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Cloud Adoption Challenging Businesses

Media Release

Cloud Adoption Challenging Businesses

Chandan Ohri – KPMG Partner Management Consulting

Business and IT leaders across the globe are finding cloud adoption to be more complicated than many had originally anticipated, according to a report from KPMG International.

According to the Cloud Takes Shape, nearly 33 percent of all executives surveyed say that cloud implementation costs have been higher than they expected, and a similar percentage say that integrating cloud services with their existing IT infrastructure has been particularly difficult.

“Though cloud computing is the new buzz word in IT circles, it has yet to permeate through into NZ businesses in a big way.” comments Chandan Ohri, Partner Management Consulting, KPMG New Zealand. “With significant experience and accreditation in project management, business analysis and testing, KPMG is working to accelerate the pace of acceptance by actively engaging with their clients to facilitate adoption of Microsoft cloud services. For its work in this area KPMG has been awarded Microsoft Silver partnership status. The NZ government also recognizes the potential of Cloud technology and is leading by example, its introducing cloud services in many government agencies as it believes that this will allow it to provide better public services to all New Zealanders.”

Business process design key to the implementation challenge
As the market for cloud matures, enterprises are now starting to come to terms with the hard practicalities of cloud enablement, according to the report’s authors. There is evidence that organizations are placing greater focus on getting the business process redesign right, facilitating appropriate change processes and making business model improvements.

One of the most important lessons uncovered by this research is that business process redesign needs to be done in tandem with cloud adoption if organizations hope to achieve the full potential of their cloud investments. Executives have found that simultaneous process redesign is central to addressing the complexities that often arise in the implementation and operational phases of cloud adoption.

Reaping the transformational value from cloud
The survey shows that despite these emerging complexities, executives still believe that the benefits of cloud adoption far outweigh any growing pains they experience through implementation. In part, this is because organizations are shifting their focus away from pure cost reduction objectives to instead focus on achieving the transformational benefits of cloud.

As cloud begins to become more mainstream within the business environment, we are seeing organizations move from the ‘when and why’ of the cloud adoption process to instead focus on the ‘how’.

While cost reduction is still the primary reason for cloud adoption according to nearly half of respondents, 28 percent said that the speed at which they are able to migrate to cloud is important. “Gaining real cost savings from the cloud is about more than simply moving from fixed costs to operating costs; the greatest cost savings – and, more importantly, the transformational business benefits – will come from the longer-term outcomes such as more efficient processes, more flexible operating models.

As cloud moves further up the ranking as a strategic tool of the business the role of CIOs is becoming ever more critical as the business integration broker on commercial, process and technical levels.

Cloud’s new and emerging challenges
Businesses are starting to more clearly understand some of the other aspects of cloud that can either significantly enhance or impair their organization’s ability to reap the rewards of cloud adoption.

Security: Business executives are recognizing that cloud adoption should improve security, not lessen it, nevertheless 26 percent of respondents still see security as a key challenge. The report indicates that business executives recognize that the only way to address the concern is to work more closely with IT to develop a joint approach on cloud security to ensure that cloud providers’ solutions and services are reliable and protected.
Chandan from KPMG New Zealand has also observed that “Paucity of knowledge and security concerns are found to be the major impediments in the adoption of the cloud technology. These concerns should be acknowledged and assuaged. Cloud services can provide sizeable cost savings and efficiencies and businesses should adopt them more readily as effective use of cloud technology would help create an enduring differentiation leading to improved profitability.”

Many businesses are proving their growing confidence in the security of cloud with more than a third of respondents saying they will migrate core operations of sourcing and procurement, supply chain and logistics to cloud within the next 18 months.

Security – data loss and privacy – are still significant concerns for business and IT leaders but many are quickly gaining more confidence in their service providers,” said Greg Bell, Principal, KPMG in the US. “Functions that, until just recently, were considered too sensitive or complex are now being put on the table.”

Regulation: Only 18 percent of respondents see regulation as a challenge but that may be due to complacency, the report’s authors suggest, because organizations may be just beginning to prepare for the complexities that will arise with increased regulatory compliance.
“The NZ Cloud computing code of practice has been developed to address similar concern around integrity of cloud computing and to provide consistent standards of adherence by cloud providers. This is a voluntary code of practice and is supported by leading NZ cloud providers as well as international cloud leaders such as Microsoft and Google.” Said Chandan from KPMG New Zealand

About KPMG International
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 156 countries and have 152,000 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.


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