Business and IT leaders across the globe are finding cloud adoption to be more complicated than many had originally anticipated, according to a report from KPMG International.
According to The Cloud Takes Shape, nearly 33 percent of all executives surveyed say that cloud implementation costs have been higher than they expected, and a similar percentage say that integrating cloud services with their existing IT infrastructure has been particularly difficult.
More than half of respondent organizations are already using Cloud and 70% of those who already have Cloud related experience state that Cloud technologies have already offered significant optimization and cost improvements. “The results of our survey are very important for Romanian organizations, which are still in the analysis and business case development phase as they are able to learn from the implementation experience of organizations from different countries” states Aurelia Costache, Management Consulting Partner at KPMG in Romania.
Business process design key to the implementation challenge
As the market for cloud matures, enterprises are now starting to come to terms with the hard practicalities of cloud enablement, according to the report’s authors. There is evidence that organizations are placing greater focus on getting the business process redesign right, facilitating appropriate change processes and making business model improvements.
The survey reveals that business process redesign needs to be done in tandem with cloud adoption if organizations hope to achieve the full potential of their cloud investments. . Executives have found that simultaneous process redesign is central to addressing the complexities that often arise in the implementation and operational phases of cloud adoption.
Reaping the transformational value from cloud
Despite these emerging complexities, executives still believe that the benefits of cloud adoption far outweigh any growing pains they experience through implementation, the survey shows. In part, this is because organizations are shifting their focus away from pure cost reduction objectives to instead focus on achieving the transformational benefits of cloud.
While cost reduction is still the primary reason for cloud adoption according to nearly half of respondents, 28 percent said that the speed at which they are able to migrate to cloud is important, as is cloud’s ability to enable faster entry into new markets (27 percent) and business process transformation (22 percent).
As cloud moves further up the ranking as a strategic tool of the business, the CIOs role is becoming ever more critical as the business integration broker on commercial, process and technical levels.
Cloud’s new and emerging challenges
Businesses are starting to more clearly understand some of the other aspects of cloud that can either significantly enhance or impair their organization’s ability to reap the rewards of cloud adoption.
Security: Business executives are recognizing that cloud adoption should improve security, not lessen it, nevertheless 26 percent of respondents still see security as a key challenge. The report indicates that business executives recognize that the only way to address the concern is to work more closely with IT to develop a joint approach on cloud security to ensure that cloud providers’ solutions and services are reliable and protected.
Many businesses are proving their growing confidence in the security of cloud with more than a third of respondents saying they will migrate core operations of sourcing and procurement, supply chain and logistics to cloud within the next 18 months.
Regulation: Only 18 percent of respondents see regulation as a challenge but that may be due to complacency, the report’s authors suggest, because organizations may be just beginning to prepare for the complexities that will arise with increased regulatory compliance.
Nearly 24 percent of respondents say they are looking at ‘private’ cloud environments as a way to address regulatory challenges.
It is already a certainty that it will not be long before regulators start to enforce new rules that will have an impact on the way global organizations use the cloud.
Tax: According to the survey, when asked how significant the role of tax was to making decisions to migrate to cloud, nearly 75 percent of respondents globally view the role of tax as either very significant or significant, indicating recognition that tax structures may change as a result of migrating to cloud.
About the survey
In late 2012, KPMG in partnership with Forbes Insight, conducted a web-based survey of 674 senior executives at organizations using cloud across 16 countries to assess the status and impact of cloud adoption around the world. Countries included in this survey were: Australia, Brazil, Canada, France, Germany, India, Israel, Italy, Japan, China, the Netherlands, Saudi Arabia, Singapore, UAE, the UK, and the US. The report combines survey data with analysis from KPMG’s cloud leaders to deliver a realistic perspective of the challenges and complexities facing today’s organizations.
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 156 countries and have 152,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
KPMG in Romania and Moldova operates from six offices located in Bucharest, Cluj-Napoca, Constanta, Iasi, Timisoara and Chiºinãu. We currently employ more than 650 partners and staff; Romanians and Moldovans as well as expatriates.