Job Role of Respondents In the cover letter it was stated that is was a prerequisite that the answering person is supposed to be in a leader role or at least have the essential information about the usage of information technology within the company. This is necessary to answer the questionnaire in terms of knowing the companies decisions about cloud computing. It was also expected that the answering person already had background knowledge about the topic cloud computing. As a result % of the respondents were CEOs, followed by the CIOs with %. Furthermore 14.29% have another leading position in a businesslike manner and 9.89 % in another technical oriented area. With % other respondent s job roles were described such as Chief Everything Officer, which describes the role of leader in a sole trader business, Social Media Manager, Leader in IT Services, Director Marked Development Enterprise, Chief Operating Officer, Chief Financial Officer as well as a Software Developer and Software Engineer. With respect to this answers almost all respondents are in leading roles and just a few are not comply with the prerequisite of being in a leading position. Job Role Cloud User and Cloud Provider To have a clear distinction between cloud user and cloud provider the survey lead after the general part I in two different ways. There is a relatively equal part o for each of the two groups % of the respondent companies are cloud provider and % are cloud user.
9 Cloud User & Cloud Provider 2. Survey Results Business Area The following table shows on the one hand in which business area cloud user are active and on the other hand for which business field cloud provider offer their cloud services. The survey shows that most of the cloud user companies operate in an information technology related business area. Cloud provider were asked for whom they offer their cloud services. The majority of cloud provider have specialized cloud services for industry, commercial marked as well as for credit institutes and insurances. Eleven provider companies concentrate on the energy and water supply industry and two develop their cloud services for public enterprises. Exactly two companies offer their services autonomous and intersectional for all types of business areas. Business Area Cloud User Cloud Provider Consulting (IT Consulting Services) 8 1 Information Technology (Internet & TelCo, Graphic & Web design, IT Education, Web 2.0, electronic media) 8 1 Industry (processing business) 7 17 Credit institutes and insurances 1 12 Energy and water supply 0 11 Commercial marked 1 17 Public enterprise 3 2 Law firm 1 0 Marketing 1 0
10 Transport & Logistics 1 0 Media sector 1 0 Autonomous / intersectoral 0 2 Current Interest in Cloud Computing To get an impression why companies using cloud computing and what their interest is in terms of how they apply cloud computing this question was created. The same as with the business area the cloud provider have been asked about the interest of their customer. Already 42 out of 53 companies considered cloud computing in their long term planning or see their customer doing plans in cloud computing for long term. Both cloud provider and cloud user have quite an identical view of the interest of cloud computing. Eleven cloud user enterprises are just starting with smaller cloud pilot projects and executions of cloud feasibility surveys. Also 13 of the cloud provider companies think that their clients already working on smaller pilot projects. Three companies answered that they are preparing large cloud projects or even started them and already 35 % are using cloud computing areawide. One company stated that they are just entirely implemented cloud computing along the whole enterprise. Cloud provider have a different view of this. Just two enterprises think that their customer applying cloud computing comprehensively. Having no interest in cloud computing was just a really small part of three cloud user companies. A few more cloud provider companies (a total of five) stated that they think their customer does not even have interest in cloud computing. Cloud Computing Offering To get a better understanding about the marked situation of cloud provider they were asked about their offering. An interesting result is that almost 45 % of the cloud provider companies are new companies just launched for the reason to offer cloud computing to customer. The other 55 % of the provider are established enterprises that expanded their range of products or services with Cloud Computing or changed their existing offering in cloud offerings. As it can be seen in the following figure 19 two-thirds of the cloud provider offering their own service and one third propose a third party cloud service.
11 Offering of Cloud Services Furthermore the following list gives more information about the detailed cloud services that are offered by the cloud provider participants in the survey: Salesforce.com Data warehouse offerings CRM solutions for small companies and self-employed Offering of a fully integrated SaaS business software Network layer offering for example for Google Salesforce.com, Google Apps und Amazon AWS Consulting, Implementation, Integration, and Training Offering of hosted platform (exchange), backup platform and ERP platform Offering of computing power, databases, SAP, storage, messaging & collaboration as shared services in data center in Switzerland Virtualization of storage environments Offering of PaaS, IaaS, SaaS and project-based services Supplementary the provider respondents are asked if they offer additional service in terms of cloud computing. A total of 68 % of the companies stated that they provide additional services. Almost 40 % of the cloud provider offer a cloud management and 30 % have experts to provide cloud consulting services. The majority in consulting provider is specialized in set-up and implementation of cloud projects. Cloud strategic consulting is the second largest consulting
12 service. A smaller part with just three companies offers support in search of cloud provider as a cloud service agency. Nine companies develop software in the cloud and three companies have cloud governance as one of their services in range. Moreover companies mentioned the offering of information security services, integration, migration, training service offerings as well as desktop cloud-, compute cloud-, collaboration cloud-, and test cloud services. With regards to the legal aspects that cloud user are facing the provider are asked if they are offering a cloud service within these field. The minority with just 22 % does offer support or consultancy concerning legal questions or problems. The companies named legal offerings such as: clarification of IKS/SOX conformance, support within Service Level Agreements (SLAs), any consultancy in terms of legal pain points Cloud Area and Cloud Type In order to understand which cloud type is preferred by the cloud user and cloud provider, the next question about public, private and hybrid cloud is chosen. Most of the cloud user (55%) are working or planning to work within in a public cloud and on the other hand 22 % within a private cloud. Two cloud user companies stated that they are active or at least plan to be active in all three types. Two others are using public and private cloud at the same time. A similar view is displayed by the cloud provider. Almost 60 % are offering cloud services in the public cloud and just % are active in the private cloud as well % within a hybrid cloud. Also two cloud provider enterprises are providing services for all three types; private, public and hybrid cloud. One enterprise is providing public and private cloud service but not hybrid cloud services. The following figure shows the cloud areas from the cloud user and cloud provider as a whole. Half of the user and provider have been chosen a public cloud as their cloud area.
13 Public, Private and Hybrid Cloud If it is looked at the cloud type of cloud computing some differences between cloud user and cloud provider can be recognized. In both groups most of the companies define Software as a Service as their service that is offered or used. The following pie chart shows in which different areas of cloud computing the cloud user and cloud provider take advantage of. Between Software as a Service and Infrastructure as a Service of the cloud user respondents is just a small discrepancy. SaaS is used by 41 % of the user and and IaaS by 38 %. Besides IaaS and Paas, 21 % of the firms are in use of Platform as a Service. In comparison to cloud user there are some differences. SaaS dominates the three types with 47 %. Infrastructure as a Service is offered by 29 % of the provider and Platform as a service is again quite the same with 24%. Even seven cloud provider offer all three types of cloud computing and five of the cloud user take into account SaaS, IaaS and PaaS. All other concentrate on one single type or at least two types. Overview SaaS, PaaS, IaaS of Cloud User and Cloud Provider
14 Management of the Cloud Environment Anytime services are provided, performance has to be defined and set up and continuously managed. As cloud computing are services provided by third parties, appropriate management methodologies have to be applied in order to secure performance, scalability as well as liabilities. The greater part with 58 % of the cloud user, manage their cloud environment with software. Just 20 % of the cloud management is done with an external partner such as a cloud broker company or consulting company. Exactly two companies took help from consulting companies to make use of set up and implementation of cloud projects. One company did need help with the cloud strategy planning and another used a cloud provider placement to find the right cloud service and cloud offering. One company describes themself as a cloud specialist that does not need any additional help to manage the cloud applications and another firm described also a self-management technique as long as the cloud stays not complex and more or less standardized. Another company stated that they operate their IT infrastructure in a public cloud together with an external IT service provider. Furthermore a company is using an idisk to manage their cloud. This service is offered by Apple and belongs to the service group Mobile Me. It is a type of cloud computing in form of online storage repository which is accessible through a browser. Within this the management of these services is included. Two companies stated that they do not know how to manage their cloud or do not even have the need of a cloud management. Influence of Cloud Computing: Advantages, Changes and Challenges Problems solved through Cloud Computing To be successful, cloud computing need to have some advantages. It must offer solution for specific solutions to problems especially better solutions compared to other previous information technology concepts. Conventional utilization of server, storage, and network is denotative low or does not have flexibility to scale up and down. Over 20 % of the cloud user companies agreed that cloud computing is able to solve this problem. Also cloud provider see this as one of the main advantage of cloud computing with 18 %. But they decided with over 20 % for another important problem that can be solved through cloud computing. So far the implementation responsible for the success of the relevant techniques needs too much time. A total of 32 companies believe that with cloud computing it is possible to have a shorter implementation process. Almost 20 % of the user stated that cloud computing helps to have faster and more flexible implementation processes. In addition the cloud user and also cloud provider are sure that cloud computing offers the possibility to support a new generation of application and is also adaptable to future developments. Eight companies had the problem of having too many investments for information technology within the last years and therefor have the need of a pay-as-you-go model such as cloud
15 computing is. Cloud provider also have the impression of too high IT expenditures of their customer. They see cloud computing as a solution with a pay-as-you-go model to avoid further tremendous investments. Moreover cloud computing deals with the issue of too much energy usage for cooling the data center and server rooms. 13 % of the cloud user and 8 % of the cloud provider see cloud computing as a help to reduce this problem. A further advantage is saving money with cloud computing. Due to the fact that there is no need of IT infrastructure there are less support and labor costs. Aspects that slow down the usage of Cloud Computing Cloud computing does not just have advantages. There are also facts that slowing down the usage of cloud computing. Both, cloud user and cloud provider see missing best practices of cloud computing as the most important barricade followed by the problem that not enough information is available. One company that is using cloud computing disagreed and stated that there is no aspect which is slowing down the usage of cloud computing. Identified issues of the cloud user and cloud provider can be seen in the following listing. It starts with the most important aspects according to the answers: Missing best practices Reliability Availability No information about cloud computing available Data security and trust data center is located abroad Higher costs / problems with non-predictable costs Efficient and industry specific implementation support / tools Legal aspects, compliance Changes provoked by Cloud Computing A further question asked in the questionnaire of the survey is, what cloud user think, how cloud computing changes the IT. 36 % of the cloud user term that cloud computing changes the IT- /business alignment and 29 % expecting a variation in the total costs in a positive manner. A group of 23 % anticipates a change in the CIO role respectively within the IT department. Challenges Since cloud computing is a very new IT model it is still facing a lot of challenges. Cloud user agreed that one of the major challenges is data security and the involved risk with legal aspects.
16 Another huge challenge that is seen by the cloud user is the selection of the right cloud provider. As it was already mentioned in the problems that cloud user are facing, they also see implementation of a cloud project as a major challenge for the future. Further challenges are: Adaption to business process Handling of payment and payment processes Training of Employees Data and Workflow Integration Dependency Decision Making Process of Cloud Computing An interesting fact is the decision making process of cloud computing within companies. In order to understand how companies came to the decision of applying cloud computing cloud user was asked this questioned. As it can be seen in figure 22 the survey shows a clear picture. Cloud Decision Finding Since cloud computing has its fundamentals in IT but has great influences on the business aspects the ideas are mostly given by the IT department of the companies. In fact it seems like the ideas came up from the IT department. The decision making was done afterwards by the IT department together with the management / business section of the companies. Over 70 % of the cloud user stated this in the survey. Just 15 % of the respondents said that the idea and the decision came along just from the management and the business side. Four cloud user initiated cloud computing with a marked study and / or a business case. Where to get information about Cloud Computing In terms of getting the latest information about cloud computing it is important to have the right sources. In the highly developed information technology world the problem is not anymore to get information but to find the right information. Cloud computing is still a very new topic.
17 Considering cloud computing as a computing model shows that companies are innovative. The following bar chart shows that almost half of the cloud user are taking the information needed about cloud computing from online sources for example from Web 2.0 applications such as social networks or blogs. 28 % are extending their knowledge on special events and fairs. Directly through cloud provider is also a method of gathering information used by 26 % of the cloud user. Information Finding
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