Page 3 - Customer context for Cloud Computing

Industry observers also describe Cloud Computing as a high growth market, for example:

 IDC predicts that by 2016, there will be an 11% shift of IT budget away from
traditional in-house IT delivery, toward various versions of cloud computing as a new
delivery model and that by 2018 public cloud spending will more than double to
$127.5 billion

 Goldman Sachs reports that spending on cloud computing infrastructure and
platforms is expected to grow at a 30% CAGR from 2013 through 2018 compared
with 5% growth for the overall enterprise IT

 Industry Analysts Forrester forecast Global SaaS software revenues to reach $106B in
2016, increasing 21% over projected 2015 spending levels

 A 2014 Bain survey of 428 companies found that putting workloads on public or
hybrid clouds delivered more value in the form of bigger cost savings, greater
flexibility, more scalability and better built-in services.

 the growth of Cloud Computing has been driven on the expected advantages compared with
traditional forms of IT: avoidance of up-front cost (no systems to purchase or maintain), scalable
service to meet demand, consumption-based pricing, immediate availability, etc. As the Bain survey
confirmed, adopters report that these factors can result in lower IT costs, increase business agility,
and drive competitive advantage.

CUSTOMER CONTEXT – THE IMPACT OF CLOUD COMPUTING

Although Cloud Computing is seen as an enabler of many benefits (such as those cited by Bain,
above), it is also a relatively new market, and unfortunately suffers from vendor hype, lack of buyer
comprehension, questionable business cases, lack of standards and new/complex risks, all of which
increase customer apprehension and hinder more strategic adoption of cloud computing.

The availability and apparent advantages conferred by Cloud Computing have motivated many
business leaders to consider Cloud in preference (or defiance) of involving the IT department, giving
rise to the phenomena of “Shadow IT”. Shadow IT impacts an organisation’s ability to control the
selection, procurement and use of external IT systems and services and can result in increased
complexity, latent risks and threat to IP.

When considering Cloud services, many organisations focus on functional and “obvious” commercial
aspects and may ignore or disregard factors embedded in their IT Operating Model that are critical
to a successful outcome:

Author: Mike Spink “Hidden” Challenges for Cloud Computing Adopters (illustrative) Page 3 of 7
Version 2.0 (final) Spring 2015
Cloud Computing – The Customer Context
A White Paper for Cisco by Innovise ESM