Outdated IT budget models slow enterprise cloud adoption, CIO research suggests

Research from IT services provider Trustmarque suggests the way that enterprises run their IT budgets is out of step with how they consume and pay for cloud

CIOs claim that working with an annual IT budget allocation is slowing down their ability to move to the cloud, and making it hard to realise all the benefits of shifting their IT off-premise.

According to research commissioned by IT services company Trustmarque and carried out by Vanson Bourne, this is just one of the reasons why so many enterprise CIOs feel that the reality of using cloud services is failing to live up to the hype.

Of the 200 enterprise CIOs who took part in the research, 72% described cloud pricing models as complicated, based on the wide range of ways that providers charge enterprises for using their services.

For this reason, the report said it was up to CIOs to decide whether a pay-as-you-go, pay monthly or annual subscription made most financial sense for their business, given that so many IT organisations are working within the constraints of an annual IT budget cycle.

Of those polled, 55% cited this as a complicating factor for their move to the cloud, claiming it had contributed to slowing down their adoption of subscription-based services.

“Planning long-term for cloud within IT budgets that are typically allocated on a capital expenditure basis is a pitfall,” the report said.

“Many organisations have a fixed multi-year budget cycle, meaning IT investments in infrastructure, platforms and applications are often accounted for as capital expenditure.”

Barriers to adoption

Trustmarque’s report, Highlighting operational and financial barriers to cloud, aims to shine a light on how much CIOs understand about cloud, the benefits it can bring to their wider organisation, and the barriers they encounter in adopting it.

The research is a follow-up to a 2016 report from Trustmarque, which featured responses from 200 CIOs and discovered that 81% were still grappling with how cloud met the needs of their organisation.

According to the 2017 report, this is an area where CIOs are still struggling, with 77% admitting finding it hard to ascertain which cloud services are the right fit for their business and how best to go about deploying them.

Part of the problem is the wide variety of cloud services and providers for users to choose from, and the many ways they can consume and pay for offerings.

“The modern cloud market is awash with cloud offerings from technology suppliers and service providers – ranging from data storage and backup, email services, fully or part-hosted platforms, collaboration services, to managed support services,” the report said.

“At the same time, many CIOs are finding that cloud is not delivering what it promised.”

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For example, just 34% of respondents said their cloud implementations were living up to the hype, and 50% said their deployments were delivering some of the benefits they had expected to get from moving to the cloud. But 16% said they were seeing little or no benefit from using off-premise services.

In anticipation of moving to the cloud, 37% of CIOs said embracing off-premise services had required a restructuring of their organisation’s IT department, and 40% said they anticipated having to embark on a similar move in the future.

The report said such moves were necessary to ensure IT departments had the right skills and knowledge in-house to build hybrid cloud environments and respond to the changing needs of the wider business.

“Cloud has subjected IT departments to new requirements and tasks they may have little experience of, such as integrating cloud services from a mixture of public and private environments so they run seamlessly,” the report said.

“At the same time, IT teams often have to re-architect applications to be delivered as either a public or private cloud service, or through a hybrid model, because many legacy applications used by businesses have not been built with cloud in mind. These needs mean that the IT skills organisations require today are changing rapidly as cloud grows its influence.”

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