by Stephanie Overby

IT Departments Move Low-Risk Services to the Cloud

Jul 28, 2010
Cloud Computing

Most IT decision makers polled by outsourcing consultancy TPI say moving ERP and vertical industry applications into the cloud is too risky, but they remain interested in testing the viability of cloud computing through pilot projects or with low-risk IT services.

IT departments continue to proceed with caution when it comes to cloud computing, according to the results of a recent survey conducted by TPI.

The outsourcing consultancy polled 140 corporate IT decision makers about their cloud computing perspectives and plans and found that nearly four out of five companies are considering cloud computing solutions. Three out of five are actually implementing them.

Those organizations that are migrating some IT services to the cloud are doing so with small pilot projects or low-risk services, says Kevin Smilie, head of TPI’s new cloud computing business solutions unit.

“They aren’t convinced that these [cloud] services are ready for the prime time requirements of their core operations,” Smilie says. “They are testing non-critical portions of their infrastructure to learn about cloud services and their own management of them while limiting their operational risks.”

While approximately half of respondents were considering server and desktop virtualization, cloud-based storage services, and hosted email and messaging applications, they’re being more cautious about moving core business systems into the cloud: Just ten percent were contemplating the cloud for ERP, and only seven percent were discussing cloud-based vertical industry applications, such as medical billing software and airline reservation systems, according to TPI.

“These services are simply too important for clients to take to market so early in the development [of cloud computing],” says Smilie.

Top Cloud Computing Concerns

The TPI survey found that IT buyers had five pervasive concerns about cloud computing:

  • inadequate or unclear data security (79 percent)
  • regulatory compliance requirements (50 percent)
  • business continuity or disaster recovery issues (50 percent)
  • integration with legacy systems (49 percent)

The handful of early adopters who have gone with cloud computing offerings in the ERP and vertical industry application spaces have done so for one reason according to Smilie: cost savings.

“Companies have spent tremendous amounts of capital and operating funds deploying and maintaining these systems over the years. Given the choice, they don’t want to continue that behavior,” he says.

Smilie says most customers will opt for private cloud options for mission-critical apps to mitigate risk while shifting their software investments from capital to operating expenses. “Clients want cloud services that will meet their business needs at lower costs with enterprise-class service levels and security. Generally, they aren’t getting that in the public cloud space,” Smilie says.

IT service providers are responding with private cloud offerings designed to address the demands of wary IT buyers, says Smilie. “The public cloud concept started in the consumer space and works off of the assumption that everyone will accept the same level of service and security. That assumption just doesn’t hold for large enterprises.”