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Cost Reduction Remains Chief Reason to Adopt Cloud, Confusion Still Apparent

By - Source: Toms IT Pro

According to survey results provided by consulting firm KPMG, almost six out of ten cloud service providers indicate that the expectation of cost reduction is the main reason why businesses consider a move to the cloud.

However, the goal of cost reduction may not always be reachable as four out of ten providers said that cost savings is their biggest challenge. Only 39 percent said that their customers have realistic cost expectations and 19 percent said their customers do not.  

Additional barriers of cloud adoption - beyond the ability to show evidence of cost savings - are now emerging in a much more strategic way and require providers to show how usage-driven pricing can create profitable business models and a need to help clients develop compelling use cases for cloud implementation (31 percent and 27 percent, respectively).

Data security has dropped down on the list with 23 percent of providers saying that data loss and privacy risks remain challenges for the cloud. 57 percent of providers said they are addressing the data security issue with tighter restrictions on user access and applying more sophisticated data encryption.

KPMG's numbers do not provide a consistent picture of the cloud environment today, but suggest that confusion of cloud usage models and benefits are still very much in existence. The consulting firm said that a quarter of providers surveyed believe that "customers need to be educated more on the basic aspects of cloud: security, pricing models, relative costs, and integration with existing infrastructure." Another quarter mentioned "that customers need more information about contractual arrangements such as service level agreements."

That education is likely to penetrate cloud customers at some point, but it is interesting to note that the required level of education is not always available inside the sales staff of cloud providers: "More than one-third of providers say they need to train or retrain their sales forces on cloud. Almost half of providers say they will form a partnership (48 percent) or expand capabilities to provide more strategic services and consulting to business users (47 percent)."

Wolfgang GruenerWolfgang GruenerWolfgang Gruener is a contributor to Tom's IT Pro. He is currently principal analyst at Ndicio Research, a market analysis firm that focuses on cloud computing and disruptive technologies, and maintains the blog. An 18-year veteran in IT journalism and market research, he previously published TG Daily and was managing editor of Tom's Hardware news, which he grew from a link collection in the early 2000s into one of the most comprehensive and trusted technology news sources.

See here for all of Wolfgang's Tom's IT Pro articles.