Cloud Computing: Slow Adoption Rates, Current Obstacles

Wednesday Nov 16th 2011 by Damu Kuttikrishnan

Despite the hype, companies are only slowly migrating to cloud computing, chiefly due to several key challenges.

Since cloud computing is a recent innovation, current adoption rate across the industry is limited. For instance:

Microsoft’s ‘SMB Cloud Adoption Study 2011 finds that currently only 29% of the SMBs are paying for one or more cloud services. This is expected to increase to 39% in the next three years.

Symantec’s 2011 State of Cloud Survey indicates that adoption of cloud computing in organizations is low and only a few have crossed the finish line. Only 11-19% have finished implementing SaaS; Private IaaS/PaaS - 17%; Public IaaS/PaaS -17%; Hybrid IaaS/PaaS -11%. The study indicates that apart from reality not meeting expectations, there are large gaps between expected and realized goals.

For instance, the survey respondents felt the following gap between expected and realized goals:

• Increased IT agility: gap 42%

• Improved DR readiness: gap 43%

• Increased IT agility: gap 42%

• Increased computing efficiency: gap 43%

• Reduced OpEx: gap 43%

• Increased security: gap 37%

According to Data Center Decisions 2011 survey, cloud adoption is growing slowly, and only a few percentage points separate 2010 results from 2011 results. Of those interviewed, the public/private cloud implementation has increased from 4% in 2010 to only 6% in 2011.

A survey conducted by North Bridge Venture Partners, in partnership with GigaOM Pro and The 451 Group, had 413 respondents, which included industry experts, users and vendors of cloud software, support and services. Released in June 2011, the study indicated that 40% of respondents are only now experimenting with a move to the cloud. Another 26% of respondents are awaiting market maturity before adopting a formal cloud strategy.

An important indicator of the level of adoption of any innovation or technology in an organization is the budget allocation for that category. Though only limited information is available, here are some surveys that provide a glimpse into the realm of budget allocation for cloud computing.

According to a TechTarget survey of more than 500 companies across North America, a whopping 70% have budgeted for cloud computing initiatives this year, compared with fewer than 10% of companies in 2010. But it's still only a tiny percentage (below 10% for most companies) of their overall IT budget.

• A survey of 375 government IT decision makers by the Computing Technology Industry Association (CompTIA) earlier this year indicated that only 18 percent of respondents expected to spend their budget dollars on cloud computing in the next twelve months.

• Prof. Jerry Luftman, lead researcher for the Society of Information Management (SIM) and a professor at the Stevens Institute of Technology, conducted a survey with 285 organizations participating in the survey. Findings indicate that:

• Cloud growth is slow – On average respondents are investing a mere 6% of their budgets on internal cloud deployments in 2011.

• On average, respondents are investing only 5% of their budgets on external cloud deployments in 2011.

• A Focus Research study titled, ‘The State of Cloud in 2011’, released in August 2011, indicates that less than one-fifth of businesses surveyed have a dedicated cloud budget and 59% plan to increase it next year.

• According to the CDW 2011 Cloud Tracking Poll, IT managers anticipate spending no more than one-third of their IT budget on cloud computing within five years.

Obstacles to Cloud Computing Adoption

Here are some of the major obstacles hindering the widespread adoption of cloud computing.

Compliance: Cloud solutions need to be compliant with various industry standards like PCI, HIPAA, SAS 70, etc. for organizations to move to the cloud.

Interoperability: Seamless moving of applications across clouds and platforms without making any major changes would ideally be considered interoperability. The present state of affairs and lack of common standards prevent any such portability across clouds and creates vendor lock-in. This challenge might take the longest to overcome.

Culture: Some organizations may not presently have the culture to bring about this change – especially since it is not an incremental innovation. It involves changing the business processes and the way people have been looking at IT for a long time. It involves developing trust and overcoming the fear of change and loss of control over data and processes. Cloud computing seems to mean change where the outcomes, benefits and ROI may not be quantified precisely.

Awareness: Everyone in an organization should have a basic awareness of cloud computing. Otherwise, there could be lot of misunderstanding among various groups in an organization as to what cloud is and is not.

Technologies like IaaS, PaaS, SaaS, private cloud and hybrid cloud should mean the same thing to everyone in the organization. Without this basic education, any planning or implementation could be beset with resistance, confusion, longer timeframes and more costs.

ROI (Return on Investment): Generally, there is difficulty in precisely quantifying the return on investment (ROI) for a cloud project.

Integration: An application that is moving to the cloud needs to integrate with the other applications with which it was integrated, before the move to cloud.

Opportunities for Cloud Vendors

The preliminary stage of this disruptive innovation and the presence of some major obstacles for widespread adoption of cloud computing is creating opportunities for the vendors.

There are many domains and sub-domains where the new vendors will try to capture the market, incrementally and collaboratively, helping in overcoming some of the existing obstacles. Adoption rates will increase as these obstacles are innovatively overcome and end-user confidence increases.


The increased adoption of cloud computing over the next few years will depend on how some of these main obstacles are overcome and how the benefits obtained including ROI, agility, flexibility and other strategic advantages are measured and communicated.

About the author: Damu Kuttikrishnan has over 15 years of experience in various areas of IT, including project, program and portfolio management; operations; strategy; planning and change transformation. He is a six sigma lean black belt with experience in developing, streamlining and managing strategic programs. He can be reached by email at

Disclaimer: The opinions expressed herein are my own and do not in any way represent the thoughts, intentions, plans or strategies of my employer.

Mobile Site | Full Site
Copyright 2017 © QuinStreet Inc. All Rights Reserved