CIOs need to act on their cloudy good intentions, states Ovum


A recent survey of 65 CIOs at a Strategy Summit revealed that cloud services adoption, though expected to grow, remains at micro-niche levels in many Australian organisations, according to global analyst firm Ovum.

In a recent report*, Ovum asked CIOs about sourcing approaches for 50 IT activities. The survey found that 76% were sourced in-house, with only 3% currently sourced as cloud services.

Steve Hodgkinson, global chief analyst for public sector research and advisory services and author of the report, said, “Adoption of cloud services is projected to increase to 12% within a few years. A similar group of CIOs, however, had a similar sourcing profile at this same CIO Strategy Summit last year, and made similar predictions.”

“Ovum’s case studies of cloud services adoption reveal that cloud-sourcing can deliver better, faster, less costly and less risky IT, but achieving these results requires more than good intentions – it requires action.”

The pain points cited by around one-third of the CIOs included delivering “more for less” while providing and securing mobile devices and supporting business demands for business intelligence and analytics.

Ovum’s survey found that CIOs were looking at analytics and mobility as the red-hot topics and cloud as a hot topic. In contrast, they were ambivalent about social and not interested in Big Data. The lack of interest in Big Data, with 37% of CIOs regarding this topic as low or below-average priority, was a surprise.

“These results suggest that Big Data is perceived as being at an early stage of maturity, technology-driven and over hyped. Clearly CIOs believe in the importance of analytics more generally, so the value of business insights derived from data is not in question,” said Hodgkinson.

The survey also revealed that in-house IT sourcing is still the dominant sourcing model in 2014. Managing traditional people, process and technology issues of the IT department is still “core business” for this group of CIOs.

Hodgkinson states that “Internal shared services are a niche sourcing approach, adoption of which is projected to remain at current levels. Outsourcing adoption is rising, but not rapidly. Overall outsourcing currently accounts for 13% of IT activities, and this is expected to rise to 16% within the next few years.”

Contrary to media hype, cloud services adoption is still at micro-niche levels: only 3% of IT activities are currently cloud-sourced in this sample of CIOs. However, the CIOs surveyed expect cloud services to become a significant element of the overall IT sourcing mix, rising to 12% within a few years.

According to Ovum’s research, “Some categories of application are clear harbingers of what’s to come: software-as-a-service (SaaS) CRM, for example, is currently implemented by 23% of the CIOs surveyed, and this figure is expected to rise to 50% over the next few years.

“An intriguing observation is that a similar survey of a comparable group of CIOs last year revealed very similar conclusions. In last year’s group of CIOs, 74% of IT activities were in-sourced, and around 10% were projected to be cloud-sourced within a few years, from a base of 4%. In this year’s group of CIOs, 76% of IT activities were in-sourced, and around 12% expected to be cloud-sourced with a few years, from a base of 3%.”

“Cloud services adoption is certainly growing – most particularly in storage and compute infrastructure-as-a-service (IaaS), and in a handful of categories of SaaS applications. There is still, however, plenty of scope for broadening the use of cloud services within a wider range of data centre, network, applications, information management and end-user services activities,” concludes Hodgkinson.


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