Cloud Computing 2012 Survey Results Date: 21 September 2012
Executive Summary Cloud computing solutions distribution between SME s and Enterprise Clients There have been many reports that speak to the advantages of cloud computing solutions within both enterprise 1 as well as SME business within South Africa. This report looks to build on those not by asking the same questions, but rather by finding out what is driving their move to a cloud computing environment and then in what order they are migrating to a cloud computing solution. As cloud computing adoption rates begin to rise, more and more organisations are preparing and investing in their cloud strategies with 41% of the respondents to this survey saying that they are already engaged in a cloud strategy of some kind. Only a small 15% of respondents reported that they would not be looking at a cloud computing solution within the following 24 months, if at all. This is a clear indication that cloud computing has passed its hype cycle and businesses are beginning to seriously invest and plan for how best they can leverage the inherent cloud computing benefits for their organisations. Both SME and enterprise businesses agree that the greatest inhibitors to a cloud computing solution are data security and legal issues with the great 1 For the purposes of reporting on this survey, SME s are defined as any operating business with 200 employees or less. An enterprise is therefore any organisation with 201 employees or more. advantages to cloud computing accelerated deployment and scalability. Both of these advantages are securely placed in the arena of assisting those deploying a cloud computing solution to gain a competitive advantage over their competitors especially as early adopters of the technology. The greatest areas where there was a difference in the way in which the SME respondents differed from the Enterprise was in the deployment types as well as IT s involvement in the cloud computing solution. In the respondents from the SME sector, public cloud deployments made up for nearly a quarter of responses while in the Enterprise market, there were no respondents who were engaged in a public cloud deployment. The enterprise market favoured the private cloud with 63% of respondents reporting to be involved in a private cloud deployment. With regards to IT involvement; the SME respondents report that the business drives and owns the cloud computing solution while IT is there to advise on implementation, integration and contract (SLA) support. In the enterprise market, there is far greater balance with IT being a more equal driver for a cloud computing solution. As the enterprise businesses by and large are more sophisticated than the SME s; their IT departments were only involved in a technical and advisory capacity; the related issues such as contracts would be given to the legal or finance departments to look over. 2
As this survey was not completed by current Deloitte South Africa clients; the results represent a view of both enterprise and SME businesses in a variety of industries that are not necessarily representative of a subscribed Deloitte view. In other words the results of this survey are not skewed to portray the Deloitte South Africa view on Cloud Computing. Findings The Deloitte South Africa Cloud Computing Survey was completed by companies across the spectrum in terms of employee numbers. For the purposes of reporting in this report, the respondents were grouped as SME s and Enterprise. An SME is any organisation who has 200 staff or less; an enterprise is any organisation who has 201 employees or more. Response by company size 11% 7% 4% 7% 4% 11% 30% 10 000+ employees 1001-5000 employees 1-10 employees 11-50 employees 201-500 employees 5001-10 000 employees 501-1000 employees 51-200 employees 26% Using the above; the survey was rather evenly balanced with 59.26% of the respondents falling in to the SME category and the remaining 40.74% making up the enterprise segment. 3
Response by designation 11% 11% 15% CXO Director 30% Junior Staff Owner Manager Senior Staff 26% 7% The responses were also grouped by the seniority of the individual who completed the survey. Only 7% of the respondents were junior staff, while the remaining 93% was made up of owners, directors, and managerial staff. This is critical as it shows the importance that senior staff is placing in cloud computing solutions. Only 15% of the respondents reported that they were not looking at a cloud computing solution within the next 24 months, if at all. The greatest section of responses showed that they were already engaged in some kind of a cloud computing solution mostly in non-core areas of the business. This data was spread equally in the SME and enterprise respondents. Interestingly, when comparing this to what percentage of computing has already been moved to the cloud; the SME segment was clearly as has been reported in similar studies a fast adopter of the technology. 4
Cloud Adoption Calendar 15% 19% 7% 19% 41% Not a future plan Within 12 months Within 24 months Within 6 months Already Using Cloud Only 38% of the respondents in the SME segment have not moved any of their computing to the cloud while a greater 82% of enterprise respondents have not moved to the cloud. SME s are clearly more at ease with cloud computing solutions and while the report didn t go into the reasons as to why this is so; it is not far-fetched to deduce that this is due to a considerably flatter organisational structure as well as less policy and procedure which needs to be followed in order to ensure that all the correct steps are followed and signed off. % Computing already in the cloud 0% 25% 50% 75% 100% 0% 20% 40% 60% 80% 100% 120% 140% 100% 75% 50% 25% 0% < 200 Employees 0% 6% 19% 38% 38% > 200 Employees 0% 0% 9% 9% 82% 5
When analysing what SME s have already moved to the cloud, email came back as the clear first move option for virtually all of the respondents. Respondents % of Computing to be moved to the cloud 38% 36% 27% 27% 18% 18% 18% 9% 6% 0% 100% 75% 50% 25% 0% < 200 Employees > 200 Employees 6
There is a parallel which can be drawn between the previous graph and the one opposite. SME s are apparently more aggressive in the amount of computing that they are willing to move to a cloud computing solution. The majority of respondents are looking at moving well over half of their computing to a cloud solution while their enterprise counterparts are not as willing with 72% of the respondents not moving any more than 50% of their computing to a cloud solution. Cloud Inhibitors: Importance 2.5 2 Uncertainty of long term offering 4 4 4 4 Data security Legal issues 3.5 3.5 3 3 3 3 3 3 3 3 Compliance Pricing Complexity Loss of control <200 Employees >200 Employees Vendor lock-in 3 3 2 3 No financial Unclear benefit licencing agreements Cloud Advantages: Importance 3 3 3 3 3 3 3.5 4 3 3.5 4 4 4 4 4 3 3 3 3 3 Flexibility Agility Mobility Efficiency Cost Reduction Accelerated Deployment Scalability Convenience Elasticity Customer Demand < 200 Employees > 200 Employees
There is an interesting parallel in the perceived inhibitors of cloud computing between the SME and Enterprise respondents. Both groups see data security and legal issues as being the largest hurdles to overcome. These are areas which have been highlighted by similar reports in the past and as these are still areas of grave concern, it appears that not much has been done to alleviate these fears. The SME segment is slightly more concerned around compliance (which can be tagged along with legal) and vendor lock-in as opposed to the Enterprise respondents. The lock-in fear could be as the SME s are less adept at handling legal as by and large SME s do not have fully fledged legal departments if they are locked in to a vendor who can either not adequately provide them with the service they are demanding or are forcing them to pay exorbitant prices, they will lose their competitive advantage. Similarly, the Enterprise and SME respondents agree that accelerated delivery and scalability are two of the greatest reasons to investigate a cloud computing solution to unlock a competitive advantage within their industry. efficiency and convenience were also featured quite prominently across the responses in both groups. Both groups also agreed that uncertainty of the long term offering of cloud computing was not a real inhibitor for pursuing a solution. This reinforces that cloud computing has matured to enough of a degree that businesses are not merely curious because of the hype, but are taking the longevity and viability of the solution seriously. Deployment Type < 200 Employees Deployment Type > 200 Employees 31% 23% Community 12% Community Hybrid Public 25% Hybrid Public 23% 23% Private 63% 0% Private
The cloud deployment types within the respondents differed quite significantly. SME respondents showed a willingness to pursue a public cloud deployment while their enterprise counterparts showed no willingness to pursue a public cloud. This is a direct correlation with the fear of security of data in a public cloud environment and is echoed in the Enterprise respondents 63% take up of a private cloud. A cloud that can be controlled and deployed behind a secure firewall without possibility of any external infrastructure share. of caution and ensured data security. However this does not mean that the Enterprise respondents would not consider a public offering in some form as 12% and 25% respectively of the respondents have said they are engaged in community and hybrid cloud computing solutions. We conclude therefore that the enterprise respondents have placed noncore, non-critical data in their hybrid and community cloud computing solutions. This leads us to conclude that the Enterprise respondents were willing to forgo the cast saving advantages of a solely public cloud to err on the side Type of current cloud deployment Phase of Current Cloud Strategy 19% 6% 25% PaaS 15% Evaluation SaaS DBaas 20% 55% Pilot Implementation Established 50% IaaS 5% 5% Live
While the adoption of cloud computing solutions is still relatively young; with 55% of all respondents still evaluating their options; it is interesting to note that in both the SME and Enterprise respondents, SaaS type deployments are where the majority (50%) of all organisations are finding themselves most comfortable in exploring cloud computing. Many respondents reported email software being the first thing which has been moved to the cloud. Only 20% of all respondents currently have an established cloud computing solution within their organisation. Departments Curently Using Cloud Solutions 8% 8% 8% 4% 4% Marketing Production 12% IT Service Logistics Finance 12% 44% HR Sales Respondents also indicated in which departments there is a cloud solution in place. The greatest majority of respondents claim that their IT departments have a cloud computing solution in place. 2 Service and logistics then have the second highest reported active cloud computing solution with the rest being spread relatively evenly between finance, HR, production and marketing. 2 This includes email which has been grouped under IT as traditionally IT controls the email environment. This again points back to organisations being more comfortable in pushing non-core business activity to the cloud as a non-critical test to understand how and where their specific organisation can benefit from cloud computing. One of the perceived barriers to entry of a cloud computing solution is the cost behind deploying and managing a cloud solution. There is an interesting parallel between the SME and Enterprise respondents with the majority of both groups agreeing that there is a lower total cost of ownership in a cloud computing solution than when compared to a similar non-cloud solution. 10
There are a large group of SME respondents (25%) who feel that the TCO of a cloud computing solution is higher than that of their current / regular computing solution. It is suggested that this fear is on the back of high data and bandwidth charges which will ultimately effect the TCO of the solution. Cloud : Perceived Total Cost Of Ownership Lower Higher Same 0% 10% 20% 30% 40% 50% 60% 70% Same Higher Lower > 200 Employees 18% 18% 64% < 200 Employees 31% 25% 44% Internal Driver Of Cloud Solutions > 200 Employees < 200 Employees 0% 20% 40% 60% 80% 100% 120% < 200 Employees > 200 Employees Business Driven 81% 55% IT Driven 19% 45% Cloud computing solutions are perceived as being something that is largely up to the IT department to plan for, deliver and control. While some of this is true, the respondents to this survey especially in the SME segment (81%) report that their cloud computing solutions are being driven by the business and not by their IT departments. The enterprise respondents report that the cloud drive is interchangeable between the IT department and the business leaders.
We conclude the reason for this is due to a lack of expert skills and experience within many SME IT departments whereas their Enterprise counterparts have far more structure and IT leadership to ensure that they are setting their technology agenda for the enterprise in which they operate. This conclusion is mirrored when we compare the role of each segment s IT departments in the cloud computing solution. In the enterprise segment, the IT department was only involved in technical support and an advisory role for how the cloud solution would need to be configured and deployed within the business. In the SME segment, the IT departments were asked to do this as well as assist in the negotiation of contracts (SLA s) and support the cloud solution once it was deployed. IT's Role In Cloud Solution > 200 Employees < 200 Employees 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% < 200 Employees > 200 Employees Technical support (config) 36% 55% Assistance on contract & SLA negotiation Enabler of application support 7% 0% 21% 0% Advisor of solution 36% 45% Contact Information Mariana Carroll, PhD Deloitte SA South African Cloud Computing Centre of Excellence Leader mcarroll@deloitte.co.za 011 209 6430 Kamal Ramsingh Deloitte Consulting Technology Leader kramsingh@deloitte.co.za 011 209 8270 12