KPMG Survey Finds Shift to Cloud Presents Unexpected Challenges, Costs

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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. 
 
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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