KPMG Survey Finds Shift to Cloud Presents Unexpected Challenges, Costs

By Frank Byrt

The shift of IT systems to Cloud computing from an in-house infrastructure is proving more expensive and more complicated than first anticipated, according to KPMG International's "The Cloud Takes Shape" report.
About a third of the 650 business and IT executives surveyed across sixteen global markets say that Cloud implementation costs have been higher than expected, and a similar percentage say that integrating Cloud services within their existing system has been particularly difficult. 

Common Questions about Cloud Migration

Alysia Dahlke, marketing manager at Cetrom Information Technology, Inc., a provider of Cloud computing solutions, spoke with AccountingWEB about accountants' most pressing concerns as they consider transitioning to Cloud. Here are a few of the questions she says accountants most often ask: 

Is moving to the Cloud secure? Dahlke said concern over security is the number-one issue for most firms. But people are already using the Cloud for personal transactions, as most online banking is conducted via Cloud. Cetrom says it uses the latest in hacker and virus protection, and its systems are at the same level of encryption as those of the leading financial institutions. In addition, Centrom's clients receive daily tape backups for disaster recovery, and systems include multiple firewalls, safeguards against employee tampering, and constant monitoring of the hardware and software.

After moving to the Cloud, will my firm still control its own data? A firm's Cloud system can be customized, such that it can define who should be allowed to access data and what controls should be in place, which results in greater control of data than before migration.

What software and applications can a Cloud system host? Most Cloud providers offer a wide range of SaaS (software as a service) applications, ranging from standard office applications and e-mail to sophisticated accounting software. Cetrom's CPA Cloud computing offerings, for example, include hundreds of such applications and programs.

How will moving to the Cloud affect current IT roles within our organization? In effect, a move to Cloud is an outsourcing of an IT department's responsibilities, such as the constant upgrading and maintenance of hardware and software, so Cloud computing can result in IT having more time to work on other projects.

What does Cloud cost? Prices vary depending on the applications, time of use, the number of people accessing Cloud applications, and the volume of data involved. Dahlke said 99 percent of Cetrom's customers save money when the costs of buying and managing a traditional in-house system is weighed against that of using a Cloud services provider. "We even take care of licensing and upgrading software so clients don't have to worry about that," she said.

Check out Dahlke's blog to learn more.
Nevertheless, "executives still believe that the benefits of Cloud adoption far outweigh any growing pains they experience through implementation," KPMG said in a February 6 press release reporting the survey results. 
More than half of the organizations surveyed are already working in the Cloud, and of those, 70 percent say the shift has delivered significant efficiencies and cost savings. 
Businesses have differing priorities when considering a shift to Cloud. While cost reduction is still the primary reason for Cloud adoption according to nearly half of respondents, 28 percent said the speed at which they're able to migrate to Cloud is important, 27 percent said Cloud's ability to enable faster entry into new markets is a consideration, and 22 percent said business process transformation was of concern.
Executives are moving beyond their original focus on pure cost-reduction objectives to finding ways to achieve company-wide benefits. "Gaining real cost savings from the Cloud is about more than simply moving from fixed costs to operating costs; the greatest cost savings – and, more importantly, the transformational business benefits – will come from the longer-term outcomes, such as more efficient processes, more flexible operating models," said Steven Salmon, principal advisor with KPMG in the United Kingdom, in the press release.
The shift to Cloud computing is now seen as inevitable for many types of businesses and service providers. "As Cloud begins to become more mainstream within the business environment, we are seeing organizations move from the 'when and why' of the Cloud adoption process to instead focus on the 'how'," said Rick Wright, a principal with KPMG in the United States and Global Cloud Enablement Program Leader.
But the scope of changes wrought by the shift to Cloud is much greater than anticipated, and a business process redesign is central to addressing the complexities that often arise in the implementation and operational phases of Cloud adoption, Wright said. 
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