Changewave Research: Corporate Cloud Computing Trends

ChangeWave Research: Corporate Cloud Computing Trends

Corporate Cloud Computing Trends

Continuing Strong Demand for Public, Private and Hybrid Cloud

Mike Wrobel

Overview: ChangeWave’s latest business cloud computing survey shows continued strong demand for public and private cloud, as well as hybrid cloud deployments.

The April survey asked 1,102 corporate respondents about their company’s current use of public, private and hybrid cloud computing, as well as future spending plans. ChangeWave Research is a service of 451 Research.

Corporate Public Cloud

Current Public Cloud Usage. Two-in-five corporate respondents (40%) report their company uses public cloud computing services – unchanged from the previous survey in January, but 11-pts higher than a year ago.

Spending Trends – Current Public Cloud Users. We also took a closer look at business spending patterns among companies currently using public cloud, and found 40% say they are increasing their spending over the next 6 months.

Effect on IT Budgets. How does cloud computing affect the way companies spend their overall IT budgets?

By a 9-pt margin (25% vs. 16%), more companies say public cloud spending is decreasing their budget for other IT products and services vs. increasing. Here’s the question:

What effect - if any - does your company's spending on cloud computing have on your budget for other IT products and services? Would you say that spending on cloud computing is having no effect on your company's budget for other IT products/ services, is it increasing your budget for other IT products/services, or is it decreasing your budget for other IT products/services?

Cloud Spending is Decreasing Company’s Budget for Other IT Products and Services / 25%
Cloud Spending is Increasing Company Budget for Other IT Products and Services / 16%
Cloud Spending is Having No Effect on Company Budget for Other IT Products and Services / 49%
Don’t Know/NA / 10%

Impact on IT Staff. Public cloud growth is also impacting IT staffing. One-in-five companies who use the cloud (20%) report cloud spending is causing a decrease in their total number of IT staff (including facilities/datacenter staff). Just 5% say it’s causing an increase in total IT staff. Here’s the question asked:

And what effect - if any - does your company's spending on cloud computing have on the total number of IT staff (including facilities/datacenter staff) at your company? Would you say that spending on cloud computing is having no effect on the total number of IT staff at your company, is it increasing the total number of IT staff at your company, or is it decreasing the total number of IT staff at your company?

Cloud Spending is Decreasing the Total Number of IT Staff / 20%
Cloud Spending is Increasing the Total Number of IT Staff / 5%
Cloud Spending is Having No Effect on the Total Number of IT Staff / 67%
Don’t Know/NA / 9%

Additional Findings: Public Cloud

The ChangeWave survey also looked at the 3 main ways businesses are using cloud computing services.

Software as a Service (SaaS; 70%; up 2-pts) remains by far the most popular usage, followed by Infrastructure as a Service (IaaS; 41%; up 1-pt) and Platform as a Service (PaaS; 30%; unchanged).

Future Spending. Looking ahead, Software as a Service is registering the biggest increase among companies planning to use cloud over the next 6 months – 30% expect their company to Increase spending on SaaS vs. 2% Decrease.

Both Infrastructure as a Service (22% Increase vs. 2% Decrease) and Platform as a Service (15% Increase vs. 2% Decrease) also remain growth stories.

Leading Cloud Vendors. We also asked respondents which vendors their company plans to increase cloud-related spending on over the next 6 months:

For which of the following public cloud computing vendors - if any - does your company plan on increasing its spending on cloud-related products and services over the next 6 months? (Check All That Apply)

Microsoft (23%; unchanged), Google (20%; unchanged) and Salesforce.com (18%; down 2-pts) top the list of Platform Providers best positioned to garner increased cloud spending over the next 6 months, followed by VMware (10%; down 2-pts).

AT&T (12%; up 2-pts) and Verizon/Terremark (10%; down 1-pt) lead in terms of increased cloud spending among Telecom Providers. Meanwhile, Amazon (26%; down 1-pt) remains the top Hosting company followed distantly by Rackspace (10%; down 4-pts).

Here’s a closer look at Amazon and Rackspace over the last 5 quarters:

Applications Supported in the Cloud. A total of 46% of companies who use public cloud say they support Email Systems, while 45% support CRM applications.

Corporate Sentiment Towards the Cloud

The ChangeWave survey also asked corporate respondents (both cloud users and non-users) to rank the reliability and security of the cloud computing services available today.

Cloud Reliability. Respondents were first asked to rate the reliability of cloud computing on a 1-10 scale, where 1 is Very Unreliable and 10 is Very Reliable.

The mean Reliability Rating among all corporate respondents remains 7.0, unchanged from the January survey.

However, there are clear differences between the reliability ratings of companies currently using the cloud (7.6%) vs. non-users (6.3%).

Cloud Security. Respondents were asked to rate the security of cloud computing services – and the mean security rating for is 6.1 – down 0.1-pt from January.

Again, major differences exist between companies who currently use the cloud (7.0%) vs. those who do not (5.4%).

Reasons Companies Do Not Use Cloud. We also asked respondents whose companies do not currently use cloud computing to tell us the most important reason why.

Two-in-five say Security Concerns (41%) is the most important reason their company does not use cloud, and 15% cite the Complexity of Integrating with Existing IT Infrastructure.

But when we compare larger companies (over 1,000 employees) with small-to-medium sized companies (under 1,000 employees) we find some notable differences. Among non-cloud users, large-sized companies are far more likely to cite Security Concerns as the most important reason why they’re not using cloud.

Meanwhile, small-to-medium sized companies are more likely to cite Cost and a General Resistance to Change.

Private Cloud Usage

The ChangeWave survey also looked at corporate usage of private clouds. Nearly three-in-ten respondents (29%) report using private cloud computing services.

Private cloud computing uses hardware dedicated to a single organization and is not shared by others. Private clouds can be built and run in your own data center or hosted by a third-party provider. Does your company or organization currently operate a private cloud or do you currently use any private cloud computing services?

We note that large companies (over 1,000 employees) are far more likely to use private cloud than smaller companies (45% vs. 21%, respectively).

Private clouds are also much more likely to be hosted in Company-Owned Datacenters (53%) as opposed to Third-Party Providers (31%) or Virtual Private Clouds (10%).

Moreover, the trend toward hosting and managing private cloud in company-owned datacenters is strongest among large companies.

Where Private Cloud is Hosted: Breakout By Company Size (April 2013)

Total
Respondents / Over 1,000
Employees / Under 1,000
Employees
In Company-Owned Datacenters / 53% / 66% / 40%
By a Third-Party Provider / 31% / 19% / 43%
Virtual Private Cloud / 10% / 9% / 12%
Other/Don’t Know/NA / 5% / 6% / 5%

Future Spending Trends – Private Cloud Users. A total of 44% of companies currently using private cloud say they’ll increase their private cloud spending over the next 6 months.

And over the next 6 months, does your company plan to increase its overall spending on private cloud computing, decrease its spending, or will your company's overall cloud computing spending remain the same compared to the previous 6 months?

Companies Currently Using Private Cloud / Current Survey Apr ‘13 / Previous Survey Jan ‘13 / Previous Survey Oct ‘12
Increase Overall Spending / 44% / 49% / 42%
Remain the Same / 46% / 44% / 46%
Decrease Overall Spending / 4% / 3% / 4%
No Plans to Use Private Cloud Computing in Next 6 Months / 6% / 3% / 8%

Only 10% say they’re decreasing spending or have no plans to use cloud at all.

Hybrid Cloud Usage

We also looked at company use of Hybrid clouds – which are combinations of two or more cloud deployments (e.g., public/private) interacting in a unified but flexible infrastructure.

The term Hybrid cloud describes combinations of two or more clouds (e.g., public and private) that interact to create a unified but flexible infrastructure. Examples of corporate hybrid cloud deployments include using a vendor's Public cloud-based SaaS on a Private cloud, or taking a Private cloud's non-sensitive workloads during peak demand and shifting to a Public cloud. Does your company or organization currently make use of any hybrid cloud deployments?

Current Survey Apr ‘13 / Current Survey Jan ‘13 / Previous Survey Oct ‘12
Yes / 8% / 8% / 6%
No / 92% / 92% / 94%

Current Hybrid Cloud Usage. A total of 8% of companies surveyed report using hybrid cloud deployments – unchanged from January. We note that large companies (17%) are deploying hybrid cloud at four times the rate of smaller companies (4%).

Future Hybrid Cloud Usage. Importantly, six months from now 11% of all companies say they’ll be deploying a hybrid cloud.

Bottom Line: The ChangeWave survey results point to continued growth for public, private and hybrid cloud computing. Two-in-five companies currently use public cloud computing services, and the survey found 40% of this group plan to increase their cloud spending over the next 6 months.

Within public cloud computing, Software as a Service (SaaS) remains the area with the fastest growth rate, with Infrastructure as a Service (IaaS) as a solid second, followed by Platform as a Service (PaaS).

In late-May we’ll be releasing a follow-up report on overall corporate IT spending trends. But the current ChangeWave survey shows cloud spending remains a solid momentum leader for 2013.

Summary of Key Findings

The ChangeWave Research Network is a group of 25,000 highly qualified business, technology, and medical professionals in leading companies of select industries—credentialed professionals who spend their everyday lives working on the frontline of technological change. ChangeWave surveys its Alliance members on a range of business and investment research and intelligence topics, collects feedback from them electronically, and converts the information into proprietary quantitative and qualitative reports.

Table of Contents

Summary of Key Findings 10

The Findings 12

Corporate Public Cloud 12

Additional Findings: Public Cloud 14

Corporate Sentiment Towards the Cloud 19

Private Cloud Usage 22

Hybrid Cloud Usage 24

ChangeWave Research Methodology 25

About ChangeWave Research 25

About 451 Research 25

The Findings

Introduction: ChangeWave’s latest business cloud computing survey shows continued strong demand for public and private cloud, as well as hybrid cloud deployments.

Corporate Public Cloud

Public cloud computing (i.e., "renting" or provisioning the remotely hosted computing resources of a service provider) can be broken down into three main categories: Software as a Service (e.g., Salesforce.com), Platform as a Service (e.g., Google AppEngine), and Infrastructure as a Service (e.g., Amazon EC2). Does your company or organization currently use any applications that run on public cloud computing services or have you used public cloud computing services over the past 12 months?

Current Public Cloud Usage. Two-in-five corporate respondents (40%) report their company uses public cloud computing services – unchanged from the previous survey in January, but 11-pts higher than a year ago.

Current Survey (Apr ‘13) – Public Cloud Usage By Company Size

Total Respondents / Under 1,000 Employees / Over 1,000 Employees
Yes / 40% / 39% / 40%
No / 60% / 60% / 59%
Don't Know / 1% / 2% / 1%

Spending Trends – Current Public Cloud Users. We also took a closer look at business spending patterns among companies currently using public cloud, and found 40% say they are increasing their spending over the next 6 months.

Just 13% say they’re decreasing spending or have no plans to use cloud at all, and 49% say spending will remain the same.

And over the next 6 months, does your company plan to increase its overall spending on public cloud computing, decrease its spending, or will your company's overall cloud computing spending remain the same compared to the previous 6 months?

Companies Currently Using Cloud / Current Survey Apr ‘13 / Previous Survey Jan ‘13 / Previous Survey Oct ‘12 / Previous Survey Jul ‘12 / Previous Survey Apr ‘12 / Previous Survey Jan ‘12
Increase Overall Spending / 40% / 42% / 41% / 37% / 37% / 32%
Decrease Overall Spending / 3% / 3% / 2% / 1% / 2% / 2%
Remain the Same / 48% / 46% / 46% / 54% / 55% / 60%
No Plans to Use Cloud Computing in Next 6 Months / 10% / 9% / 10% / 8% / 6% / 7%

Effect on IT Budgets. How does cloud computing affect the way companies spend their overall IT budgets?

By a 9-pt margin (25% vs. 16%), more companies say public cloud spending is decreasing their budget for other IT products and services vs. increasing. Here’s the question:

What effect - if any - does your company's spending on cloud computing have on your budget for other IT products and services? Would you say that spending on cloud computing is having no effect on your company's budget for other IT products/services, is it increasing your budget for other IT products/ services, or is it decreasing your budget for other IT products/services?

Impact on IT Staff. Public cloud growth is also impacting IT staffing. One-in-five companies who use the cloud (20%) report cloud spending is causing a decrease in their total number of IT staff (including facilities/datacenter staff). Just 5% say it’s causing an increase in total IT staff. Here’s the question asked: