Welcome!

Containers Expo Blog Authors: Pat Romanski, Liz McMillan, Derek Weeks, Scott Allen, Tim Hinds

News Feed Item

Cloud Services Providers Confident Despite Questions Around Cost Savings, Control, And Security

KPMG survey finds providers see cloud revenues comprising significantly larger share of their total revenue due to migration of more sophisticated applications

SANTA CLARA, Calif., Dec. 6, 2012 /PRNewswire/ -- Cloud-based services revenue in two years is expected to comprise nearly twice its current share of provider revenue, even as providers believe that showing evidence of cost savings is the biggest barrier to cloud adoption, according to the 2012 Cloud Providers Global Survey from KPMG International.

Revenue from business users' migration to cloud in the coming two years will be increasingly for data-intensive applications, such as business and data analytics, content management, customer care, and operations and manufacturing, say providers in the survey.  They expect the shift to occur despite users' ongoing concerns over loss of control and data security, which are in addition to the providers' challenges of proving savings and the business case.

Nearly six out of 10 providers say cost reduction is still the chief reason most business users migrate to cloud, yet almost four out of 10 providers say proving cost savings is their biggest challenge.  The challenge is further complicated by the fact that only 39 percent of providers believe that users have realistic expectations for cost savings in the migration to cloud, while 19 percent believe users don't.

Addressing the expectations gap on cost savings is just one of the interrelated customer challenges emerging as users embrace cloud for more strategic reasons. Providers see the top three challenges as: showing stronger evidence of cost savings (38 percent), devising usage-driven pricing (31 percent), and helping clients develop realistic business cases for switching to cloud (27 percent).

"While providers are seeing the challenges of a maturing, yet still relatively young, market, we're at a pivotal point in the evolution of the cloud ecosystem as users become more comfortable with a variety of cloud applications," said Gary Matuszak, partner, global chair and U.S. leader for KPMG's Technology, Media and Telecommunications practice. "Leading cloud providers know they must evolve to provide a new level of scale, capacity and capability."

Prevailing User Concerns
Nearly half of providers say that loss of control is still a business user's biggest difficulty with cloud adoption followed by data loss and privacy risks, according to 39 percent. Fifty-seven percent of providers say they are addressing the data security issue with tighter restrictions on user access and applying more sophisticated data encryption.

Ongoing challenges with cloud adoption may point strongly to the increasing need for more tightly defined parameters on service level agreements (SLAs).

Presently, 59 percent of providers surveyed have service level commitments in their cloud SLAs. Over the next three years, 68 percent say they will have commitment parameters in SLAs, and 82 percent expect data security to be the single-most important SLA parameter. 

The Evolving Cloud Ecosystem
Currently, two-thirds of cloud providers say they are most active in software-as-a-service applications (SaaS) and expect that to continue over the next two years. Platform-as-a-service (PaaS) and infrastructure-as-a-service (IaaS) activities are projected to have the greatest increase in activity over the same period.   

"The anticipated migration of core systems and critical infrastructure to cloud in the next two years will be complex undertakings; users will be requiring if not demanding strategic direction and guidance from providers across a broad range of areas," said Tom Lamoureux, Global Advisory Leader, KPMG Technology sector.  "The lines are blurring across the various types of cloud services; users need and want to understand cloud's value and immense power much better than they do."

Understanding of Cloud Needs a Boost
While about half of providers say that business users are sufficiently knowledgeable about the marketplace for cloud services, almost a quarter believe that customers need to be educated more on the basic aspects of cloud: security, pricing models, relative costs, and integration with existing infrastructure. Also, nearly a quarter believe that customers need more information about contractual arrangements such as service level agreements (SLAs).

The knowledge gap may explain the interest in outside assistance, as 60 percent of providers say users turn to a third party for help with acquiring or implementing technology. Nearly 40 percent of providers say business users employ third parties for help on the user business strategy. Users also do so, according to providers, for technology implementation (56 percent), business process transformation (45 percent) and information security assistance (41 percent).  

Providers Shore up Expertise
Providers are shoring up deeper expertise to meet the user demands for greater proficiency on cloud and help with the business case. 

Interestingly, more than one-third of providers say they need to train or retrain their sales forces on cloud.  Almost half of providers say they will form a partnership (48 percent) or expand capabilities to provide more strategic services and consulting to business users (47 percent).

Provider differentiation is no doubt higher on the agenda because they believe that increasingly, board-level executives - Chief Information Officers (79 percent) and Chief Technology Officers (77 percent) - are influencing the purchasing decisions on cloud.

About the Survey
The KPMG 2012 Cloud Providers Survey is part of a series of two global KPMG surveys on the business of cloud. The providers report is based on the findings of a web-based survey of 179 executives from cloud providers across more than 10 countries in North America (51 percent), Asia Pacific (29 percent) and Europe, the Middle East and Africa (20 percent). Forty-five percent of those surveyed were C-level executives. In January, KPMG will release the second half of the Cloud Survey series focusing on the cloud business users.

About KPMG LLP
KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative ("KPMG International.") KPMG International's member firms have 145,000 people, including more than 8,000 partners, in 152 countries.

About KPMG International
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 152 countries and have 145,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

Contact: Mike Alva
KPMG LLP
(415) 963-5426
[email protected]
On Twitter: @michaelalva

SOURCE KPMG LLP

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories
There is an ever-growing explosion of new devices that are connected to the Internet using “cloud” solutions. This rapid growth is creating a massive new demand for efficient access to data. And it’s not just about connecting to that data anymore. This new demand is bringing new issues and challenges and it is important for companies to scale for the coming growth. And with that scaling comes the need for greater security, gathering and data analysis, storage, connectivity and, of course, the...
A critical component of any IoT project is the back-end systems that capture data from remote IoT devices and structure it in a way to answer useful questions. Traditional data warehouse and analytical systems are mature technologies that can be used to handle large data sets, but they are not well suited to many IoT-scale products and the need for real-time insights. At Fuze, we have developed a backend platform as part of our mobility-oriented cloud service that uses Big Data-based approache...
The IoTs will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform. In his session at @ThingsExpo, Craig Sproule, CEO of Metavine, will demonstrate how to move beyond today's coding paradigm and share the must-have mindsets for removing complexity from the development proc...
trust and privacy in their ecosystem. Assurance and protection of device identity, secure data encryption and authentication are the key security challenges organizations are trying to address when integrating IoT devices. This holds true for IoT applications in a wide range of industries, for example, healthcare, consumer devices, and manufacturing. In his session at @ThingsExpo, Lancen LaChance, vice president of product management, IoT solutions at GlobalSign, will teach IoT developers how t...
The IETF draft standard for M2M certificates is a security solution specifically designed for the demanding needs of IoT/M2M applications. In his session at @ThingsExpo, Brian Romansky, VP of Strategic Technology at TrustPoint Innovation, will explain how M2M certificates can efficiently enable confidentiality, integrity, and authenticity on highly constrained devices.
Manufacturers are embracing the Industrial Internet the same way consumers are leveraging Fitbits – to improve overall health and wellness. Both can provide consistent measurement, visibility, and suggest performance improvements customized to help reach goals. Fitbit users can view real-time data and make adjustments to increase their activity. In his session at @ThingsExpo, Mark Bernardo Professional Services Leader, Americas, at GE Digital, will discuss how leveraging the Industrial Interne...
Artificial Intelligence has the potential to massively disrupt IoT. In his session at 18th Cloud Expo, AJ Abdallat, CEO of Beyond AI, will discuss what the five main drivers are in Artificial Intelligence that could shape the future of the Internet of Things. AJ Abdallat is CEO of Beyond AI. He has over 20 years of management experience in the fields of artificial intelligence, sensors, instruments, devices and software for telecommunications, life sciences, environmental monitoring, process...
Increasing IoT connectivity is forcing enterprises to find elegant solutions to organize and visualize all incoming data from these connected devices with re-configurable dashboard widgets to effectively allow rapid decision-making for everything from immediate actions in tactical situations to strategic analysis and reporting. In his session at 18th Cloud Expo, Shikhir Singh, Senior Developer Relations Manager at Sencha, will discuss how to create HTML5 dashboards that interact with IoT devic...
We're entering the post-smartphone era, where wearable gadgets from watches and fitness bands to glasses and health aids will power the next technological revolution. With mass adoption of wearable devices comes a new data ecosystem that must be protected. Wearables open new pathways that facilitate the tracking, sharing and storing of consumers’ personal health, location and daily activity data. Consumers have some idea of the data these devices capture, but most don’t realize how revealing and...
SYS-CON Events announced today that Ericsson has been named “Gold Sponsor” of SYS-CON's @ThingsExpo, which will take place on June 7-9, 2016, at the Javits Center in New York, New York. Ericsson is a world leader in the rapidly changing environment of communications technology – providing equipment, software and services to enable transformation through mobility. Some 40 percent of global mobile traffic runs through networks we have supplied. More than 1 billion subscribers around the world re...
We’ve worked with dozens of early adopters across numerous industries and will debunk common misperceptions, which starts with understanding that many of the connected products we’ll use over the next 5 years are already products, they’re just not yet connected. With an IoT product, time-in-market provides much more essential feedback than ever before. Innovation comes from what you do with the data that the connected product provides in order to enhance the customer experience and optimize busi...
The increasing popularity of the Internet of Things necessitates that our physical and cognitive relationship with wearable technology will change rapidly in the near future. This advent means logging has become a thing of the past. Before, it was on us to track our own data, but now that data is automatically available. What does this mean for mHealth and the "connected" body? In her session at @ThingsExpo, Lisa Calkins, CEO and co-founder of Amadeus Consulting, will discuss the impact of wea...
In his session at @ThingsExpo, Chris Klein, CEO and Co-founder of Rachio, will discuss next generation communities that are using IoT to create more sustainable, intelligent communities. One example is Sterling Ranch, a 10,000 home development that – with the help of Siemens – will integrate IoT technology into the community to provide residents with energy and water savings as well as intelligent security. Everything from stop lights to sprinkler systems to building infrastructures will run ef...
Digital payments using wearable devices such as smart watches, fitness trackers, and payment wristbands are an increasing area of focus for industry participants, and consumer acceptance from early trials and deployments has encouraged some of the biggest names in technology and banking to continue their push to drive growth in this nascent market. Wearable payment systems may utilize near field communication (NFC), radio frequency identification (RFID), or quick response (QR) codes and barcodes...
Whether your IoT service is connecting cars, homes, appliances, wearable, cameras or other devices, one question hangs in the balance – how do you actually make money from this service? The ability to turn your IoT service into profit requires the ability to create a monetization strategy that is flexible, scalable and working for you in real-time. It must be a transparent, smoothly implemented strategy that all stakeholders – from customers to the board – will be able to understand and comprehe...
You deployed your app with the Bluemix PaaS and it's gaining some serious traction, so it's time to make some tweaks. Did you design your application in a way that it can scale in the cloud? Were you even thinking about the cloud when you built the app? If not, chances are your app is going to break. Check out this webcast to learn various techniques for designing applications that will scale successfully in Bluemix, for the confidence you need to take your apps to the next level and beyond.
SYS-CON Events announced today that Peak 10, Inc., a national IT infrastructure and cloud services provider, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Peak 10 provides reliable, tailored data center and network services, cloud and managed services. Its solutions are designed to scale and adapt to customers’ changing business needs, enabling them to lower costs, improve performance and focus inter...
So, you bought into the current machine learning craze and went on to collect millions/billions of records from this promising new data source. Now, what do you do with them? Too often, the abundance of data quickly turns into an abundance of problems. How do you extract that "magic essence" from your data without falling into the common pitfalls? In her session at @ThingsExpo, Natalia Ponomareva, Software Engineer at Google, will provide tips on how to be successful in large scale machine lear...
You think you know what’s in your data. But do you? Most organizations are now aware of the business intelligence represented by their data. Data science stands to take this to a level you never thought of – literally. The techniques of data science, when used with the capabilities of Big Data technologies, can make connections you had not yet imagined, helping you discover new insights and ask new questions of your data. In his session at @ThingsExpo, Sarbjit Sarkaria, data science team lead ...
SYS-CON Events announced today that Fusion, a leading provider of cloud services, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Fusion, a leading provider of integrated cloud solutions to small, medium and large businesses, is the industry's single source for the cloud. Fusion's advanced, proprietary cloud service platform enables the integration of leading edge solutions in the cloud, including cloud...