NTT: 66% of CIOs & CFOs Not Yet Sold on Cloud

June 4, 2009

Sixty-seven per cent of Chief Information Officers and Chief Financial Officers in UK enterprises say they are either not planning to adopt cloud computing (35 per cent) or are unsure (32 per cent) of whether their company will adopt cloud computing during the next two years, according to a major new report from managed hosting specialists NTT Europe Online.

NTT’s ‘Cloud or Fog?’ report, which polled 200 CIOs and CFOs at large UK businesses, found that decision makers placed cloud computing at the bottom of their top ten strategic investment priorities for the next 12 months. Many were still grappling with the concept – 46 per cent of respondents felt definitions of cloud computing remained unclear.

Despite this, 60 per cent said their organization was more likely to invest in software and services delivered online as a result of the recession. Eighty-five per cent of CIOs and CFOs are looking for more flexibility in their software licensing agreements and 68 per cent said they will avoid long term IT contracts – benefits widely acknowledged to be delivered by the cloud computing model.

“Decision makers at large UK companies clearly see the benefits of investing in online delivery of software and services however many are unconvinced about taking the plunge with a cloud computing model in the next two years,” said Rob Steggles, Marketing Director Europe at NTT Europe Online.

“Unfortunately cloud has become a technical sell rather than a business and operational discussion, which is where the value really lies. There is certainly demand for online software and service delivery within a secure hosted environment or using a ‘private cloud’ infrastructure, but in a practical sense the classic shared cloud computing model seems not to be on the board’s agenda.”

Seventy-seven per cent of respondents said their organization was not using cloud computing, citing security, concept immaturity and uncertain reliability as the primary reasons for not adopting it. To consider a move to a cloud computing model, 40 per cent of CIOs and CFOs would demand between 10 and 20 percent cost savings to justify the investment.

While the UK executives said their top three strategic IT priorities in the recession were IT security, servers and storage, and network infrastructure investment, the NTT ‘Cloud or Fog?’ report far from rules out future investment in cloud computing. Forty-five per cent of CIOs and CFOs said they believed cloud computing was not just hype, and 44 per cent of those businesses using or planning to use cloud computing said they expected to invest between 6-15 per cent of their IT budgets on cloud computing in the next two years.

For those using or considering investing in a cloud computing model, the systems most preferred to place in the cloud were content management systems, sales/CRM applications, and those applications deemed ‘non-business critical’. However, many cloud computing adopters felt financial and accounting systems should never be put into the cloud (55 per cent).

Commenting on the findings of the Cloud or Fog? report, Daniel Marion, ICT Senior Manager at UEFA Media Technologies said: “The fact this report reveals some confusion over definitions of cloud computing doesn’t surprise me. The term is used to market a wide variety of very different products and services and it can be difficult to get past the complexity of the technical specifications and focus on the business benefits. However, the operational case for IT, software and services delivered online is compelling and we will continue to look at ways in which these types of services offer value to our organization.”

NTT Europe Online’s Steggles adds: “Given the model’s lack of maturity, it’s understandable that businesses are waiting to see how cloud computing pans out for early adopters. What is quite evident from our research is that CIOs and CFOs are crying out for the capex vs. opex benefits that can be delivered by cloud-based and managed hosted solutions. If the security and reliability concerns can be ironed out, cloud computing has a bright future – but until then, it will continue to be a work in progress.”