IBM study: Top performers have their hybrid cloud act together

IBM hybrid cloud infographic

Nearly 80 percent of C-level executives say their cloud efforts are coordinated or fully integrated, up from just 34 percent four years ago.

That’s according to a new study by the IBM Institute for Business Value (IBV). The survey of 1,000 executives across 18 industries also finds that cloud computing is a driving force for innovation, helping businesses to expand into new industries (76 percent), create new sources of revenue (71 percent), and create and support new business models (69 percent).

But executives don’t expect their on-premise workloads to go away anytime soon. Nearly half of workloads – 45 percent – are likely to remain on dedicated servers in corporate data centers for the foreseeable future, a number that is unchanged from two years ago. That means that hybrid strategies are essential to achieving the ideal mix of flexibility and cost advantages that businesses expect from the cloud.

The top four reasons executives say they’re adopting hybrid clouds are

  • Lowering total cost of ownership (54 percent);
  • Facilitating innovation (42 percent);
  • Enhancing operational efficiencies (42 percent); and
  • More readily meeting customer expectations (40 percent).

Remarkably, three-quarters of respondents say cloud initiatives have enabled them to expand into new industries and 71 percent have created new revenue sources thanks to the cloud. The business functions that they are most likely to migrate to cloud over the next two years are customer support (68 percent) and finance (55 percent).

But top executives aren’t all-in on cloud, at least not yet. Security remains a major concern, with 47 percent of respondents reporting it as a barrier to adoption. Other top roadblocks include complicated cost structure (41 percent) and increased risk of operational disruption due to the introduction of new platforms (38 percent). Researchers note that cloud providers are aggressively tackling security and compliance issues, and that detailed activity reports by service providers can actually improve compliance reporting.

The survey segments respondents into high-performing and low-performing organizations. Researchers report that more than twice as many high performers as low performers have fully integrated their cloud initiatives. The principal benefit of integration is to eliminate organizational silos that create all sorts of inefficiencies, including duplication of effort, inability to access information and high maintenance costs. IBV researchers stress that a new breed of IT professional is needed who understands business value and who can work hand-in-hand with business-side colleagues to optimize available platforms.

Cost considerations (53 percent) are the top criteria when evaluating cloud platforms, followed by security/compliance requirements (48 percent) and speed to market (45 percent). More than four in ten respondents say they also like the way cloud platforms facilitate innovation. Clouds make it possible for organizations to prototype and field-test new ideas without incurring long lead times or heavy capital costs. Many respondents also cite the growing use of application program interfaces (APIs) as a way to facilitate sharing of data and processes among partners in an ecosystem.

“One respondent noted that today, a company doesn’t want to be defined by the number of engineers it employs,” the study reports. “It can instead rely on technology partners to provide expertise on recent industry trends, methodologies and frameworks while it deals directly with its core business.”

The cloud ecosystem is becoming more complex, with the entrance of additional players and licensing frameworks. Evaluating ROI in the cloud is a new discipline that few organizations have yet mastered, the report notes. Making smart choices requires collaboration and a new set of IT skills. The cloud doesn’t make IT any less relevant, the report concludes, but IT’s role must shift to a more advisory one as deployment options proliferate.