Cloud implementation costs higher than expected, finds KPMG

Higher cloud implementation costs and IT integration challenges have come to the fore as use of cloud services rises

Cloud adoption is more complicated and fraught with problems than many businesses and IT executives originally anticipated, according to a research report from KPMG.

One-third of IT executives found costs related to implementation were higher than expected, while 31% indicated that the process of integrating existing IT architecture with new cloud services was creating challenges, according to KPMG's The cloud takes shape report.

The implementation challenges are highlighted at a time when most organisations are shifting from planning their cloud strategies to using cloud computing services.

“Cloud has moved beyond the hype and into the very fabric of organisations. Yet the transition has been anything but smooth,” said Steve Salmon, principal advisor in KPMG’s IT advisory team in the UK.

“Many are also frustrated by the difficulties of integrating cloud services with legacy systems and worried about long-term uptake across their supplier base. They also face challenging times in the adoption of cloud against a regulatory backdrop,” he said.

Overcoming cloud implementation and integration challenges

Overcoming the implementation and integration challenges is critically important because they can threaten both the return on investment and business benefits of cloud use, warned Salmon.

Some 70% of firms that have implemented cloud services have seen cost savings and higher levels of productivity

In the UK, IT executives were concerned about long-term implications surrounding cloud services, with 29% admitting that the “lack of visibility into future need” is a major stumbling block to full-scale adoption.  

About 27% of respondents added that interoperability is critical to make transition to cloud services easy. These IT executives emphasised the issues around the lack of common standards among cloud suppliers.  

Other concerns cited by IT executives were loss of control, security risks, lack of transparency of operational control, and the lack of visibility into future demand and its associated costs.

Cloud uptake on the rise

But despite newer challenges and concerns, the uptake of cloud services is set to double in 2013, according to the audit and advisory firm.

Cloud’s benefits, such as lower capital expenditure and faster time to market, mean the use of cloud is genuinely dominating boardroom planning, said KPMG. Among those firms that have implemented cloud services, 70% claimed to have seen cost savings and higher levels of productivity.

About 42% of UK organisations said that at least one-fifth of their total IT spend in the next 12 months will focus on cloud services, compared with just 20% in 2012.

UK organisations are using the cloud for services such as customer care and human resources functions, but not for running mission-critical applications and workloads.

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