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Cloud computing trends: Three reasons skeptics aren't adopting cloud

Like the early days of the California Gold Rush, the promise of easy riches has spurred providers from all over the IT industry to cash in on cloud computing trends and launch cloud services. It is evident, however, that cloud adoption and usage remains lower than many providers anticipated in their business plans. 

Only 15% of U.S. businesses currently use cloud infrastructure services, and even then, they only use them intermittently, according to Frost & Sullivan's 2012 survey of IT decision-makers. 

More discouraging for providers: A large percentage of the market has remained resistant to current marketing messages about the cloud's allure. According to Frost & Sullivan, 40% of U.S. businesses claim to

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understand cloud computing trends but are unwilling to adopt cloud services. They have attended webinars, read marketing brochures, talked to salespeople -- and yet they remain unswayed. 

More on cloud adoption strategies:

Cloud outage concerns hinder global cloud adoption

CloudCast Weekly: Winning government cloud customers

Cost savings spur cloud adoption

To add to provider insecurity, the survey also reveals that cloud providers have only a tenuous hold over their current customers. Businesses that currently use or plan to implement cloud services, also known as cloud adopters, continue to harbor concerns that are inhibiting their broader use of cloud services.

Although cloud providers have captured the easiest opportunities -- early technology adopters and organizations that were quick to embrace cloud -- they must now find a way to stimulate mass adoption. To accomplish this, it's important to look beyond the obvious adoption barriers and understand the fundamental, sometimes nuanced differences between cloud adopters and those who are skeptical about moving into the cloud, a group known as cloud skeptics.

Frost & Sullivan's survey on cloud computing trends reveals three big reasons why some customers are resisting the cloud, and we will discuss ways providers can fine-tune their marketing approaches to turn cloud skeptics into cloud adopters.

1. Cloud skeptics don't believe your cost savings claims. 

Nearly every provider touts cloud services' cost savings over traditional data center deployment models. Yet cloud skeptics are half as likely as adopters to agree that cloud computing will reduce costs, a third of skeptics strongly disagree with this claim.              

What cloud providers can do: The skeptics are the most budget-conscious of market segments, often citing "budget constraints" as their top data center challenge. They are also admittedly late-adopters of new technologies. These conservative businesses will not risk investing in a decision unless they are fully confident that it will reap significant rewards.

To gain credibility among this segment, don't simply tell them they can save; show them. Provide tools that will help prospective customers build a business case for adopting cloud services -- one that includes capital, operating and opportunity costs. If the cloud's savings claims are meant to play out over three or five years, make that clear.

2. Cloud skeptics are overconfident about the security of their on-premises data centers. 

Cloud adopters and skeptics both believe that public cloud poses greater risk than private, premises-based data centers. Across a variety of risk areas, including cyberattacks, data loss and weak access controls, the average cloud adopter perceives public cloud as 12% riskier than private data centers. Among those who remain skeptical, the perceived risk premium for the cloud shoots up to 36%.

Forty percent of U.S. businesses claim to understand cloud computing trends but are unwilling to adopt cloud services.

Even more interesting is that both groups share similar perceptions about the risks of using the public cloud. The divergence comes in how they perceive the vulnerabilities of private data centers. When asked to evaluate the risk profiles of their own data centers, skeptics saw their facilities as 20% less vulnerable than adopters did.

What cloud providers can do: These results are consistent with widespread misperceptions regarding cloud vulnerability. Each time a data breach gains public attention, cloud confidence takes a hit -- regardless of whether the breach occurred in a cloud data center or a private data center. Cloud providers can do a better job of educating the market -- existing customers and prospects alike -- on security issues. Be sure to describe steps that have been taken to secure the cloud data center, including physical security, firewalls and access controls. Help customers understand their part in securing their data. It may even be appropriate to ensure that customers fully grasp the impenetrability of their own data center environments.

3. Skeptics and adopters are both afraid of cloud outages.

Performance and reliability concerns plague 77% of cloud skeptics. Perhaps more surprisingly, the same concerns are expressed by 60% of cloud adopters.

What cloud providers can do:  These results are a stark reminder that in the absence of a term contract, it is impossible for cloud providers to identify a true customer versus one that may just be dabbling.  If providers want to retain their customers and expand their usage, they have to continue to market to their current customer base just as heavily as they do to prospects.

To overcome reliability concerns, providers should be open about what their service does and does not cover. It's important to discuss the resiliency of their architectures and their own business continuity processes. Similarly, they should proactively review their service-level agreements with customers and prospects to avoid misunderstandings. For higher-end cloud providers, these discussions can lead to professional services engagements to help customers establish appropriate cloud performance requirements.

The cloud requires mutual trust between service providers and customers, and developing trust starts with a shared perspective. Only by demonstrating that they understand the real concerns, challenges and issues that customers and prospects face will cloud service providers convert the skeptics into believers and potentially spearhead a spike in adoption.

About the author: Lynda Stadtmueller is a program manager at Stratecast, a division of Frost & Sullivan.

This was first published in September 2012

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