Analysts question enterprise cloud readiness

Cloud demand is on the rise, but end user and provider capabilities are still lacking

Internal cloud projects are fraught with danger, warn experts

A number of recently published analyst reports point to a growing appetite for cloud computing among enterprises large and small, but they also point to a crucial lack of service provider and enterprise readiness.

A Forrester Research report said that just five per cent of enterprise IT operations teams actually meet the requirements for cloud computing.

The report defined cloud computing as "more than just using server virtualisation", and warned that most enterprise IT infrastructure and operations functions lack the experience and maturity to manage such an environment internally.

The report's author, Forrester vice president and principal analyst James Staten, explained that cloud computing is "a standardised, self-service, pay-per-use deployment model".

However, given the current opinion held by many enterprise IT functions that public cloud services are still too immature and insecure for adoption, Staten warned against falling into the trap of pursuing an internal cloud project without being fully prepared.

The report said that companies need to have the people, process and tools in place to deliver IT on demand, sharing resources and maximising the use of IT assets to enable the company to act nimbly.

Staten urged companies to start investing now by following Forrester's cloud maturity path, which outlines the basic requirements for a cloud deployment.

"Forrester's research shows that it takes years to get cloud-ready. This means that firms should begin investing now in cloud knowledge by experimenting with cloud infrastructures and cloud-in-a-box solutions to learn how clouds actually operate," he said.

The model includes a standardised set of the most commonly repeated opera ting procedures, fully automated deployment of most routine management tasks, self-service access for internal users via a service catalogue or portal, and individual business units sharing the same IT infrastructure.

Such requirements also seem to be affecting cloud adoption among smaller enterprises, in Europe particularly, according to SME-focused cloud research unveiled yesterday.

A global survey by Spiceworks of 1,500 IT professionals at SMEs with fewer than 1,000 employees revealed that the Latin and South American regions are leading cloud services adoption, followed by Asia-Pacific and North America. This leaves European SMEs trailing, with fewer than one in five buying into cloud.

Analysts question enterprise cloud readiness

Cloud demand is on the rise, but end user and provider capabilities are still lacking

The study also found that smaller organisations are more aggressive than their larger SME counterparts when it comes to cloud services adoption.

More than a third of SMEs with fewer than 20 employees already use, or plan to use, cloud-based IT solutions in the next 12 months.

This adoption rate was markedly higher than the 17 per cent of organisations with no more than 99 employees, and the 22 per cent with more than 100 employees that use, or plan to use, cloud services over the same period.

"Small companies with little existing infrastructure and outsourced IT are moving most quickly to the cloud, whereas larger SMEs are taking more measured steps owing to considerable investments in onsite technology," said Jay Hallberg, co-founder and vice president of Spiceworks.

Echoing the Forrester findings, 62 per cent of SMEs have no plans to move to the cloud in the next 12 months, citing technology and security concerns.

At the same time, research firm Analysys Mason is urging service providers to embrace cloud services and bundle them into their enterprise solutions to avoid missing out on this lucrative emerging market.

The market research firm forecast that the global market for enterprise cloud-based services will grow nearly threefold within the next five years, from $12.1bn (£7.4bn) in 2010 to $35.6bn in 2015.

Steve Hilton, the report author and principal analyst at Analysys Mason, described the business model behind cloud services as similar to that behind established communications network services.

"A service provider amortises its upfront datacentre-related capital investment over a period of months, coinciding with the monthly fees charged to end user enterprises for the use of the infrastructure," he said. "For a service provider, this model should be very comfortable."

According to the report, the year-on-year growth rate will be 43 per cent in 2011, but will decrease to 13 per cent over the next five years. Software-as-a-service will account for 70 per cent of revenue in 2010, while the share taken by infrastructure-as-a-service will increase from 30 to 40 per cent over the next five years.

The report added that registered IT and application partners, such as agents, systems integrators, dealers and direct market resellers, will account for 39 per cent of this revenue by 2015.

IT and application vendors will take 36 per cent, while telecoms and cable TV operators will secure a 23 per cent share.