INDUSTRY’S LARGEST CLOUD SURVEY REVEALS OPPORTUNITY TO DO MORE WITH CLOUD

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Cloud has been gaining momentum year-over-year since the Future of Cloud Computing survey was launched five years ago. Looking at the adoption rates and trends at such a detailed level, it’s undeniable that the most successful technology leaders of today and tomorrow are scaling in the cloud - Jim Moran, General Partner at North Bridge

INDUSTRY’S LARGEST CLOUD SURVEY REVEALS OPPORTUNITY TO DO MORE WITH CLOUD

  • Hybrid cloud use expected to double in two years
  • IT use of cloud surges to record heights after lagging behind business adoption
  • Agility and scalability driving cloud adoption point to cloud’s strategic function in business
  • Execution issues like security and regulation top the list of cloud adoption inhibitors
  • Entering new Era of Cloud Practicality

Waltham, MA – December 15, 2015 – North Bridge, a seed-to-growth venture capital firm, in partnership with research analyst firm Wikibon, announced the results of the fifth annual Future of Cloud Computing Survey, which investigates trends in corporate cloud use on a yearly basis. The broadest and deepest exploration of cloud trends in the industry, this year’s survey reflects perspective from vendors and users spanning senior executives to practitioners across all industry sectors.

“Cloud has been gaining momentum year-over-year since the Future of Cloud Computing survey was launched five years ago. Looking at the adoption rates and trends at such a detailed level, it’s undeniable that the most successful technology leaders of today and tomorrow are scaling in the cloud,” said Jim Moran, General Partner at North Bridge. “Last year, we discussed the second cloud front and the rise of “cloud-native” companies. This year, we’re seeing the pervasiveness of cloud disrupt industries across the board as companies look to maximize and implement cloud as a strategic and integral technology. We’re also seeing the emergence of the cloud as the only way businesses can truly get more out of their data including analyzing and executing on it real-time. This will be a huge opportunity, but as the survey showed, because data rarely moves between clouds (Public/Private) companies must first learn how to interconnect disparate data sources into new applications.”

The cloud has reached the point where businesses are no longer debating whether or not to use cloud, but how pervasively they will use it. The 2015 survey results highlight record levels of corporate adoption of cloud computing, both for business functions and in the more complicated IT areas, especially to run content management and application development in the cloud. IT teams are finally jumping on board, seeing a surprising level of cloud adoption this year, seizing back the reins on the technology strategy of their companies. From the bottom to the top, digital technologies delivered from the cloud are becoming differentiating factors for more businesses.

Cloud Adoption Now Reflected Throughout Entire Business Operations

  • Significant processing, systems of engagement and systems of insight are moving to the cloud. 81.3 percent of sales and marketing, 79.9 percent of business analytics, 79.1 percent of customer service and 73.5 percent of HR & Payroll activities have transitioned to the cloud. The impact on HR is particularly noteworthy as in 2011, it was the third least likely sector to be disrupted by cloud computing.
  • IT is moving significant processing to the cloud with 85.9 percent of web content management, 82.7 percent of communications, 80 percent of app development and 78.9 percent of disaster recovery now cloud-based.
  • While business users have been a fan of cloud’s ease of use, accessibility and scalability since 2011, the importance of cloud agility has leapt from fourth to second in importance in the last five years.
  • Among all survey respondents, the top inhibitors to cloud adoption are security (45.2%), regulatory/compliance (36%), privacy (28.7%), lock-in (25.8%) and complexity (23.1%). Concerns regarding interoperability and reliability have fallen off significantly since 2011 (15.7% and 9.9% respectively in 2015).
  • Cost of cloud services is three times as likely to be a concern today versus five years ago.

Expectations Shifting Towards a New Approach to Cloud

  • Three quarters of company data in significant volumes is living in private or public clouds. However, company data in hybrid cloud systems is forecast to double over the next two years.
  • Corporate cloud computing strategies are focusing on public (up 43.3%) and hybrid (up 19.2%) while private cloud has taken a significant back seat (down 48.4%).
  • SaaS is the most pervasive cloud technology used today with a presence in 77.3 percent of all organizations, an increase of 9 percent since 2014. Accordingly, ROI expectations are high with 78 percent expecting to see results within three months. Fifty eight percent expect ROI in less than three months for PaaS services.
  • Among users taking the survey, the biggest factors preventing use of public cloud offerings are security (38.6%), privacy (29.8%) and expertise (22.8%).

Vendor Market Flexing To New Expectations, Customer Structure, and Business Models

  • Vendor leadership/consolidation continues to take hold with 75 percent of companies using fewer than 10 vendors.
  • While 61 percent of PaaS users only use one vendor, 71 percent of SaaS adopters use more than one vendor. 46 percent validate choosing multiple vendors due to the variation in capabilities.
  • Seeking simple and clear relationships, over 50 percent opt for online purchasing or direct to provider purchasing of cloud services. Online buying is expected in increase in the next two years up to 56 percent.
  • Seventy percent of customers interact directly with the cloud providers signaling huge changes to come for vendor business and go-to-market models.

The Initial Waves of Cloud Computing

Cloud truly began to gain speed when organizations realized it could be used above and beyond simple cost cutting efforts. Developer adoption, still gaining speed even today, showed an opportunity for applications only possible in the cloud.

“In the five years we’ve done this survey, we’ve seen cloud change from a rising niche to an industry shaping technology not only disrupting the startup sector but companies in all industries as well,” said Moran. “As speed increasingly determines who wins from a competitive perspective, companies of all types are considering cloud strategies as they try to move at software speed.”

The New Era of Cloud Practicality

Today, cloud use is less about adoption and more about the cloud at work. This was a theme witnessed throughout the 2015 results. Inhibitors have shifted from reliability and interoperability to pragmatic issues such as building the right network and tackling challenges such as security, regulation, privacy and lock-in. Even more telling, concern over cost has tripled in the last five years, a reflection of the competitive vendor landscape and the actualization of the cloud on budget reports at all levels.

Movement of data has fueled even more complexity and the limits of data transportability are being tested across Clouds. Thirty eight percent of respondents said that they have moved or considered moving from public cloud to private, with 40 percent of those respondents reporting technical difficulties moving the data.

The reemergence of IT’s use of cloud is one of the largest indicators of the normalization of cloud. Business uses often occur at a smaller scale, impacting specific teams within sales or customer service and growing slowly among similar teams. With IT’s full engagement, we expect to see the cloud blossom exponentially and a direct impact on the expansion of the hybrid cloud.

“Deploying to public cloud and hybrid cloud are no longer ‘if’ questions, but ‘when,’” said Brian Gracely, Senior Cloud Analyst, Wikibon. “Wikibon forecasts that over the next 10 years, hybrid cloud will be the predominant model which will include one-third of IT spending on public cloud. The Future of Cloud data shows that businesses see cloud as a way for IT to deliver business agility for competitive advantage.”

Don’t miss the live panel discussion of this year’s Future of Cloud Computing Survey results. Register for the December 16th web broadcast for real-world insights from the following cloud industry experts:

Jim Moran, General Partner at North Bridge (@jimmoran1)
Brian Gracely, Lead Cloud Analyst, Wikibon (@bgracely)
Paul Gillin, Enterprise Editor, SiliconANGLE (@pgillin)

Follow @futureofcloud and join the #FutureofCloud conversations on Twitter.

Visit www.northbridge.com/cloud-computing for all surveys published since 2011.

About North Bridge

North Bridge Venture Partners and North Bridge Growth Equity are active partners with entrepreneurs providing seed-to-growth financing for innovative companies looking to disrupt big markets. With $3.5 billion in capital currently under management, North Bridge partners, many founders themselves, work with entrepreneurs to apply their expertise in the creation, operation and scaling of market-leaders. The firm has funded more than 170 companies creating many billions in market value. Among those firms are Acquia, Actifio, Cool Planet, Couchbase, Demandware, Mavenir Systems, Paydiant, Proto Labs, Reval and Starent Networks. The firm is based in Waltham, MA. To learn more about North Bridge go to http://www.northbridge.com. Follow us at @North_Bridge.

About Wikibon

Wikibon is a community of business technology practitioners founded to deliver the most actionable and real-time information available in the marketplace. The Wikibon analyst team comprises expertise cutting across all facets of business technology, with a cross-functional focus on cloud, big data/analytics and infrastructure. Wikibon research methodologies heavily leverage traditional approaches and advanced social media and data analysis techniques. To learn more about Wikibon, go to http://wikibon.com. Follow us @Wikibon.

2015 Future of Cloud Computing Survey Collaborators (* indicates Platinum Level)

1. Acquia*
2. Actifio
3. Apperian
4. Appformix
5. Black Duck
6. Canonical
7. Cazena
8. CenturyLink*
9. Citrix
10. Clarity
11. CloudBees
12. CloudHealth Tech*
13. Confer
14. Coolan
15. Couchbase
16. Deis/EngineYard*
17. Demandware
18. Disqus
19. Dyn
20. Egenera
21. EnterpriseDB
22. eRecruit
23. Flexiant
24. Harmon.ie
25. Hornet Security
26. IngeniousMed
27. Logentries
28. Microsoft*
29. Motus
30. Nasuni
31. Newforma
32. OnShape
33. Open Xchange
34. Red Hat*
35. Reval
36. Rift-IO
37. Rightscale
38. Salsify
39. Scribe
40. Service Rocket
41. Sharethrough
42. Signiant
43. SpringCM
44. Stratus Technologies
45. Tapjoy
46. THINKStrategies
47. Trillium Software
48. Unidesk
49. Virtustream
50. Wikibon*
51. WPEngine*

For previous North Bridge Surveys, visit www.northbridge.com/cloud-computing. Follow us on Twitter @FutureofCloud #FutureofCloud to be the first to hear about the survey findings!

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