KPMG Finds Cost is Secondary in Cloud Adoption

KPMG’s 2014 Cloud Survey Report of enterprise cloud computing adoption had some significant findings, including the notable shift away from cloud adoption for purely cost reduction purposes and a move to other goals.

The Report was compiled from survey answers from 539 C-level global business executives and IT leaders including CEOs’, CIOs’ and CFOs’. The executives were from organizations spanning more than a dozen major industries, all of which had annual revenues between $100 Million to over $20 Billion. The methodology is explained in greater detail on page 15 of the study.

There were a number of points of note including the following; According to Forrester Research, the public cloud market is estimated to reach $191 billion by 2020, a significant climb from 2013’s total of $58 billion. Forrester asserts that cloud applications will lead this growth, achieving approximately $133 billion in revenue by 2020. Cloud platforms will follow, generating an estimated $44 billion in revenue, and cloud business services will amount to approximately $14 billion in revenue by this time

The findings from the survey show that the primary use of the cloud is to drive cost efficiencies, this was the case for 49 percent of respondents.  However, the findings also that that an increasing number of organizations are using the cloud for significant changes, both within individual business units as well as across the enterprise. These changes are working to a number of goals including: better enabling a flexible and mobile workforce (42 percent); improving alignment and interaction with customers, suppliers and business partners (37 percent); and better leveraging data to provide insightful business decisions (35 percent).

It is interesting to note that this is rather different from the findings of the KPMG 2012 study that found that while cost efficiencies clearly held the top spot (48 percent), speed to adoption came in a far second at 28 percent. This suggests that cost savings were a much more powerful driver in two years ago than it is today. This is particularly true for Enterprises selecting a cloud solution, whereby cost is secondary to other factors, namely being, security and data privacy.

Rick Wright, principal and global cloud enable leader at KPMG, said in a prepared statement, “While the challenge posed by cloud related data loss and privacy threats are less pronounced in the minds of global industry leaders, they are still taking the issue seriously. The clear trend in the data that we have collected shows that, even in the face of significant media attention paid to recent data breaches, global leaders are still willing to embrace the transformative potential of the cloud.”

Moreover, the study compared the results from the 2014 study to that of the 2012 study and found that security and data privacy are now more of a concern than cost efficiency. According to 50 percent of survey respondents, the risk of intellectual property theft is the most significant challenge to doing business in the cloud, followed by data loss and privacy risk, which was cited by 45 percent. However, while respondents voiced continued security concerns, results in fact show a substantial decline from 2012.

Mark Shank, managing director of the digital and mobile practice at KPMG was reported as saying, “People’s expectations as employees are a lot different than they were ten years ago… Employees today demand the same access, experience and richness on their work computers and mobile devices as they have on their personal devices. Cloud is making that possible, and organizations are turning to it to enable a more flexible and mobile workforce.”