SOURCE: Avanade

October 21, 2009 09:00 ET

Global Study: Cloud Computing Adoption Rising Rapidly Worldwide; Canadian Respondents in No Rush to Adopt

C-Level Executives and IT Decision Makers Report More Than 300 Percent Increase in Respondents Beginning to Plan for or Test Cloud Computing

TORONTO--(Marketwire - October 21, 2009) - The number of global companies planning for, and testing, the cloud has increased dramatically, according to a recent survey commissioned by Avanade, a business technology services provider. Cloud computing is no longer just a buzzword that companies are trying to figure out. The respondents who say they are beginning to embrace cloud computing jumped more than 320 percent since January 2009. This is the first data that indicates a growing global acceptance of cloud computing in the enterprise.

The study also found that while companies are moving toward cloud computing, there is little support for cloud-only models (just 5 percent utilize only cloud computing). Rather, the majority of companies are using a combination of cloud and internally-owned systems, or a hybrid approach.

"For very large organizations, the hybrid approach is logical and prudent," said Tyson Hartman, global chief technology officer at Avanade. "No one is going to rip and replace decades of legacy systems and move them to the cloud, nor should they. Additionally, at this stage of cloud computing maturity, not every computing system is appropriate for the cloud."

This study is the second large-scale survey of cloud computing adoption, surveying more than 500 global C-level executives and IT decision makers in 17 countries comparing attitudes from an earlier study this year. In Canada, the survey shows that many see no immediate need to adopt cloud computing while the rest of the world is rushing to embrace the cloud. Forty-five percent of Canadian respondents are currently not utilizing cloud-based systems. And, of those, none reported that they are beginning to plan for or test cloud computing, while only 20 percent say they will begin to use cloud-based systems within the next 6 to 12 months. Other key Canadian findings show:

--  Less than half of Canadian companies (49 percent) think the global
    recession has "hit bottom" (59 percent globally).
--  The majority of Canadian respondents reported that they are under
    pressure to save money and innovate.
--  However, nearly two-thirds of Canadian companies reported rates of new
    technology adoption has remained the same or decreased even though cost
    savings are important in Canada.
--  And, 61 percent of respondents say they view cloud-based IT systems as
    a strategic investment.
--  Security issues and a lack of an immediate need are the leading
    reasons for not using cloud computing (50 percent each). Costs ranked third
    as a barrier to adoption.
--  Of those companies using cloud computing, 55 percent of respondents
    say they have experienced a steep learning curve for IT staff (40 percent
    globally).
    

Globally, while companies are making strategic investments and recognize cloud computing is one of these areas (57 percent say cloud is a strategic investment; 43 percent see it as a cost-saving measure), there are still barriers to the use of only cloud computing in large organizations.

"Companies recognize the value of online services like cloud computing to offer increased operational elasticity, IT cost reductions, and increased connection with various stakeholders. However, there is still an adoption curve taking place, especially in Canada," said Jeff Kempiners, account group executive, Avanade Canada.

Additionally, more than 35 percent have experience an outage at the service provider company. On a broader level, 30 percent of respondents using Software as a Service (SaaS) have experienced an outage of 10 or more hours -- losing more than a full day of business.

Other key global findings in the September 2009 survey show:

--  Companies reporting no plans to adopt cloud computing has declined
    from 54 percent to 37 percent.
--  More than 70 percent of global companies reporting that the economy
    has either helped (13 percent) or had no effect (58 percent) on efforts to
    implement cloud computing.
--  More than half of respondents are turning to a mix of cloud-based and
    internal IT (on-premises) systems. There is a clear move using these hybrid
    deployments of cloud-based systems as companies get more comfortable with
    new technology.
    

"It is clear that cloud computing is not an all-or-nothing proposition. There is an evolution that is taking place. Companies are moving to take advantage of the cost savings and scalability that cloud computing brings to the enterprise," said Hartman.

Online Services Gaining Momentum

Another important finding of the survey is that online services, such as Software-as-a-Service, are quickly gaining acceptance. This online services model is beginning to fundamentally change how IT services are consumed and provisioned in large organizations. More than half of respondents report that they are currently using SaaS applications.

While SaaS is making major inroads, nearly one third (30 percent) reported more than a day of business had been lost due to a service outage. Despite that issue, SaaS is seen as a resounding success globally -- 93 percent of companies view their experience as successful. Other key SaaS findings show:

--  The majority of respondents say they have been using SaaS for a year
    or less (60 percent).
--  Globally, there is a 2:1 ratio of respondents who prefer SaaS
    delivered internally (or as private services) versus from third party
    service providers.
--  And, although the technology may be new to most users, one-third
    report using three or more SaaS providers.
--  Finally, more than 62 percent of respondents are looking to increase
    their use of SaaS over the next year.
    

"From our viewpoint -- based on the work we've done with customers and what the research reinforces -- the future of cloud-based solutions lies in this hybrid approach of using cloud and internally owned systems. In the same way that email and the Internet have permeated businesses with early resistance, SaaS and cloud will continue to take hold," Hartman said.

About Avanade

Avanade provides business technology services that connect insight, innovation and expertise in Microsoft technologies to help customers realize results. Avanade's services and solutions help improve performance, productivity and sales for organizations in all industries. The company applies Microsoft expertise from its global network of consultants, drawing on the right mix of onshore, offshore and nearshore skills, which together are designed to help deliver results faster, at lower cost and with less risk. Avanade, which is majority owned by Accenture, was founded in 2000 by Accenture and Microsoft Corporation and serves customers in more than 20 countries worldwide with more than 8,600 professionals. Additional information can be found at www.avanade.com.

About the Survey

The Cloud Computing survey was conducted by Kelton Research, an independent research firm, between August 26, 2009, and September 11, 2009, on behalf of Avanade. The 502 respondents include C-level executives, business leaders and IT decision-makers from 16 countries in North America, Europe and Asia-Pacific. For more information on this study and Avanade's cloud computing expertise, please visit http://www.avanade.com/people/thought_detail.aspx?id=79.

Avanade and the Avanade logo are registered trademarks or trademarks of Avanade Inc. Other product, service, or company names mentioned herein are the trademarks or registered trademarks of their respective owners.

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