Changewave Research: Corporate Cloud Computing Trends s1

ChangeWave Research: Corporate Cloud Computing Trends

Corporate Cloud Computing Trends

New Survey Shows Explosive Surge in Public Cloud Computing

Paul Carton and Mike Wrobel

Overview: ChangeWave’s latest survey on business cloud computing trends shows a giant leap in actual usage and a surge in corporate migration to the cloud going forward.

A total of 1,133 corporate respondents participated in the April 10-25 survey, including 331 involved in their company’s public cloud decision-making and cloud computing usage. Another 802 work in companies not currently using the cloud. ChangeWave Research is a service of 451 Research.

Corporate Cloud Computing

Current Cloud Usage. Nearly 3-in-10 respondents (29%) report their company currently uses public cloud computing services in the April survey – a huge 7-pt increase since the previous quarter.

Future Cloud Usage. Importantly, the momentum behind corporate cloud adoption is set to continue going forward. Nearly one-in-three respondents (32%; +3) say their company will be using public cloud computing six months from now.

Taken together, these findings point to continued strong growth in the rate of corporate adoption of the cloud.

Spending Trends – Current Cloud Users. We took a closer look at business spending patterns going forward among companies currently using the cloud.

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?

Among current cloud users, an unprecedented 37% report they plan to increase cloud spending over the next 6 months vs. just 8% who are decreasing spending or have no plans to use cloud at all – another sign of continued strong growth ahead.

Overall Software Spending vs. Cloud Spending

ChangeWave’s April Business Software Spending survey found a slight uptick in overall software spending for the 2nd quarter, as the following chart points out.

A total of 17% of all corporate software buyers report their company will spend More on software over the next 90 days – up 2-pts from previously. At the same time, the percentage spending Less (17%) is unchanged from last quarter (Note: Net Difference Score = 0).

In comparison, our April Cloud survey found 15% of all corporate buyers say they’ll be Increasing their cloud spending vs. only 1% who say they’ll be Decreasing their spending (Net Difference Score = +14).

The following chart highlights these results – and shows the huge contrast in corporate momentum for public cloud spending vs. software spending:

These findings prompt the inevitable question:

What effect is cloud spending having on other IT spending areas?

In the search for answers, we asked companies that currently use cloud computing the following:

What effect - if any - does you 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?

By a 5-pt margin (25% to 20%), more companies say cloud spending is decreasing their budget for other software and IT services than increasing it.

Moreover, cloud growth also appears to be having an impact on overall IT staffing.

Impact on IT Staff. Nearly one-in-five companies using the cloud (18%) report that cloud spending is causing a decrease in their total number of IT staff (including facilities/datacenter staff). Only 7% say it’s causing an increase in their total IT staff.

Simply put, these results show cloud spending is having an impact on the total number of enterprise IT staff.

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?

Additional Findings on Public Cloud Usage

The ChangeWave survey also looked at how businesses use cloud computing – and among current cloud users Software as a Service (SaaS; 68%) remains the most popular usage.

In comparison, Infrastructure as a Service (IaaS) is used by 35% and Platform as a Service (PaaS) by 28%.

Future Cloud Spending. Looking ahead, among companies planning to use cloud over the next 6 months, Software as a Service is registering the biggest net increase (i.e., 30% say they expect their company to Increase spending on SaaS vs. 1% Decrease).

Both Infrastructure as a Service (23% Increase; 3% Decrease) and Platform as a Service (16% Increase; 2% Decrease) trail SaaS growth rates, but remain remarkable growth stories.

Leading Cloud Vendors. We then asked respondents which vendors their company plans to increase cloud related spending on over the next 6 months. Here’s what we found:

Microsoft (14%) is the Platform Provider best positioned to garner increased cloud spending over the next 6 months, followed by Salesforce.com/Force.com (12%), Google (11%) and VWware (10%). As the following chart shows, Salesforce.com/Force.com is showing significant momentum in the percentage of companies planning to increase spending on their cloud related products/service going forward.

Among Telecom Providers, AT&T (9%) and Verizon/Terremark (9%) both rank at the top.

And among hosting companies, Amazon (16%) has the most momentum in terms of planned corporate cloud spending increases. Rackspace (7%) is a distant second. The following chart looks at future cloud related spending increases for Amazon and Rackspace over the last 4 ChangeWave surveys.

Other cloud vendors projected to see increased cloud spending include IBM (6%), Hewlett-Packard (4%) and Dell (3%).

Corporate Sentiment Towards the Cloud

The ChangeWave survey asked all corporate respondents (both cloud users and non-users) how they rank cloud computing in terms of its reliability and security.

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

The mean Reliability Rating among all corporate respondents has improved slightly to 6.8 in the current survey compared to 6.6 in our January survey.

But a closer look shows stark differences in the perceived reliability among companies who currently use cloud vs. those who do not.

The mean reliability rating among companies who currently use cloud computing (7.5) is a full 1.3-pts higher than it is for companies not using cloud (6.2).

Cloud Security. Similarly, we asked respondents to rate the security of the cloud computing services available today on a 1-10 scale, where 1 is Very Unsecure and 10 is Very Secure.

The mean Security Rating in the current survey improved to 6.1 compared to 5.8 in the previous January survey, but again we see major differences in the perception of cloud security between companies who use the cloud vs. those who do not.

The mean security rating for companies currently using cloud (6.9) is a full 1.5-pts better than that of non-cloud using companies (5.4).

Interestingly, respondents rate cloud computing as being more reliable than it is secure.

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

One-in-three cited Security Concerns (32%) as the most important reason for their company not using the cloud. Another 13% say the Technology is Too New, and 11% say it’s due to General Resistance to Change within their company.

When we compared larger companies (over 1,000 employees) with small-to-medium sized companies (under 1,000 employees) some noticeable differences emerge.

Large-sized companies are far more likely to cite security concerns as the most important reason why they’re not currently using cloud, while small-to-medium sized companies are more likely to cite Cost and General Resistance to Change.

Bottom Line: With corporate concerns over the security and reliability of cloud continuing to diminish, the April ChangeWave survey shows a giant leap in actual usage and a surge in corporate migration to the cloud going forward.

Within public cloud, Software as a Service (SaaS) is experiencing the fastest growth rate, but Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) also remain remarkable growth stories.

On a more cautious note, corporate cloud spending is continuing to squeeze the budget for other IT products and services, including software and IT staffing.

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 9

The Findings 11

Corporate Cloud Computing 11

Overall Software Spending vs. Cloud Spending 12

Additional Findings on Public Cloud Usage 14

Corporate Sentiment Towards the Cloud 20

ChangeWave Research Methodology 24

About ChangeWave Research 24

The Findings

Introduction: ChangeWave’s latest survey on business cloud computing trends shows a giant leap in actual usage and a surge in corporate migration to the cloud going forward.

A total of 1,133 corporate respondents participated in the April 10-25 survey, including 331 involved in their company’s public cloud decision-making and cloud computing usage. Another 802 work in companies not currently using the cloud. ChangeWave Research is a service of 451 Research.

Corporate Cloud Computing

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 Cloud Usage. Nearly 3-in-10 respondents (29%) report their company currently uses public cloud computing services in the April survey – a huge 7-pt increase since the previous quarter.

Future Cloud Usage. Importantly, the momentum behind corporate cloud adoption is set to continue going forward. Nearly one-in-three respondents (32%; +3) say their company will be using public cloud computing six months from now.

Taken together, these findings point to continued strong growth in the rate of corporate adoption of the cloud.

Spending Trends – Current Cloud Users. We took a closer look at business spending patterns going forward among companies currently using the cloud.

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?

Among current cloud users, an unprecedented 37% report they plan to increase cloud spending over the next 6 months vs. just 8% who are decreasing spending or have no plans to use cloud at all – another sign of continued strong growth ahead.

Overall Software Spending vs. Cloud Spending

ChangeWave’s April Business Software Spending survey found a slight uptick in overall software spending for the 2nd quarter, as the following chart points out.

A total of 17% of all corporate software buyers report their company will spend More on software over the next 90 days – up 2-pts from previously. At the same time, the percentage spending Less (17%) is unchanged from last quarter (Note: Net Difference Score = 0).

In comparison, our April Cloud survey found 15% of all corporate buyers say they’ll be Increasing their cloud spending vs. only 1% who say they’ll be Decreasing their spending (Net Difference Score = +14).

The following chart highlights these results – and shows the huge contrast in corporate momentum for public cloud spending vs. software spending: