The Cloud (Part 1): State of the Cloud 2016
As cloud adoption reaches a tipping point, it is essential that ‘best-practice’ is followed to enable organisations to derive the full benefits of what the cloud has to offer.
In Part 1 of our new blog series, we present a brief review of ‘The State of the Cloud in 2016’, globally and in the UK. Subsequent articles will dispel popular misconceptions about the cloud before moving to look at the key success factors in developing and implementing an effective cloud based strategy for your own organisation.
The Global Cloud
Our review of current research on cloud adoption trends around the world leads to one clear conclusion. Over the next few years, worldwide cloud adoption will increase exponentially. A tipping point has been reached.
At the time of writing, the most recent study in this area, a September 2016 report by McKinsey (IT as a service: from build to consume), argued that the debate on whether to use the cloud is over. Based on a survey of 800 CIOs, the report concluded that businesses, across a wide range of sectors, are now moving a material portion of their IT workloads to cloud environments. Over the next three years, enterprises will make a fundamental shift from building IT to consuming IT.
The McKinsey report supported an earlier June 2016 study from Gartner which claimed that by 2020, a corporate ‘no-cloud’ policy will be as rare as a ‘no-internet’ policy is today. Cloud-first, and even cloud-only, is replacing the defensive no-cloud stance that dominated many large providers in recent years. Cloud will become the default option for software deployment, with a no-cloud policy becoming increasingly untenable. Hybrid will be the most common usage of the cloud.
As a consequence of the above, the cloud computing market worldwide is forecast to grow by 24% CAGR 2016 to 2021.
State of the Cloud UK
As far as cloud adoption in the UK is concerned, two main conclusions emerge from our review of recent research:
- UK cloud adoption has increased rapidly in recent years.
- Despite this, there is still a long way to go before the majority of UK organisations are leveraging the full potential of the cloud. While we are moving in the right direction, progress has been slower than in many competitor nations. Cloud adoption in the UK public sector, especially local government, has also progressed at a much slower rate than expected.
Moving in the right direction
According to the most recent research conducted by the Cloud Industry Forum (CIF) in Q4 2015, the cloud adoption rate amongst UK-based organisations now stands at 78 per cent, substantially higher than the 53 per cent recorded in the first survey conducted in 2011. This is likely to increase to 85 per cent over the next two years.
Of cloud users, three quarters (77%) are using at least two services with one in eight (12%) deploying five or more. This represents a healthy increase in cloud service penetration from levels reported even a few years ago.
The survey reports a wide range of business benefits being derived from cloud adoption including flexibility of delivery, scalablity, 24/7 service dependency, enabling innovation, business continuity, improved customer service, saved organisation time. The business benefits of using the cloud will be examined in more detail in a forthcoming article in this series.
Two other very interesting conclusions emerge from the CIF survey.
- Two-thirds of UK enterprises would consider moving their entire IT estate to the cloud in the near future.
- For the first time, digital transformation to stay ahead of the competition was mentioned as an important factor driving cloud adoption. As the pace of digital disruption accelerates, and with no industry being immune from the threat of being disrupted, cloud adoption to support transformation will become common place.
But still a long way to go
While good progress has been made, cloud-based solutions still constitute a relatively small part of the wider IT estate in the UK. Worryingly, there is some evidence to suggest that cloud adoption in the UK is lower than for many of our international competitors.
An April 2016 survey of 1,200 IT professionals from the US, UK, Spain, Australia, Brazil, Canada, France and Germany, conducted by Intel Security, concluded that UK organisations use less cloud services than their international counterparts. IT budgets were also shifting to the cloud at a much slower rate in the UK.
Across all of the countries surveyed, the average organisation is using 43 cloud services. The average for the UK was just 29 cloud services in use per organisation. Survey respondents expected 80 per cent of their organisation’s IT budget to be dedicated to cloud computing services in 16 months time. In the UK, it will take 28 months to reach that target, the longest time period for any of the countries surveyed.
Given the business benefits to be derived from using the cloud and the strong link that exists between cloud adoption and national competitiveness, these are worrying findings.
Cloud adoption slow in local government too
The UK public sector too has a long way to go before it is fully utilising the benefits of the cloud for modernising the delivery of public services, especially in local government.
According to a recent report, only a small minority of the 400 or so local councils in the UK are using the cloud in any meaningful way. The report argues that while local government were not mandated to use GCloud (announced in 2013), the expectation was that most public sector organisations would consider cloud services as the first option for technology solutions.
Three years down the road, the fact that little progress has been made at a local authority level is worrying given that the cloud is now critical to developing the agile IT infrastructure required to support local government digital programmes. Accelerated process reengineering, shared services, modernised IT delivery, mobile and flexible working, information governance maturity, reduced IT costs, speed and flexibility in meeting changing service demands and achieving value for money in an era of tight budgets are all dependent on effective use of the cloud.
So where is your organisation?
The overall conclusion from our survey of cloud adoption research is that the movement to the cloud is now unstoppable. However, not every organisation is moving at the same pace.
In conclusion, a recent study by the National Computing Centre defines five cloud personas based on two main criteria – the level of enthusiasm for cloud computing and maturity of adoption.
Is your organisation an ‘Embracer’, ‘Believer’, Experimenter’, ‘Accepter’ or ‘Controller’?
- The Embracer – been using the cloud for 3 or more years, very active in seeking out new technologies, dedicates over half of budget and is deriving real benefit from using the cloud.
- The Believer – very likely to actively seek out new technologies and to have moved the majority of services into the cloud over the next year. The cloud is seen as being critical to the deployment of services with a third of budget allocated.
- The Experimenter – likely to experiment with new technologies and to move the majority of services to the cloud in the next year. Used in half or more departments with a quarter of budget dedicated to cloud.
- The Accepter – adopted the cloud in the past two years and most likely to adopt technology when there is a clear business case. Cloud is not central to IT strategy.
- The Controller – least likely to be using the cloud or other emerging technologies. The cloud is not currently part of their IT strategy.
As always, comment and feedback on this post are very welcome.
In Part 2, to be published next week, we tackle the most common misconceptions regarding the cloud and the main business benefits to be derived from developing and implementing an effective cloud strategy for your organisation.