Midmarket Execs: Cloud Has Bright Prospects Despite Initial Concerns

Seven in 10 executives and IT directors in the midmarket call themselves "cloud believers," but more proofs of concept will be needed to convince premise advocates.

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Cloud computing is considered the future model for IT by 87 percent of respondents to a midmarket business survey conducted by Evolve IP, a cloud services provider.

Interestingly, the survey finds that executives and IT directors value cloud services more than IT managers do. They also plan to spend more on cloud services than IT managers despite disaster avoidance, scalability and flexibility benefits. The biggest adoption barrier is still security issues.

Seventy percent of C-level, vice president and IT director-level survey respondents and 53 percent of IT managers in the midmarket call themselves cloud believers, according to the survey of more than 1,100 IT survey respondents at midmarket companies in North America. Despite the high interest in cloud computing for midmarket companies, the survey data indicates that "more education and proofs of concept will be required to settle internal battles between premise advocates and cloud believers," said Evolve IP.

"The survey data reflects what we see in our business every day," Guy Fardone, general manager and chief operating officer, Evolve IP, said in a statement. "Most organizations already have at least one hosted service running but in some organizations not everyone is in complete alignment regarding putting all of their services in the cloud."

"Executives want the cost and disaster avoidance benefits while security, privacy and compliance are typical initial concerns brought up by the managers responsible for implementation," Fardone added.

Midmarket businesses are already deploying cloud services, although they are less likely to plan cloud deployment of complex enterprise systems such as financial applications and ERP systems, according to the "Cloud of Dreams—Adoption of the Cloud by North American Midmarket Businesses," survey.

A key finding reveals that midmarket companies have on average 2.5 services in the cloud. Not surprisingly, cloud believers tally 3.1 hosted services, while unconvinced respondents average 1.3 cloud services, and those undecided on cloud benefits have 1.1 services deployed in the cloud. However, 75 percent of all respondents plan to add new or additional cloud services over the next three years. Even 52 percent of unconvinced and undecided respondents expect to migrate some cloud services by 2016.

The biggest benefits of cloud deployments are improved flexibility and scalability, according to 70 percent of cloud users. Other benefits include disaster avoidance/business continuity (62 percent), lower total cost of ownership (57 percent) and the ability to defer/avoid hardware purchases (52 percent).

The top services expected to be deployed over the next three years are servers/data centers (27.5 percent), Microsoft Exchange (22 percent), co-location/backup infrastructure (22 percent), phone systems (17 percent) and Microsoft Office (17 percent). Only 12.5 percent of respondents expect to deploy more complex enterprise systems.

To implement these services, the survey indicates that cloud computing budgets at midmarket companies continue to increase. Case in point: 43 percent of respondents expect a budget increase in 2013, and 61.5 percent expect an increase in 2014. More than 80 percent of companies that have a budget increase in 2013 expect to increase spending again in 2014.

The survey also reveals that 69 percent of executives plan on spending more on cloud services while 52 percent of IT managers expect to see a budget increase. While 54 percent of respondents believe that their IT staffs are able to implement a cloud strategy, only 31 percent will do it on their own.

So how will midmarket businesses move to the cloud? According to survey respondents, 27 percent will use a cloud service provider, 21 percent will go to a value-added reseller or consultant, 11 percent will use a data center/infrastructure provider, 5 percent will go to a network services provider and only 3.5 percent will use a security service provider.

But there are still several big barriers to adoption with security topping the list of biggest concerns, according to 55 percent of respondents. Other top concerns include legal/compliance issues (38.5 percent), privacy (37 percent), reliability/availability (33 percent) and performance (33 percent).