Daily News: September 19, 2013

CIT: Mid-Market Execs Face Unforeseen Hurdles With the Cloud

While middle-market executives report moving ahead with transitions to cloud-based systems, many organizations face unexpected hurdles that prevent the cloud from fully delivering on its promises. Cloud-based systems and services, which are largely being built upon existing IT infrastructure using traditional financing products, are resulting in duplicated services and lower return on investment, CIT said.

These are just some of the key findings of “Clearing the Roadblocks to Cloud Computing,” a new study of middle-market executives released by CIT. The study was conducted by Forbes Insights on behalf of CIT.

“Due to a lack of awareness in hidden costs, utilization of traditional financing products and implementation of processes meant for older IT infrastructure, middle-market executives are realizing less value in their cloud system transitions,” said Ron Arrington, global president, CIT Vendor Finance. “However, with careful planning that minimizes surprises and new products and services from financing providers, full transitions to cloud computing should continue to take place with costs likely falling significantly.”


Companies Are Moving Ahead With Various Forms of The Cloud: Nearly half of middle-market executives (46%) say they currently use — and 26% are considering the use of — public cloud services. Thirty-six percent utilize — and 26% are considering the use of — private clouds. Fifteen percent say they already use — and 25% are considering the use of — hybrid clouds. More than 7 out of 10 (76%) companies using public clouds say they have been subscribing to these services for less than two years. Sixty-seven percent of companies with private clouds say they are less than two years old.

Lack of Funding, Fear of Unexpected Costs and Security Top Concerns Around Cloud Adoption: When asked about issues that concern them, 49% of public cloud users point to vendor pricing and unforeseen costs. Fifty-one percent of private cloud users worry about the costs of maintaining or adding to existing systems, and 44% say their projects are being hampered by unforeseen costs. Another 43% of executives overseeing private clouds say it’s difficult to get the funding they need to modify their data centers for virtualized, private cloud settings. Other challenges to adoption include: security, cited by 80% of public cloud users and 41% of hybrid cloud users; data ownership and accountability, a concern among 57% of public cloud users; and performance issues, cited by 54% of private cloud users and 46% of executives at hybrid cloud sites.

Transitioning to The Public Cloud: More than three-quarters (77%) of executives using public cloud are replacing at least some of their existing IT assets or applications. Public cloud services being adopted include 74% subscribing to Software as a Service (SaaS), 34% using Platform as a Service (PaaS) and 24% using Infrastructure as a Service (IaaS). From public clouds, 64% seek lower operational costs, 43% expect more availability of applications and systems and 41% hope for better overall performance.

Going Forward With Private Clouds: More than two-thirds of private cloud users (68%) say they have built their projects by virtualizing or extending their current data centers. Nearly a quarter (24%) say their private clouds are entirely new systems. A majority of executives using private cloud, 73%, say they do so to gain greater data security and privacy, while 65% say they want more control over application features, and 49% look for greater control over long-term costs. Among hybrid cloud users, 52% also seek lower operational costs and 49% want improved performance.

Private Cloud Computing Has Cost More Than Many Companies Have Expected: Close to seven out of ten middle-market executives (67%) using private clouds say that spending on IT infrastructure increased because of transition to or buildup of a private cloud. Only 8% have seen a decrease in their IT costs as a result of the move to private clouds. Thirty-five percent of private cloud users say these services have been more costly than expected. Three-quarters of all surveyed executives say it will take more than a year until they start seeking a payback from their cloud implementations.

Most Private Cloud Funding Comes from The IT Budget: Seventy-seven percent of private cloud users say funding comes out of their IT department budget; only 8% have a chargeback mechanism by which departmental usage can be metered. Most companies have not altered their financing and accounting approaches for the cloud phenomenon. More than half (52%) of surveyed executives say they fund cloud services and systems with the same financing and accounting mechanisms as they use for standard IT systems.