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September 13, 2010

Cloudy skies: a tale of two surveys

Two pieces of research that shed only a little light on the murky world of cloud computing

By Cbr Rolling Blog

Two pieces of research that seem to suggest contradictory impulses in enterprise IT have crossed my desk – but what can we glean from them about cloud computing adoption? One survey says that CIOs are struggling with cloud a lot more than we expected – see the news covered by my colleague Jason Stamper here – and the other is that the same group of IT leaders increasing their cap-ex spending and paying for it by finding op-ex savings.

So survey 1 – sponsored by Compuware, found that cloud-related problems are costing firms "£500,000 a year," and that 57% of businesses are as a result slowing down or stopping adoption of further cloud applications.

"So far businesses have largely invested in cloud applications, such as eCommerce sites and online collaboration tools, without really thinking about the hidden business risks that result from poor performance," claimed its Richard Stone, cloud computing solutions manager at Compuware – adding that "further adoption will be severely hampered unless cloud performance management is tackled".

Of course Compuware sells software to address such issues. But in any case, let’s look at study 2. This time the source is our friends at Gartner, who say, based on a midyear survey of 500 IT leaders, that CIOs contacted plan to increase capital expenditures by 3% this year and pay for that increase with a 1.3% cut in operating budget. One can only assume that cloud computing is one way of reducing their op-ex budget to find extra money for cap-ex investment.

In other words – we just have to buy some new kit, the stuff that had their own endowment mortgages taken out in the 1980s that are now maturing, kind of thing. But they’ll get the funds not by tapping the CFO, who’ll tell them to not be silly, but from squeezing money out somewhere else of the IT toothpaste tube: "The need to upgrade infrastructure is being appropriated from reduced operating budgets… CIOs felt they could no longer delay infrastructure upgrades and other capital investments and they funded them at the expense of operating budgets," comments the analyst group’s head of research at its executive programmes arm, Mark McDonald.

The research also suggests even in the midst of economic uncertainty in some sectors, industries such as utilities and healthcare continue to invest in IT regardless of economic outlook – though (no shock) government and education industry CIOs reported budget declines.

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Compuware’s headline suggests cloud is in trouble or at least facing difficulties, but equally, if companies are losing £502,000 a year through poor cloud performance they must be spending far more than that on cloud in total. The Gartner research suggests that CIOs must be doing something like the cloud to fund investment they can’t get elsewhere. But if they’re investing in cloud, wouldn’t they be spending more on op-ex than cap-ex, since cloud is meant to be more of a pay-as-you-go model?

It’s a cloudy old world, and we’re not very much further down the road of understanding just how much companies are spending on their cloud computing strategies.

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