The Tipping Point for Cloud Has Arrived


With adoption expanding, cloud is becoming a central strategic focus for a growing number of organizations and technology providers.

While cloud may be the number-three priority of Chief Information Officers (CIOs) broadly (according to Gartner’s 2015 CIO survey), Chad Eschinger, VP Research at Gartner, notes that 88 percent of organizations using cloud services today have a cloud-first strategy.

In a presentation to FEI’s Committee on Finance & IT (CFIT), Eschinger predicted that by 2019, over 30 percent of technology providers’ new software investments will shift from cloud-first to cloud-only, and by 2020, an “on-premise only” policy will be as untenable for providers as a “mainframe only” policy is now.

John Van Decker, Gartner Research VP, told the committee he believes cloud is becoming the preferred business application delivery platform for finance and the hybrid cloud, at the intersection of public and private clouds, will become the dominant cloud model.

Van Decker described a number of key cloud computing trends to CFIT:

  • IT spending is shifting to public cloud;
  • Internal private cloud and hosted private cloud usage is increasing;
  • Hybrid scenarios dominate today; and
  • The lines are blurring between the various types of cloud services.
Eschinger cites some compelling statistics from Gartner’s 2015 Cloud Adoption Survey:  40 percent of current IT budgets are allocated to cloud, and 78 percent of organizations plan to increase or significantly increase their spending on cloud.  The public cloud market is expected to continue to double in size every four years:
  • 2010: $42 billion
  • 2014: $86 billion
  • 2018: $160 billion
Eschinger notes the growth in spending on cloud services significantly outpaces the growth in IT spending generally.  For example, while IT spending in 2016 is expected to grow by only 2 percent, spending on Software as a Service (SaaS) should grow by almost 18 percent, and spending on Infrastructure as a Service (IaaS) may grow by over 30 percent.

And while the many benefits of cloud, such as cost, freedom and instant gratification, define its value, “security and/or privacy concerns” is the top reason why organizations may not plan to use public cloud services (indicated by almost two-thirds of respondents to Gartner’s 2015 Cloud Adoption Survey).

Possibly because of security concerns, Van Deckernotes 17 percent of finance organizations say they will never support more than half of their transactions on a cloud infrastructure (based on responses to his recent survey of FEI members and Magic Quadrant clients

Eschinger provided a number of recommendations to CFIT:

  • Cloud service adoption is increasing across markets:
    • Every organization should have a cloud-first strategy.
  • Cloud usage is gently shifting toward public cloud services:
    • Embrace public cloud now, and figure out what value you bring to public cloud environments.
  • Cloud use cases are increasingly oriented around business solutions and applications:
    • Prepare for new cloud adoption scenarios oriented around digital business.
  • Cloud budgets are increasingly held by business and functional leads:
    • Build relationships with the new IT influencer and decision maker.
  • The competitive landscape is shifting every day:
    • Operate as a digital business, too! Only agile, adaptive and innovative providers will survive this industry shift.

For more information about FEI’s Committee on Finance & IT, contact Bill Sinnett.