IT departments are not ready to embrace the on-demand phenomenon, despite a bullish outlook among vendors, according to Mike Lynch, founder and chief executive of search specialist Autonomy.

IT chiefs remain apprehensive about moving away from on-premises software to an on-demand or software-as-a-service (SaaS) model for their search requirements due to security fears, Lynch told Computing.

“The security concerns are still sufficient for most CIOs to stick with what they have. Archiving is very popular as SaaS, but for search, people are not convinced they want their dirty laundry outside their own walls,” he said. “ Every secret in the company hits the search at some point and every system is accessed, so you would be handing the crown jewels to a remote site. Technology companies are more bullish about it than the IT departments.”

Earlier this month, IBM announced it was spending $360m (£187m) on building two new datacentres dedicated to cloud computing services, and HP, Intel and Yahoo are working together to provide a research platform for potential customers to test cloud computing services.

However, Dylan Roberts, CIO at Leeds City Council said, “For councils, the biggest challenge is the heterogenous nature of the applications, operating systems and database platforms that local government run and whether these can be served by a ‘cloud’ offering. My personal view is wait and see. Local government should not be an early adopter, we would like to see it mature and understand more.”