U.S. cloud adoption fueled by cost savings and flexibility

Cloud adoption in the U.S. is driven by a hunger for cost savings and flexibility, according to a recent survey by the Cloud Industry Forum.

As enterprises embrace cloud adoption, service providers must understand their customers' motivations for adopting these services in order to satisfy a growing customer base in the future.

Thirty-one percent of U.S. enterprises cite cost-saving opportunities as their main driver for cloud adoption, according to a study released recently by the Cloud Industry Forum (CIF). Flexibility came in as a close second, with 28% of survey respondents identifying it as a major motivation.

The drivers for end user cloud adoption ... are flexibility, agility and the need to do something with potentially limited resources, time scales or skills.

Andy Burton
Chairman, Cloud Industry Forum

Due to the ongoing economic slump, U.S. companies have preferred to host new services in the cloud rather than purchasing new, on-premises equipment, noted Andy Burton, chairman of the CIF. The study -- sponsored by Rise, the Infrastructure as a Service (IaaS) division of service provider Fasthosts Internet -- was based on a survey of 400 senior IT and business decision-makers in U.S. enterprises and small- to medium-sized businesses (SMBs). 

"It is more prominent that larger enterprises are driving their decisions on cloud adoption from a cost reduction point of view," Burton said. "The drivers for end user cloud adoption, especially on the smaller end of the market -- companies employing less than 1,000 [people] -- are flexibility, agility and the need to do something with potentially limited resources, time scales or skills.”

In recent years, however, many customers have cited gradually rising costs and unrealized flexibility and efficiency benefits  as leading factors for cloud project failure over the last few years, said Tom Nolle, president of CIMI Corp.

"I think the challenge is that the education of the buyer and [of] the value proposition is as much the responsibility of the buyers as it is the providers," he said.

Growing cloud adoption, one happy customer at a time

Enterprises have different business rationales for moving to the cloud. While overall market readiness for cloud adoption varies, most organizations are using the cloud for at least one application and plan to expand their strategy by exploring other areas of cloud-based services, Nolle said.

Despite all the hype, cloud adoption will grow only if customers remain satisfied. The CIF reported that 98% of respondents claimed to have a high satisfaction level with the results of their hosted or cloud-based services. Burton attributed these high satisfaction levels to buyers being better informed about what cloud providers can offer.  

"We are seeing customers starting to look at cloud-based services as formally part of the IT strategy," he said. "That's one of the reasons we are seeing higher satisfaction levels."

More informed buyers must know their cloud provider in order to stay satisfied, Burton said. "If I am an end user wanting to use cloud services, I want to know who the cloud provider is and [whether] they have a brand name I recognize," he said.

In turn, cloud providers must understand their target customers and what types of cloud services they are going to offer Burton said.

Delivering cost savings and flexibility can ensure cloud adoption

Industry-wide price decreases have dominated the cloud provider market recently, said Darren Stahl, director of channel services at Rise. Providers have realized that enterprises are looking to the cloud for cost savings, so they are pushing down prices to stay competitive, he said.

More on cloud adoption:

Turning IT managers onto the cloud

Cloud providers still learning how to sell cloud-based services

Five 2012 cloud computing trends cloud providers should watch

While smaller cloud providers may struggle with storage or compute power costs, larger providers that can use economies of scale in their data centers will be able to keep their costs down, Stahl said. Amazon has lowered storage prices for its customers, and Microsoft has also lowered pricing for its Software as a Service (SaaS) suite, Office 365, and its Platform as a Service (PaaS) product, Azure.

"These companies are trying to align themselves with Google, especially with their email platform and office applications," Stahl said.  

To ensure continued cloud adoption, cloud providers must address the primary concerns that users have when migrating to the cloud  --"issues around data security and privacy, and connectivity and latency," Burton said. The potential toll that competitive pricing will have on the performance and reliability of the offering is yet to be seen, he said.

But availability, security and overall quality of cloud services is in very high demand, Stahl noted.     

"Despite growing cloud adoption, customers are still hesitant to move their data to the cloud," Stahl said. "Cloud providers are definitely put under the microscope at any given opportunity when customers want to roll out new infrastructure. I think the cloud offerings coming out will still be high-level, but pricing is definitively being driven down at the moment.”   

Let us know what you think about the story; email: Gina Narcisi, News Writer.

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