tackling the cloud computing landscape in enterprise...

Tackling the cloud computing landscape in enterprise IT Cloud computing adoption trends and costs

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Tackling the cloud computing landscape in enterprise IT:

Cloud computing adoption trends and costs

Contents

IT pros see promise of cost savings, efficiency in cloud computing

Pump the brakes on cloud adoption, except SaaS

To find cloud cost savings, all you need is a little patience

Why CIOs have problems with cloud computing: Sunk costs in legacy IT

Top 10 public cloud services businesses want to buy

Enterprises choose to adopt public cloud services or build a private cloud for various reasons that align with their company goals.

The TechTarget survey results gave a glimpse into these motivations, uncovering underlying cloud adoption trends and cost analyses.


Few technologies have affected the IT industry as profoundly as cloud

computing, which delivers computing as a service or utility. Part of cloud's

appeal is clearly financial; it allows organizations to shed at least some of

their expensive IT infrastructure and shift computing costs to more

manageable operational expenses.

The cloud also eases much of the technological burden involved with IT

systems support and maintenance, helping companies focus on the

productive business use of their workloads rather than on underlying systems

and software. Regardless of the motivation, business owners and data center

managers are increasingly turning to cloud for vital computing services.

This report examines key findings of a recent TechTarget survey about cloud

adoption and services.

Cloud interest up, despite hesitation amid midsize companies

In the third quarter of 2012, approximately 1,500 IT professionals responded

to a TechTarget survey examining the use of cloud computing and cloud

services in the enterprise. And the numbers suggest a growing exploration

and adoption of cloud technologies.

Approximately 61% of respondents reported they use some form of cloud

services, while 39% said they do not use cloud services within the enterprise.

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The proliferation of cloud offerings -- SaaS, Iaas, PaaS -- that give IT

professionals an array of options could be behind an increased interest.

So, who's using cloud? Small and large companies are implementing cloud

services more readily than midsize companies (Slide 1), primarily due to

differing business needs.

Small companies, for example, typically have more modest, in-house IT

resources, which make it easier for them to look to less traditional IT

methods such as cloud computing. Larger companies primarily approach

cloud services as a cost-saving strategy for offloading non-mission-critical

workloads or those exempt from compliance requirements. By comparison,

midsize companies tend to be victims of inertia -- significant investments in

internal IT resources and procedures make it difficult to justify the technical

modifications and financial demands of a move to cloud.

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Consumers split among cloud computing models

Cloud computing can be divided into three general models: public cloud,

private cloud and hybrid cloud. Public cloud consists of independent, third-

party service providers that rent or lease cloud computing resources to

external clients, such as businesses or government agencies. A private cloud

represents the deployment of on-premises cloud services, generally building

upon an existing virtual data center infrastructure with self-service portals,

chargeback or showback models and additional services, such as automated

provisioning or resource scalability. A hybrid cloud connects both public and

private cloud services, allowing a business to use both environments

simultaneously while shifting workloads between private and public cloud

facilities on demand.

The use of each cloud model among respondents is fairly evenly split, with

40% using public cloud, 30% using private cloud and another 30% of

respondents reporting the use of hybrid cloud services. And all three cloud

models will see increased use over the next six months, as survey results

show in Slides 2a and 2b. In Slide 2, for example, 90 respondents using

public cloud currently have 25% to 50% of their data center infrastructure in

the cloud.

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Public cloud computing. Of survey respondents using public cloud, 73%

point to cost savings as the primary motivating factor. Approximately 65%

note public cloud computing fits the business' computing needs.

While there are numerous benefits to public cloud, 60% of respondents using

this cloud model cite improved availability for computing workloads as the

biggest benefit. About 57% list workload scalability, which allows users to

adjust IT resources to accommodate changes in computing demands, as the

main perk for public cloud.

But public cloud isn't always the answer. In addition to real and perceived

benefits, public cloud also presents challenges. Fifty-five percent of

respondents say application suitability can be a problem, forcing

administrators to rewrite or convert a workload codebase for the specific

cloud provider to which the enterprise subscribes. In addition, 29% note that

a lack of interoperability or integration between cloud-based and local

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workloads can present problems. Public cloud provider support also ranks as

a concern for 35% of respondents.

Private cloud computing. Money is the root of all decisions. So it may not

be surprising that the principal driver for moving to private cloud was identical

to that listed for moving to public cloud -- cost savings.

Sixty-seven percent of survey respondents using private cloud do so to save

money. Approximately 57% choose private cloud because it automates IT

tasks, and 53% say a private cloud model meets their business' computing

needs.

Of respondents that implemented a private cloud, 59% note a more efficient

use of IT resources, while 53% benefit from workload scalability. However,

62% of respondents using private cloud note that some applications can be

problematic when they're run in the cloud. Forty percent of respondents also

note support is a challenge.

Hybrid cloud computing. Of respondents using hybrid cloud, 63% expect

cost savings to be the biggest advantage; 56% expect the hybrid cloud

model will best fit the business' computing needs.

With a hybrid cloud in place, 59% of users report more efficient use of IT

resources, while 58% cite the benefit of workload scalability. As with private

cloud computing, the emphasis is on maximizing business agility and

ensuring that computing resources are efficiently allocated and optimized.

Hybrid cloud users also echo the concerns of private cloud users, with 61%

of respondents suggesting problems with application suitability and 39%

noting a lack of interoperability or integration between private and public

clouds. These concerns may pose serious issues when moving workloads

among cloud providers or using local applications and data with cloud-based

workloads.

As cloud services infiltrate the modern enterprise, it's important to keep all

three principal cloud models in the proper perspective. Public, private and

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hybrid cloud computing all have a unique role in enterprise IT. However, they

aren't mutually exclusive, allowing IT planners and administrators to realize

the benefits of each model to fit the overall needs of the business. And,

certain functions such as storage, collaboration tools and application

development are taking the lead as primary benefactors of cloud computing.


At times it seems like there is no one in the IT world -- analyst or journalist,

PR flack or marketer -- that is not talking about cloud applications. But that

does not mean businesses are buying into cloud adoption.

About 39% of respondents to the 2012 TechTarget CloudPulse survey said

that they do not use any cloud services or applications and 45.2% added that

they do not expect to use any cloud services or applications in the

foreseeable future. Those that are in the cloud are using Software as a

Service (SaaS) as their primary cloud vehicle.

"It isn't surprising that 45.2% of the respondents have no plans to adopt

cloud strategies and solutions in the 'foreseeable future' given all of the

confusion and uncertainty which still surrounds the cloud concept," said Jeff

Kaplan, managing director of Wellesley, Mass.-based consultancy

THINKstrategies. "I think this percentage will drop quickly as more customer

success stories become available which make the benefits and use cases

clearer."

Paul Burns, president of Fort Collins, Colo.-based Neovise, was surprised by

how high the numbers were, especially given the widespread popularity of

things like Web-based email. But, he did believe that there is a contingent of

people who are against cloud in all circumstances.

"There are definitely a lot of people out there who are against cloud, period,"

he said. "They are worried about job loss, that sort of thing. They don't want

things to change so much."

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While some are clinging to the past, those that are investing in the future are

doing it in one key area -- SaaS. Of the 352 respondents engaged in public

cloud, nearly two-thirds were using SaaS applications. Within six months,

37.6% of all respondents said more than half of their applications will use the

SaaS model.

"Most organizations adopt SaaS solutions as the first step in moving down

the cloud path," Kaplan said. "They start by experimenting with front office

and end-user-oriented SaaS applications, such as CRM and collaboration.

They then explore back-office SaaS apps, such as financial management

and ERP."

Burns believes the number is high because of the large investment startups

have made in SaaS applications over more expensive on-premises setups.

"That strikes me as a little high. SaaS spending and adoption is higher than

something like IaaS, but that seems a little bit high," he said. "[At] enterprise-

level [companies] that would be shocking, but smaller companies saying that

I wouldn't be surprised. I'm probably that way, half or more."

More apps, more problems

Moving more business applications into the cloud has solved some problems

but created news ones. Respondents were happy with SaaS applications'

low costs (21.3%), faster implementation (22.8%) and ease of use (19.3%),

but said that they need help dealing with application integration (34.2%), data

integration (26.2%) and customization (34.2%).

"Integrating multiple SaaS applications with legacy systems and data

sources can be a big challenge," Kaplan said. "Fortunately, there are a

growing number of APIs, integration tool providers and system integration

firms which can help organizations overcome these challenges."

Kaplan references Informatica, Pervasive Software, Dell Boomi,

IBM/CastIron and SnapLogic as cloud integration tools that are being used

by some to fix integration problems. He also notes that some enterprises can

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kill two birds with one stone -- fixing integration and customization problems

with Platform as a Service (PaaS).

"Today's Platform-as-a-Service development tools are also making it easier

to build and customize SaaS apps," he said. "Salesforce.com's Force.com,

Google [App] Engine and Microsoft Azure are the major PaaS players.

Cordys, TrackVia and LongJump are leading independent players."

Burns believes people investing in SaaS need to accept the realities that they

can't have everything both ways when it comes to convenience and

customization.

"I definitely hear that complaint -- it's a two-edged sword," he said. "You can

save time and money on SaaS, but then it varies by offering how much you

can configure from there. Some people have a lot of need or in some cases

are just used to configuring [their applications]."


Corporate IT execs are locked in debate over whether their companies can

really save money by moving some applications to the cloud.

The IT community is riddled with stories of companies that launched a public

cloud app, only to build a private cloud once costs flew out of control.

So does cloud computing really save money? And how do you choose the

cloud platform best for your needs?

When Brickfish, a Chicago-based social media marketing software provider,

moved its headquarters from San Diego to Chicago in 2009, the company

switched from an on-premises data center to Rackspace Hosting's managed

service model. But it found the cost savings to be negligible.

Renting servers with Rackspace still cost the company about $47,000 to

$52,000 a month, said Michael Mullarkey, CEO of Brickfish. When it was

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time to renew its Rackspace contract, Mullarkey thought he could cut

expenditures and improve Brickfish's ability to innovate if he moved the

company's entire technology stack to NaviSite's NaviCloud.

The shift also allowed Brickfish to partition off certain virtual machines for

some of its larger clients that wanted their own virtual private clouds for

security reasons. One such company was retailer Vera Bradley, which used

Brickfish's social marketing app to create a page on Facebook that features

its housewares products.

With the cloud migration to Navisite, Mullarkey saw significant cost

reductions. Brickfish went from spending just under $700,000 hosting and

maintaining boxes with Rackspace to under $200,000 with NaviCloud.

Mullarkey was able to pump that $500,000 in savings back into Brickfish's

own research and development.

Others do agree that there are cost savings from the cloud, although not

necessarily immediate.

Bluebird Auto Rental Systems, a Dover, N.J.-based firm that handles credit

card transactions for auto rental centers worldwide, needed a cloud provider

with PCI DSS certification. Shortly after Amazon Web Services (AWS)

became PCI DSS-certified, Phil Jones, vice president at Bluebird, said the

company jumped from hosting physical servers with OpSource to AWS EC2

public cloud.

By simply eliminating the server-leasing fees it had with OpSource, Bluebird

cut costs from 60% to 70%. However, the money saved from moving to EC2

didn't magically stream in.

"After we were in the cloud for about six months and were sure this was the

way we wanted to go, we took advantage of [AWS EC2] reserved instances

and now get a much lower rate," Jones said. "The break-even point is about

six months. That's where we're saving money for the rest of the three-year

term."

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Cloud value isn't just about the almighty dollar

The cost savings of moving to a public or private cloud is one thing, but

you're getting much more value than cold, hard cash, said Mitch Greenwald,

CEO of CloudBakers, a Chicago-based integrator. The trick is to choose the

right cloud service model and cloud provider in order to get that value.

"SaaS offers an extremely high value proposition, and PaaS [offers]

accessibility," he said. And while IaaS has its benefits for some companies,

it won't necessarily reduce capital expenditures.

"With Rackspace or AWS, you still need to manage servers, monitor your

network and maintain it -- even though it's a cloud," Greenwald added.

Why CIOs have problems with cloud computing: Sunk costs in legacy IT Are customers scared of cloud security breaches? Absolutely. Are they

uncomfortable with their lack of control over cloud providers' infrastructure?

You bet. But do businesses see these two issues as their biggest problems

with cloud computing? Not exactly, according to a new TechTarget survey.

More enterprises and small to medium-sized businesses (SMBs) say they

are delaying public cloud adoption because they've sunk too much money

into legacy IT, according to TechTarget's recent Cloud Pulse survey, which

polled 1,497 IT professionals about their use of and attitudes toward cloud

services.

If cloud providers want to overcome this problem, they should stop marketing

their services as replacements for IT infrastructure.

Of the 569 respondents who reported they were not currently using cloud

services, the plurality (38.1%) said they have delayed any adoption of cloud

services and applications because they have "too much capital already

invested in internal IT infrastructure." Concerns about security took second

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place (36.4%) while "not enough control over the environment" trailed closely

behind in third place (33%).

Those issues and the order they're in roughly match what Bluelock LLC, an

Infrastructure as a Service (IaaS) provider based in Indianapolis, hears from

enterprises and SMBs, according to Pat O'Day, Bluelock's chief technology

officer.

These sunk costs in IT are still depreciating, O'Day said. "This happened in

virtualization too because a lot of companies started off when virtualization

was really scary; the benefits were reasonably clear, but the risks were seen

as high."

Eventually, most enterprises adopted a "virtualization first" policy for new

deployments, and O'Day suspects they'll do the same with cloud.

But even when those risks are mitigated or that legacy infrastructure fully

depreciates, businesses dedicate no more than a quarter of their IT budgets

to public cloud services, according to Tom Nolle, president of CIMI Corp., a

consultancy in Voorhees, N.J. That's partly because some cloud services

can wind up being 2.5 to 3.5 times more expensive than on-premises

deployments, he said.

"Nobody wants to write a story that says, 'Almost every application that is not

hosted [in the cloud] today is not going to be hosted [there] in the future for

the same reason it's not hosted today,' which is that it's not cost effective to

do so," Nolle said. "But that doesn't mean the cloud isn't going to succeed.

It's going to succeed differently."

Cloud can't just be 'IT replacement'

One of the biggest problems with cloud computing is how it's marketed

today. Providers are touting it as "an IT replacement," Nolle said. This stokes

the argument from customers concerned about legacy IT investments. The

bigger opportunity for providers is in the "service cloud," meaning new

applications and services that happen to run on cloud platforms but aren't

necessarily marketed as cloud services, per se, he said.

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Examples of cloud-based "service applications" in the consumer market

include Verizon and AT&T's residential monitoring services, which run on

cloud platforms. However, carriers don't market these services as cloud,

Nolle said. On the enterprise side, mobile device security scans could be

served to customers via the cloud but not marketed explicitly as a cloud

service.

"If you believe that the cloud is a different way of doing what we already do in

the data center, you're doomed to disappointment," Nolle said. "The cloud

provider who thinks that the failure of their sales process is [due to the fact

that] the buyer is dumb and needs to be re-educated is looking in the wrong

direction. They're the dumb ones that need to look in the mirror to

understand the real value proposition in the cloud."

Enterprises that once came to the cloud for cost savings are increasingly

interested in using it to extend existing applications or deploy totally new

ones, according to Jonathan King, vice president of cloud solutions at Savvis,

a cloud and managed hosting provider based in Town and Country, Mo.

"There was a time when the reason people were talking about cloud was

capex to opex," he said. "But that fell from grace. It has not stayed in the top

list of why people are looking at cloud."

A large rental car company recently told King that it didn't want to move its

core reservation application into the cloud because it didn't make technical or

financial sense to move it off of the company's legacy, on-premises

infrastructure. It was interested in moving pieces of a new mobile application

into the cloud, however.

"They're not going to move large chunks of the technical componentry that

would enable the mobile application; it's not going to leave their data center,"

King said. "However, it's a new application, and components of the mobile

app -- middleware and other components of the application -- can and should

be in the cloud."

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Savvis and other cloud providers believe hybrid cloud models will enable this

approach.

Hybrid cloud: Solving biggest problems with cloud computing?

Cloud providers say they have accepted that customers aren't going to throw

away legacy IT investments and move every application into the public cloud.

But that's not necessarily bad news for cloud providers, King said. "That's

where we see hybrid solutions to be relevant," he said.

Microsoft is drawing on its years of experience running consumer Web-based

applications -- such as MSN, Bing and Hotmail -- with its heritage in on-

premises software to support hybrid cloud for Windows Azure customers,

according to Helene Love Snell, director of Microsoft's server and tools

business.

"We understand that each of our customers is unique in regards to their

needs and priorities," Love Snell said in an email interview. "We believe that

many of our customers will live in a hybrid cloud world -- a mix of on-

premises and off-premises solutions -- and we're making it easy for them to

employ cloud technologies in their own way, at their own pace, in order to

help them minimize loss on previous IT investments."

Top 10 public cloud services businesses want to buy As businesses expand their use of public cloud services beyond short-

term testing and development projects, overall adoption of cloud

services is gaining traction, according to the results of TechTarget's

new survey, Cloud Pulse, which asked 1,497 IT professionals about

their use of and attitudes toward public, private and hybrid cloud.

Respondents say they're drawn to the public cloud due to several

advantages it has over on-premises deployments, including infrastructure

availability, scalability and cost management; additionally, IT spending for

nearly all types of cloud services is expected to grow. When asked which

public cloud services they plan to adopt in the next six months, the

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responses from 569 IT pros clearly indicated that cloud adoption is maturing

beyond just test and development.

Check out the top 10 cloud services that customers want to buy, listed from

least to most popular, and find out if you're ready to meet cloud adopters'

needs.

No. 10: Hybrid cloud integration

Integrating hybrid cloud isn't on any standard Anything as a Service, or

XaaS, product list, but private/public cloud integration is becoming more of

an essential feature for many customers.

Coming in at No. 10 in our survey, demand for hybrid cloud integration

services likely stems from a collective cloud adoption hangover among early

cloud adopters. That is, during the first wave of hybrid cloud adoption IT pros

encountered several unanticipated challenges around application suitability,

interoperability and integration between private and public clouds, application

modification, and hybrid cloud security issues. Customers tend to consider

hybrid cloud for cost savings or because it complements their business'

computing needs, but they can't achieve these goals without help on the

integration side. Whether that assistance is built into the original price or sold

separately as professional services, businesses are increasingly looking to

service providers for guidance.

No. 9: Database as a Service

For database administrators, Database as a Service has one major allure:

reduced maintenance. Among other benefits, Database as a Service allows

companies to ditch the burden of installing and managing transactional

databases locally, thereby relieving admins from having to configure on-

premises database management systems.

One potential barrier to adoption, however, is regulatory compliance

requirements. Businesses in various industries face a litany of rules and

regulations around how they maintain and secure databases, causing some

anxiety among customers who could lose control over data stored in a cloud

provider's facilities. As the cloud once again comes under the microscope

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with companies that fear losing control over infrastructure, cloud providers

must learn how to address these concerns if interest in Database as a

Service will ever match adoption of it.

No. 8: Cloud BI and data management services

Customers are attracted to cloud-based business intelligence because it

helps them monitor trends and respond quickly to market changes. Cloud-

based BI has picked up momentum as more corporate users feel comfortable

incorporating cloud computing and Software as a Service (SaaS) into their BI

strategies. As with many cloud services, customers eying cloud BI are

attracted to the prospect of reduced IT and data center management costs,

faster deployment times and increased flexibility as business needs change.

On the other hand, cloud BI services are still somewhat low-end in nature,

which customers take into account.

When it comes to data management, cloud technologies are emerging as

alternatives to traditional on-premises software -- something customers are

starting to embrace.

The main selling points of cloud-based data management services are that

they can accelerate technology deployments as well as reduce capital

expenditures and system maintenance costs. They can also provide

customers with more flexibility to help meet evolving business requirements.

Customers' main concerns lie in data security, often hesitating to outsource

sensitive data away from the monitoring capabilities of the corporate firewall.

No. 7: Collaboration software tools

Demand is growing for social collaboration software in the era of Bring your

own device. Employees want access to their work files regardless of where

they are or what device they're using. Consumer, cloud-based file sharing

and collaboration services give employees the freedom to store their data

files and access them on any device they choose.

Security and data leakage are major concerns for customers considering

cloud-based collaboration. Administrators are worried their data could

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become compromised if insecure public servers and platforms come into the

mix.

In response to this, some cloud providers have built or are reselling Unified

Communications as a Service (UCaaS), a package of cloud-based UC

applications that often includes collaboration software tools. To its credit,

UCaaS addresses the need for enterprise-grade, cloud-based UC, and

analysts have identified several benefits with this new delivery model.

However, the UCaaS market has been slow to develop. Earlier this year,

Gartner declared that most UCaaS offerings are not ready for primetime -- at

least among large enterprises -- since they often lack a full suite of UC

functionality or don't scale for large deployments.

No. 6: DRaaS and business continuity

Conventional disaster recovery has been a tough sell when it comes to small

and medium-sized businesses because they can't always afford to pay for

what-if scenarios. But because of the upfront cost savings of cloud-based

DR, also known as DR as a Service, DRaaS is starting to become an

attractive alternative for SMBs.

When we asked IT pros which cloud disaster recovery (DR) services they

were currently using, 69% said they were using the cloud to store their IT

resources and services, but still kept these separate from their conventional

backup data. Respondents were allowed to select more than one answer,

and another 46% said that in the event of a disaster, they can perform DR in

the cloud by switching users over to cloud-based resources -- as opposed to

first transferring everything needed for DR and business continuity from the

cloud, via the Internet, and back to the corporate data center.

If companies are willing to dabble with DRaaS by just storing data and other

IT resources in the cloud and then transferring them back when needed, they

may later be willing run DR directly in the cloud if things go smoothly. This

ability for customers to try varying levels of commitment to DRaaS and then

upgrade once they're comfortable is likely to spark adoption of cloud-based

DR services.

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No. 5: Platform as a Service

PaaS providers still find themselves explaining PaaS application

development and how it works -- hindering adoption rates as this

technology's uses are not yet fully understood.

Platform as a Service (PaaS) is gaining ground with enterprises and

developers that want to develop their own applications using a provider's

existing cloud platform. PaaS promises cheaper application development,

faster deployment, a reduced need for application infrastructure

administration, easier integration and more effective deployment of in-house

IT resources.

Providers can use their own cloud application platforms as building blocks for

developing, integrating and delivering SaaS applications or they can build

revenue by selling on-demand access to their platforms to customers. The

latter opportunity enables cloud providers to capitalize on their expertise in

other areas of service delivery, such as billing and operations.

One reason we may see SaaS rank higher on our survey is that it requires

the least amount of effort on the customer's end to get an application

running, limiting overall administrative work. PaaS, comparatively, needs

more manual efforts because it requires a customer to build their own

applications on the provided platform.

Still, research suggests that the PaaS model offers the largest total

addressable public cloud services market for providers, as it may potentially

capture nearly 60% of total cloud market opportunity.

No. 4: Infrastructure as a Service

In fourth place, Infrastructure as a Service is one of the first cloud services

enterprises are willing to try, but IaaS happens to be the lowest revenue

producer for cloud providers. But a positive IaaS experience may encourage

customers to consider additional services higher on the cloud food chain.

Although the IaaS market is vast -- populated by telecom carriers, data

center operators and managed service providers -- Amazon has stolen the

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spotlight due to its early entrance in the market, simple provisioning and

bargain-basement prices.

However, Amazon has suffered several embarrassing outages in its cloud,

and it's gained a reputation that, well, you get what you pay for. Alternative

IaaS providers -- including Bluelock, CSC, IBM, HP, Savvis and Terremark --

are starting to gain traction as businesses seek more enterprise-grade

services with higher reliability, tighter security and stronger service-level

agreements.

No. 3: Testing and development

Testing and development was one of the first use cases for the cloud that

customers wholeheartedly embraced. Developers were attracted to the

flexible and fast provisioning, and the rest of enterprise IT could take solace

in knowing these deployments would be short-term and contain no sensitive

data or critical applications. It probably comes as no surprise that it takes the

bronze medal in our survey.

Despite the fact that enterprises are moving more production apps into the

cloud and are experimenting with more sophisticated cloud services, cloud-

based test and dev still has (and will likely continue to have) staying power.

Cloud providers could think of it like running a restaurant: You can put Kobe

beef with French truffles on the menu, but people will never stop ordering

hamburgers.

No. 2: Cloud storage services, or Storage as a Service

Let's face it: Storage is cheap. But when it comes to up-front investments

and management costs, Storage as a Service is often cheaper and it's

always elastic. These two perks have helped cloud storage gain popularity

among small and medium-sized businesses that otherwise lack the funding

or staffing to maintain their own storage systems.

Some enterprises want to unburden themselves of the stresses associated

with in-house backups. They may not be backing up tier-one applications, but

they're also not giving cloud storage the cold shoulder. Storage as a Service

relieves customers of managing backup applications as well as managing

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tapes and disks -- freeing up IT pros to focus on long-term projects. Backup

tools and staffing are expensive, so customers see this service as a money-

saver.

Because cost savings are a big adoption driver, many cloud storage

providers have been engaged in price wars -- trying to undercut each other in

a race to the bottom. Providers that do this, however, run a big risk: turning

their cloud storage into a commodity. Fortunately, there are ways to make

cloud storage pricing both economical and profitable.

When customers opt to outsource backup data to the cloud, they want to be

sure their data can be safely and easily transferred back and forth, and it's up

to cloud providers to assure them this will be a nonissue.

No. 1: Software as a Service

The envelope, please. And the winner is: Software as a Service.

Software as a Service (SaaS) adoption is primarily driven by its fast

implementation time, usage-based pricing model, simple provisioning and

minimal management requirements. Compared with IaaS and PaaS, SaaS

displaces the most costs for customers; therefore, it often holds the most

value.

On the other hand, cloud providers looking to compete in this market will

have to address some of the existing challenges around SaaS integration,

migration and performance. These issues have started to incite some distrust

and skepticism among enterprises and small and medium-sized businesses,

which may be why our survey shows that SaaS adoption is expected to

decrease over the next six months. Integration issues especially continue to

plague customers as more companies seek SaaS alternatives for a wide

range of on-premises business applications.

Although SaaS ranks as the top-selling service among enterprises and

SMBs, it's the only service in our survey that showed adoption slowing down

-- going from 63.9% to 55% over the next six months -- underscoring the

urgent need for SaaS providers to address customer concerns.

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More resources from SearchCloudComputing.com

Storage and PaaS shine in cloud computing adoption spotlight

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http://searchcloudcomputing.techtarget.com/feature/Storage-and-PaaS-shine-in-cloud-computing-adoption-spotlight?Offer=CloudSurveyResultsEguide

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http://searchcloudcomputing.techtarget.com/news/2240165206/Is-OpenStack-the-great-cloud-hope-or-just-hype?Offer=CloudSurveyResultsEguide




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