Cloud switchover tougher than expected

By Ben Chapman-Smith

Google's data storage facilities. Getting into the cloud has been more costly than many global business leaders expected. Photo / Supplied
Google's data storage facilities. Getting into the cloud has been more costly than many global business leaders expected. Photo / Supplied

Cloud computing is becoming more mainstream by the day but shifting into the cloud has been far more challenging and expensive than most businesses expected, shows a new report.

KPMG has just released 'The cloud takes shape', a report based on the responses of more than 650 senior executives in 16 countries.

The survey found that although the cloud marketplace was growing and maturing, business leaders had found the technology difficult to adopt, with almost 33 per cent claiming cloud costs had been higher than they anticipated.

A similar percentage said integrating cloud services with their existing IT infrastructure had been particularly difficult.

Although the survey did not include New Zealand, the results were just as true here, said KPMG partner Chandan Ohri.

"Though cloud computing is the new buzz word in IT circles, it has yet to permeate through into NZ businesses in a big way," he said.

"The complexities were underestimated and more and more organisations ate finding the costs more than expected. It's not just plug and play."

Other reasons New Zealand businesses had been slow to adopt included security concerns and confusion about exactly how the cloud worked, Ohri said.

"While adoption is increasing, the fact that people still have concerns is stopping them from fully embracing the cloud."

But Ohri, who is KPMG's head of IT advisory, said the market was moving in the right direction and businesses were increasingly seeing cloud adoption as less about saving money and more about improving efficiency.

"While initially most organisations were looking at cloud services as a cost-cutting measure, the intention has clearly moved towards better process design and improving efficiencies that can be gained from adoption."

KPMG said in the report that as the cloud market matured, businesses were now starting to come to terms with "the hard practicalities of cloud enablement".

Ohri said a major lesson to emerge from the research was the importance for businesses to carry out any major process redesigns in tandem with cloud adoption.

Paul Matthews, head of the Institute of IT Professionals NZ, said while there were definitely benefits of the cloud for larger organisations, the level of cost and complexity of their IT requirements would be a barrier to any major IT platform change, including into the cloud.

"Therefore it's fair to say that the biggest cost and simplicity benefits from moving to the cloud are felt by SMEs (small and medium-sized enterprises)."

He agreed that the move to the cloud in New Zealand had been "a little slower than expected".

A big issue in New Zealand was the quality and reliability of connectivity, Matthews said.

"For a business to rely on Cloud Computing they have to have confidence in their connectivity.

"We're likely to see rapidly increased take-up once the Ultra-fast Broadband project is bedded in, although we still have the international connectivity issue to solve."

He said general business cloud offerings are fairly mainstream and easy to adopt now, particularly for SMEs.

"However as confidence in cloud-based solutions grows and as the market matures, we are likely to see a greater take-up from mainstream businesses as they realise how quick, easy and cost-effective many cloud-based services are."

Initiatives like the Cloud Computing Code of Practice would help give businesses confidence when dealing with cloud providers, he added.

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