Research
Report
Abstract:
Cloud Computing Adoption Trends:
Software- and Infrastructure-as-a-Service Usage Among
Enterprise and Midmarket Organizations
By Bill Lundell
With John McKnight and Jennifer Gahm
May 2011
Introduction
Research Objectives
In order to assess IT spending priorities over 2011 and beyond, ESG recently surveyed 611 North American and Western European senior IT professionals representing midmarket (100 to 999 employees) and enterprise-class (1,000 employees or more) organizations. All respondents were personally responsible for or familiar with their organizations’ 2010 IT spending as well as their 2011 IT budget and spending plans at either an entire organization level or at a business unit/division/branch level. A subset of ESG’s questions in this survey focused on respondents’ usage of and plans for public cloud computing services.
Specifically, the survey asked the following questions with respect to cloud computing services:2
• What impact will public cloud computing services have on organizations’ traditional IT infrastructure and processes over the next five years?
• Among organizations that believe public cloud computing will have little or no impact on their IT strategies, what are these customers’ leading objections or concerns?
• How does cloud computing sentiment vary by organization size, IT budget, and other variables?
• What are the usage trends for SaaS (software-as-a-service), and how do they vary by organization size?
• What types of applications are being delivered via the SaaS model?
• What percentage of organizations’ current applications is delivered via a SaaS model? How will this change over time?
• Who are the primary internal advocates for the usage of SaaS?
• What are the usage trends for IaaS (infrastructure-as-a-service), and how do they vary by company size and the scope of on-site IT infrastructure?
• What portion of 2011 IT budgets will organizations earmark for spending on SaaS and/or IaaS services? Survey participants represented a wide range of industries including manufacturing, financial services,
communications and media, health care, retail, government, and business services. For more details, please see the
Research Methodology and Respondent Demographics sections of this report.
Research Methodology
To gather data for this report, ESG conducted a comprehensive online survey of IT managers from private- and public-sector organizations in North America (United States and Canada) and Western Europe (United Kingdom, France, and Germany) between November 17, 2010 and December 1, 2010. To qualify for this survey, respondents were required to be senior IT managers personally responsible for or familiar with their organization’s overall 2011 IT budget and spending plans, either at an entire organization level or at a business unit/division/branch level. Respondents who were only responsible for IT spending at a departmental or workgroup level were disqualified. All respondents were provided an incentive to complete the survey in the form of cash awards and/or cash
equivalents.
After filtering out unqualified respondents, removing duplicate responses, and screening the remaining completed responses (on a number of criteria) for data integrity, we were left with a final total sample of 611 IT managers. Please see the Respondent Demographics section of this report for more information on these respondents. Note: Totals in figures and tables throughout this report may not add up to 100% due to rounding.
Respondent Demographics
The data presented in this report is based on a survey of 611 qualified respondents. The figures below detail the demographics of the respondent base, including individual respondents’ current job responsibility and budget responsibility as well as respondent organizations’ total number of employees, primary industry, annual revenue, 2011 IT budget, number of IT staff, number of production servers, and geographic region.
Respondents by Job Responsibility
Respondents’ current job responsibility is shown in Figure 1.
Figure 1. Survey Respondents, by Job Responsibility
Source: Enterprise Strategy Group, 2011.
Respondents by Budget Responsibility
Respondents’ responsibility/familiarity with their organization’s IT budgets and spending is shown in Figure 2.
Figure 2. Survey Respondents’ Budget Responsibility/Familiarity
Senior IT management (e.g.,
CIO, VP of IT, Director of IT, etc.),
52% IT management,
41%
IT staff, 5%
Other, 2%
Which of the following best describes your current responsibility within your organization? (Percent of respondents, N=611)
I am responsible for/familiar with IT budgets and spending
plans for my entire company/organization
, 62% I am responsible
for/familiar with IT budgets and spending
plans for a specific business unit, division,
branch office, etc., 38%
Which of the following best describes your personal responsibility with respect to your organization’s 2011 IT budget and spending plans? (Percent of respondents, N=611)
Respondents by Number of Employees
The number of employees in respondents’ organizations is shown in Figure 3.
Figure 3. Survey Respondents, by Number of Employees
Source: Enterprise Strategy Group, 2011.
Respondents by Industry
Respondents were asked to identify their organization’s primary industry. In total, ESG received completed, qualified respondents from individuals in 20 distinct vertical industries, plus an “Other” category. Respondents were then grouped into the broader categories shown in Figure 4.
Figure 4. Survey Respondents, by Industry
Source: Enterprise Strategy Group, 2011.
100 to 249, 11% 250 to 499, 14% 500 to 999, 13% 1,000 to 2,499, 12% 2,500 to 4,999, 11% 5,000 to 19,999, 20% 20,000 or more, 19%
How many total employees does your organization have worldwide? (Percent of respondents, N=611) Manufacturing, 20% Financial (banking, securities, insurance), 19% Business Services, 9% Health Care, 8% Communications & Media, 8% Retail/Wholesale, 7% Government (State/Province/Count y/Municipal, etc.), 6% Education, 6% Government (Federal/National), 5% Transportation & Logistics, 5% Other, 8%
Respondents by Annual Revenue
Respondent organizations’ annual revenue is shown in Figure 5.
Figure 5. Survey Respondents, by Annual Revenue
Source: Enterprise Strategy Group, 2011.
Respondents by Total 2011 Overall IT Budget
The total expected spending on IT products, staffing, and services is shown in Figure 6.
Figure 6. Total 2011 Budget for All IT Products, Staffing, and Services
33% 26% 23% 7% 3% 1% 7% 1% 2% 11% 11% 24% 12% 11% 20% 7% 0% 5% 10% 15% 20% 25% 30% 35% Less than $50 million $50 million to $99 million $100 million to $499 million $500 million to $999 million $1 billion to $4.999 billion $5 billion to $9.999 billion $10 billion to $19.999 billion $20 billion or more Not applicable (e.g., public sector, non-profit) What is your organization’s total annual revenue ($US)? (Percent of respondents)
Midmarket (100 to 999 employees, N=231) Enterprise (1,000 or more employees, N=380)
45% 35% 13% 4% 3% 0% 0% 0% 0% 0% 0% 0% 4% 13% 11% 13% 11% 10% 6% 9% 8% 3% 3% 7% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Less than $1 million $1 million to $4.999 million $5 million to $9.999 million $10 million to $24.999 million $25 million to $49.999 million $50 million to $74.999 million $75 million to $99.999 million $100 million to $249 million $250 million to $499 million $500 million to $749 million $750 million to $999 million $1 billion or more To the best of your knowledge at this time, what is your organization’s total 2011
budget for all IT products, staffing, and services ($US)? (Percent of respondents)
Current IT Budget Allocations
Average IT budget allocations by category are shown in Figure 7.
Figure 7. 2011 IT Budget Allocation
Source: Enterprise Strategy Group, 2011.
Respondents by Number of IT Staff
The number of IT staffers in respondents’ organizations is shown in Figure 8.
Figure 8. Survey Respondents, by Number of IT Staff
Source: Enterprise Strategy Group, 2011.
Staff, 34% Hardware, 19% Software, 17% Telecom/Network Services, 12% Professional Services/Consulting, 7% IT Outsourcing Services, 8% Other , 2% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
To the best of your knowledge at this time, approximately what percentage of your organization’s total 2011 IT budget is allocated to each of the following categories?
(Mean, N=611) 65% 19% 11% 3% 1% 1% 0% 0% 4% 9% 11% 7% 7% 11% 15% 36% 0% 10% 20% 30% 40% 50% 60% 70% Less than 25 IT staff 25 to 50 IT staff 51 to 99 IT staff 100 to 149 IT staff 150 to 199 IT staff 200 to 249 IT staff 250 to 499 IT staff 500 or more IT staff To the best of your knowledge, approximately how many IT staff does your
organization employ worldwide? (Percent of respondents)
Respondents by Number of Servers
The number of production servers operated worldwide by respondents’ IT organizations is shown in Figure 9.
Figure 9. Survey Respondents, by Number of Servers
Source: Enterprise Strategy Group, 2011.
Respondents by Total Disk-based Storage Capacity
The amount of installed capacity associated with disk-based storage systems is shown in Figure 10.
Figure 10. Survey Respondents, by Total Disk-based Storage Capacity
44% 28% 16% 8% 3% 1% 0% 0% 0% 5% 8% 11% 18% 15% 15% 9% 8% 12% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Less than 25 servers 25 to 49 servers 50 to 100 servers 101 to 250 servers 251 to 500 servers 501 to 1,000 servers 1,001 to 2,500 servers 2,501 to 5,000 servers More than 5,000 servers
Approximately how many production servers (whether physical or virtual) are supported worldwide by your IT organization? (Percent of respondents)
Midmarket (100 to 999 employees, N=225) Enterprise (1,000 or more employees, N= 354)
22% 20% 24% 18% 7% 2% 2% 4% 0% 1% 4% 9% 10% 14% 17% 13% 27% 3% 0% 5% 10% 15% 20% 25% 30% Less than 5 TB 5 TB to 9 TB 10 TB to 24 TB 25 TB to 49 TB 50 TB to 99 TB 100 TB to 249 TB 250 TB to 499 TB 500 TB to 999 TB 1 PB or more
To the best of your knowledge, what is your organization’s total installed capacity associated with disk-based storage systems? (Percent of respondents)
Respondents by Region
Figure 11 shows the regional breakdown of the respondent base.
Figure 11. Survey Respondents, by Region
Source: Enterprise Strategy Group, 2011.
Respondent by Psychographics
ESG created a company “psychographic” profile by capturing respondents’ views on their organization’s purchasing pattern for IT products and services (see Figure 12) and overall effectiveness of the IT organization (see Figure 13).
Figure 12. Survey Respondents, by Purchasing Pattern for IT Products and Services
Source: Enterprise Strategy Group, 2011.
North America, 72% Western Europe,
28%
Respondents by region. (Percent of respondents, N=611)
Leading-edge consumers – we stay
on top of the most current technology trends and purchase
related products as soon as they are
available, 14% Average consumers –
we stay on top of technology trends but
generally wait to purchase related products until they
have proven acceptance in the
market, 68% Laggard consumers –
we don’t really stay on top of technology trends and tend to make investments only after those technologies have been widely accepted
in the market, 15%
Don’t know/no opinion, 3%
Generally speaking, how would you describe your organization’s purchasing patterns for IT products and services? (Percent of respondents, N=611)
Figure 13. Survey Respondents, by Effectiveness of IT Organization
Source: Enterprise Strategy Group, 2011.
Highly effective – consistently able to
support business needs & deliver promised service levels in a timely, secure, & cost-effective manner.
Line-of-business executives are rarely
dissatisfied with IT’s performance, cost &
reliability., 24% Somewhat effective –
could do a better job supporting business
priorities & service level requirements in
a timely, secure, & cost-effective manner. Line-of-business executives
are occasionally dissatisfied with IT’s performance, cost &
reliability, 61% Needs improvement –
do not consistently meet business needs.
Line-of-business executives are often dissatisfied with IT’s performance, cost &
reliability., 13%
Don’t know/no opinion, 2%
Which statement do you believe best describes the overall effectiveness of your IT organization? (Percent of respondents, N=611)
Contents
List of Figures ... 3
List of Tables ... 3
Executive Summary ... 4
Report Conclusions ... 4Introduction ... 6
Research Objectives ... 6Research Findings ... 7
Public Cloud Computing Sentiment ... 7
Software-as-a-Service (SaaS) Usage Trends ... 10
Infrastructure-as-a-Service (IaaS) Usage Trends ... 16
Conclusion ... 20
Research Methodology ... 21
Respondent Demographics... 22
Respondents by Job Responsibility ... 22
Respondents by Budget Responsibility ... 22
Respondents by Number of Employees ... 23
Respondents by Industry ... 23
Respondents by Annual Revenue ... 24
Respondents by Total 2011 Overall IT Budget ... 24
Current IT Budget Allocations ... 25
Respondents by Number of IT Staff ... 25
Respondents by Number of Servers ... 26
Respondents by Total Disk-based Storage Capacity ... 26
Respondents by Region ... 27
List of Figures
Figure 1. Expected Impact of Public Cloud Computing ... 7
Figure 2. Expected Impact of Public Cloud Computing, by Usage of Cloud Computing as a Cost Reduction Strategy ... 8
Figure 3. Factors Preventing Wide Scale Adoption of Public Cloud Computing ... 9
Figure 4. Usage Trends for Software-as-a-Service (SaaS) ... 10
Figure 5. Usage Trends for Software-as-a-Service (SaaS), by Company Size ... 11
Figure 6. Extent of SaaS Usage, Now and 36 Months from Now ... 12
Figure 7. Applications Organizations Have Deployed or Expect to Deploy via the SaaS Model ... 13
Figure 8. 2011 IT Budget Allocated for SaaS-based Applications... 14
Figure 9. Biggest Internal Advocates for SaaS Adoption ... 15
Figure 10. Usage Trends for Infrastructure-as-a-Service (IaaS) ... 16
Figure 11. Usage Trends for Infrastructure-as-a-Service (IaaS), by Company Size ... 17
Figure 12. 2011 IT Budget Allocated for IaaS Services ... 18
Figure 13. Expected Impact of Public Cloud Computing Among Current SaaS and/or IaaS Users ... 20
Figure 14. Survey Respondents, by Job Responsibility ... 22
Figure 15. Survey Respondents’ Budget Responsibility/Familiarity ... 22
Figure 16. Survey Respondents, by Number of Employees ... 23
Figure 17. Survey Respondents, by Industry ... 23
Figure 18. Survey Respondents, by Annual Revenue ... 24
Figure 19. Total 2011 Budget for All IT Products, Staffing, and Services ... 24
Figure 20. 2011 IT Budget Allocation ... 25
Figure 21. Survey Respondents, by Number of IT Staff ... 25
Figure 22. Survey Respondents, by Number of Servers ... 26
Figure 23. Survey Respondents, by Total Disk-based Storage Capacity ... 26
Figure 24. Survey Respondents, by Region ... 27
Figure 25. Survey Respondents, by Purchasing Pattern for IT Products and Services ... 27
Figure 26. Survey Respondents, by Effectiveness of IT Organization ... 28
List of Tables
Table 1. Expected Impact of Public Cloud Computing, by Company Size and IT Budget ... 8Table 2. Effective IT Organizations Believe They’re a Better Alternative to Cloud Computing Services ... 9
Table 3. Usage Trends for Software-as-a-Service (SaaS), by Production Servers and 2011 IT Budget ... 11
Table 4. Applications Organizations Have Deployed or Expect to Deploy via the SaaS Model, by Company Size ... 13
Table 5. 2011 IT Budget Allocated for SaaS-based Applications, by Usage of SaaS ... 14
Table 6. 2011 IT Budget Allocated for SaaS-based Applications, by Usage of Cloud Computing for Cost Reduction ... 15
Table 7. Usage Trends for Infrastructure-as-a-Service (IaaS), by Production Servers and Storage Capacity ... 17
Table 8. 2011 IT Budget Allocated for IaaS Services, by Usage of IaaS ... 18 Table 9. 2011 IT Budget Allocated for IaaS-based Applications, by Usage of Cloud Computing for Cost Reduction19
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