A new report based on the recently completed Harvey Nash/KPMG Global CIO Survey for 2016 reveals that most companies plan to invest significantly across all three ‘as-a-service’ cloud platform types over the next 3 years. And many are expected to move beyond the ‘easier wins’ associated with deploying a readily available software as a service solution, to tackle Platform as a Service with its lower maturity in the market and steeper learning curve.
The march to the cloud is continuing unabated. Almost 70 per cent of large organisations plan to invest ‘significantly’ across all cloud services in the next three years, building on their existing investments.
This is one of the major findings from a new Harvey Nash and KPMG report, launched today, based on responses from nearly 3,400 CIOs and IT leaders around the world, making it the biggest global survey of IT leadership.
Clearly, this acceleration in cloud services adoption makes sense. The cloud journey is in effect simply a reflection of the shift taking place from a product-led to a service-led economy. To that extent, it’s an inevitability. To compete, companies have to become more responsive to customer demand and the dynamics of a rapidly evolving marketplace. The cloud and agile IT are key components – and enablers - of agility in the transformation to digital business.
While IT still controls most cloud decisions - 56 per cent are made by central IT - it’s certainly true that parts of the business outside IT have been buying SaaS solutions directly from vendors, without IT involvement. This has caused challenges for the IT organisation as it seeks to ensure that the company doesn’t find itself creating even more “islands of data” where essential data is fragmented, further complicating efforts to have a single, consistent view of the customer and to bring together disparate data for big data initiatives. Not to mention ensuring that customer and enterprise data is properly secure and protected.
But our survey also reveals that the journey could be entering a new phase for many: whereas to date investment in SaaS has dominated, it is PaaS that is set to grow fastest in terms of increased investment in the next three years.
So what of the detail behind the findings?
Cloud brings benefits
Let’s start with the positives. Firstly, it’s refreshing to see that many organisations have moved beyond using the cloud for the primary reason of cost savings. Four in ten CIOs use cloud technology to improve availability and resiliency, and the same number use it to boost agility and responsiveness. Over a third (34 per cent) use it to accelerate product innovation. These three things all come in ahead of cost savings (33 per cent).
What’s more, two thirds of respondents say that moving systems to the cloud in the past two years has been successful (only 14 per cent say it has actually been unsuccessful, with the rest being neutral).
Moreover, three quarters of IT leaders say that the opportunities of ‘open technologies’ such as public cloud and BYOD outweigh the threats.
But common challenges remain
If this all seems highly encouraging, there are nevertheless some common concerns and challenges that IT leaders are grappling with. The top concern is data loss and privacy risks (49 per cent), closely followed by integration with existing architecture (47 per cent), while governance over cloud solutions (36 per cent) and legal and regulatory compliance issues (35 per cent) also feature highly.
There is also evidence that in some senses CIOs have been focusing on the easier wins so far. SaaS emerges as by far the leading area of investment to date, ahead of IaaS and then PaaS. This is perhaps to be expected given that software vendors have been increasingly focusing their efforts on cloud, with some pure-play SaaS vendors reporting growth rates in excess of 100 per cent, according to a recent Forrester report*. Vendors of on-premises software are increasingly looking to develop SaaS applications while even ‘mixed-mode’ vendors are likely to struggle against SaaS-first applications.
Historical growth in SaaS, then, has been driven by the abundance of readily available and compelling solutions in the market. IaaS growth has been led by a relatively straightforward ‘lift and shift’ approach – often with cost as a primary driver.
PaaS poised for substantial growth
But our survey suggests that this is set to change and that PaaS is becoming the focus for much higher levels of investment in the future. With less challenging IaaS and SaaS deployments behind them, CIOs are turning to PaaS. Indeed, our figures reveal that investment in PaaS projects over the next three years is projected to grow by a staggering 87 per cent, compared to investment growth in IaaS and SaaS of 56 per cent and 53 per cent respectively.
Why is this? To some extent, it is likely to be led by the rapid evolution and increasing maturity of PaaS service offerings in the market and a growing range of validated use cases. It also reflects a continuing trend to transition more technology assets into the cloud. For PaaS, the key driver is the desire to establish a common platform and tools that facilitate the in-house development of solutions so that development teams can rapidly respond to business demand. PaaS provides a far more efficient environment in which to spin up and scale operating systems and capabilities for continuous development and opens up capabilities to a broader set of stakeholders, meaning organisations can work more effectively with clients, partner organisations and suppliers.
However, PaaS presents a set of challenges for the CIO to resolve as well, the most pressing being to understand what use cases will deliver the biggest benefits. For example, whether that’s to rapidly deploy a data and analytics platform to improve customer engagement; to support the introduction of new IoT services; or to enable new digital/mobile capabilities, to name but a few.
Next stage of the journey
So where are you in your cloud journey? The only certainty is that cloud services will become an increasingly fundamental component of an organisation’s technology portfolio and investment budget. Don’t get left behind.
For more information about the Harvey Nash/KPMG Global CIO Survey 2016, and to request a full copy of the results, please visit www.hnkpmgciosurvey.com
* Application Adoption Trends 2016: SaaS Expands Across the Enterprise and Across the Globe, Forrester Research, March 2016
Marc Snyder, Head of KPMG’s CIO Advisory Global Centre of Excellence